Budgeting is often viewed as restrictive or difficult. I thought that when I met with a credit counselor to help me begin attacking debt. The idea of keeping track of my finances seemed foreign and I believe it was impossible to do. I speak with many people who believe the same thing, or they believe they need to be an expert to manage their budget. Thankfully, none of those can make it impossible to master your money. However, there are some simple mistakes that can trip you up when budgeting for the first time. These are ten mistakes to avoid if you’re trying to budget for the first time. Avoiding them will help increase the likelihood of success.
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Not Being Consistent
Consistency is vital when you begin to live on a budget. If you don’t want to create your plan, then simply ignore it.
As you start, it’s best to revisit it at least once a month. As you become more comfortable you can don’t have to revisit it as frequently.
Budgeting may jarring if you’re a novice. Don’t let that keep you from avoiding dealing with it.
Guessing About Expenses
Knowing exactly how much you’re paying for your expenses is essential for the success of your budget. You want to look at your bank account to learn exactly how much you spend each month.
This ranges from known expenses, such as utilities, to irregular expenses. If you don’t inform yourself, you’re opening yourself up to failure.
Not Allowing Yourself Fun Money
A lot of people believe that if you live on a budget, you can’t spend on things you enjoy. That’s a myth. In fact, fun money is vital to include in your spending plan.
Determine what you can afford and pair it with something you enjoy. This will give you the motivation to continue. After all, life is too short not to have something to enjoy.
Reinventing the Wheel
Budgeting doesn’t have to be difficult. Although overwhelming at first, you don’t need to make it more difficult merely for the sake of it.
Free budgeting apps are a terrific resource to use to simplify much of the process for you. They do much of the work, allowing you to only need to check it to verify everything is on track.
Creating Unrealistic Goals
You want to challenge yourself with your budget, but you don’t want to make it too difficult. That may only result in you giving up in frustration.
Set goals that challenge you but are also reasonably achievable. Don’t forget to break up goals to help give you motivation to continue the fight.
Forgetting About Irregular Expenses
Not all expenses are known. Auto insurance and groceries are two good examples. Give yourself some leeway with irregular expenses so you aren’t surprised if you end up needing more cash to cover the needs.
Going it Alone
Studies show that if you have a partner doing something with you, you increase your chances of success in getting something done. The same is true with budgeting.
Instead of staying in the dark, ask a friend to be your accountability partner. Or, ask a friend to work together on your respective budgets.
You never know what you may be able to help each other with to improve your success.
Forgetting About Saving Money
You are your most important resource. As such, it’s vital to pay yourself first after you receive your paycheck.
Include saving in your budget as a bill to yourself. You can use an online bank, such as CIT Bank, to automate your savings and earn as much interest as possible.
Not Revisiting Your Budget
A budget is not a set-it-and-forget-it kind of situation. It’s best for beginners to revisit their budget once a month.
As you become comfortable with it, you can move to look in on it quarterly. If you use a budgeting app, this should not take a lot of time, as it will help you identify areas for improvement.
Not Thinking Holistically
A budget should keep your entire financial life in mind. Ignoring things like high-interest consumer debt or retirement planning can be detrimental.
When starting a budget you want to think about both your short and long-term goals. This will help align your spending with both, allowing you to optimize your efforts.
How to Create a Budget
Budgeting isn’t difficult, but it does allow you to spend your money as you wish. If you’re new to budgeting, read our beginner’s guide to budgeting and see just how easy it is.
35 Proven Ways to Save Money Every Month
Many people believe it’s impossible to save money. Or, they think saving $20 or $50 a month won’t amount to much. Both are incorrect. There are many simple money-saving tips that can add up to big savings. You just have to start one, then another, to increase your savings.
Ways to Save Money Every Month
How to Become Rich Quickly
Everyone wants to become rich quickly. While not always possible, there are legitimate ways to become wealthy. Follow these methods and you’ll be on the road to riches.
How to Become Rich in 9 Simple Steps
Signs You’re Financially Stable
Financial stability is the foundation to achieving financial freedom. Learn how financially stable you are and where you can improve.
33 Signs You’re Financially Stable
10 Proven Ways to Pay Off Debt Faster This Year
Paying off debt doesn’t have to take years upon years to achieve. You can intensify your efforts to kill it quicker. The sooner you become free the sooner you can attack other personal finance goals.
10 Proven Ways to Pay Off Debt Faster this Year
I’m John Schmoll, a former stockbroker, MBA-grad, published finance writer, and founder of Frugal Rules.
As a veteran of the financial services industry, I’ve worked as a mutual fund administrator, banker, and stockbroker and was Series 7 and 63-licensed, but I left all that behind in 2012 to help people learn how to manage their money.
My goal is to help you gain the knowledge you need to become financially independent with personally-tested financial tools and money-saving solutions.
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