5 Budgeting Mistakes You May Be Making

One of the reasons that many people give up on budgeting is that they can’t seem to make their budget work. Often the difficulties come from making one of these 10 common budgeting mistakes. It helps to understand the mistakes and misconceptions you may have to help you get control of your money. Learn if you are making any of these mistakes and how you can fix them.

    • 01

       Budgeting Mistake: Guessing at Monthly Costs


      When you create your first budget, you may not know how much to assign the various categories in your budget. It helps to look over your past three months worth of spending and base the amount for each category on the average that you spent. Over the next few months, you can cut back on spending gradually. One common example is to decide that you will spend $200.00 a month on groceries for you, when the last few months you have averaged $500.00. Cutting back $300.00 in a month on food is likely setting yourself up for failure.

    • 02

       Budgeting Mistake: Assigning Expenses by Paycheck


      If you are paid weekly or every other week, you may be assigning your expenses by paycheck. This means that the week that you pay your mortgage or rent, you may be really tight, and it can be even more difficult if most of your bills are due at the same time. The best way around this is to divide each paycheck up and set aside money from each to cover the larger expenses. Another alternative is to save up a month of income, and use that for your budget, while you are saving what you are earning this month to pay for next month’s bills. This process makes budgeting a lot easier, and helps to prevent the times where you do not have money for groceries.

    • 03

       Budgeting Mistake: Not Tracking Your Spending


      If you are not tracking your spending by category, then your budget is not doing you any good. If you do not know what you have spent, you cannot know when you have reached your limit. The key is to find the budgeting method that will work well for you, whether it is software or the envelope method. Once you track your spending, you can really start following your budget.

  • 04

     Budgeting Mistake: Leaving Out Items

    Young woman holding shoppings bags in boutique

    One common mistake is that people forget to put things in their budget. You may leave out things like gifts, haircuts or annual bills. If you have not planned or budgeted for the expenses, it can really hurt you when it is time to pay for it. You can budget for annual expenses by dividing the amount that you pay by twelve and setting aside that money each month. You also need to make sure you haven’t forgotten to add these items that people most commonly forget. After a few months of budgeting, you should be able to identify the expenses you are missing.

  • 05

     Budgeting Mistake: Not Working as a Team


    If you are married, one of the biggest issues may be working together on your budget. You both need to be committed, and discussing where you are financially on a regular basis. This will prevent you from both spending too much money or blowing through a category spending in one day. If you are married, it is essential that you work together on your finances.

This article was taken from: https://www.thebalance.com/biggest-budgeting-mistakes-2385610
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