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As amazing and life-changing as budgeting is, it’s not always easy to get the hang of.
The first few months you begin to budget, you’re almost guaranteed to make quite a few mistakes. The important part is to not let that stop you. Budgeting is a skill to learn, and must be treated like so. You wouldn’t expect to learn to play the piano without hours and hours of practice and hitting the wrong keys before you can finally play a song. Approach budgeting with the mindset that it will take some practice, and you’ll be sure to succeed.
Knowing what to expect can go a long way towards making sure you don’t give up when you hit a bump in the road. Check out the three budgeting mistakes everyone makes to give yourself a head’s up:
Mistake #1: Forgetting an Expense
The first budgeting mistake everyone makes is forgetting about something that should have been included in the budget. For instance, my husband signed up for a gym membership and I totally forgot about it. Luckily when the money drafted out of the account, I had budgeted $40 for a doctor’s visit co-pay which ended up being covered 100%, so it washed out.
If I hadn’t had that co-pay to cover this unexpected expense, I would have had to find the $39 for the gym membership from another category in our budget. This could have been groceries, entertainment, date night, or even our debt snowball. When this happens to you, you have to decide which budget category is the most important to you.
Since our number one goal this year is to get out of debt, I knew I would not want to take the money from our debt snowball. Most likely, I would have taken some of the money from our date night category, and some from our groceries category. By taking a few dollars out of some of your negotiable categories, you can easily cover the cost of your unplanned expense without feeling like you’re sacrificing anything else.
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Mistake #2: Not Budgeting Enough
The next budgeting mistake everyone makes is not allocating the right amount of money for each category of expenses.
If you’ve just started budgeting and you’re not really sure what you typically spend on your variable expenses, you might just shoot for a number that sounds good. The problem with this is you may spend $150 on groceries in the first week (for example) when you’ve only budgeted $400 for the month total. In a four week month, you’ll have gone over your budget by $200 dollars.
An easy fix to this is to analyze what you’re currently spending before trying to set a new budget. My absolute favorite way to do this is by using the Highlighter Budgeting Method. Look through your bank account over the last month or two and add up what you have been spending on groceries and other variable expenses such as fuel, clothing, etc., then use that as a guide for what you would like to spend going forward. Try to shave off ten percent next month and see how that goes. Keep gradually decreasing your spending until you hit your goal.
Mistake #3: Being Unrealistic
The third budgeting mistake we all make is being unrealistic. Sometimes when we have a goal in mind, it can be hard to focus on anything else besides getting there as fast as we can.
This is so true for me when it comes to paying off debt! I’ve had a tendency to squeeze every last dollar out of the budget to throw on our debt. This is not always a bad thing, but sometimes you have to give a little (especially when you’re married or accountable to someone else.) Your partner may not like the idea of not having anything in the clothing budget for the next six months, and this is where you have to listen to their wants and needs too. They may just knock a little sense into your head. 😉
If you’ve set an unrealistic goal of only spending $100 a month on groceries for your family of six, it’s time to reevaluate the budget. Once you go over-budget (and you will) you will probably get frustrated and maybe even depressed, thinking you’re just not cut out for this. That’s when bad spending decisions get made, such as taking the family out to the buffet because meal planning and grocery shopping is too hard. Don’t set yourself up for failure by being unrealistic! Financial goals are usually a marathon, not a sprint, and burning yourself out too soon can completely halt your progress.
Keep these budgeting mistakes we all make in mind as you navigate the waters of your first few monthly budgets. If you make any of these mistakes, pick yourself up and start again. A mistake is not fatal, so don’t let it kill your budget!
What budgeting mistake do you struggle with the most? Join the conversation in the comments below!