Budgeting may not sound like the most fun activity to do with your free time, but it is a smart one. One common misconception about budgeting is that it doesn’t allow you any freedom, or extra money to do the things that you enjoy. However, a good budget will consist of paying bills, saving for your future, and paying off debt all the while allowing for extra spending each month. Keep reading so that you too can avoid making these common budgeting mistakes.
“Grab That Cash with Both Hands and Make a Stash” – Money by Pink Floyd
In my opinion, the first mistake anyone can make regarding a budget is thinking that they don’t need one. Having a budget is critical in order to improve your financial standing. Making a budget does take time, but that time will save you money and help you avoid financial troubles further down the road.
Maintaining financial well-being takes effort and work, so make sure you put in the effort to stick to your budget after you’ve taken time to build it. If you talk the talk, but don’t actually walk the walk, you will be stuck in the same place where you started.
“Not Enough Can Be a Sad Thing” – Money Isn’t What Really Matters by Kenny Rodgers
Perhaps we have mentioned this before, but it is extremely important to have an emergency fund. By making a contribution into an emergency fund each month, you can help save yourself money in the future. When an unexpected event occurs, this type of fund helps tremendously because you aren’t putting the costs onto your credit card or taking away from what you had budgeted for the month! It is also imperative that you don’t steal money from this fund if you start running low in any other categories for the month. Try to do without brand name items, or simply avoid frivolous purchases instead of dipping into the emergency bucket. A few dollars here, and a few dollars there, will help get you on your way to a good emergency fund, but borrowing any amount from it each month will defeat the purpose. U.S. News suggests that you should have enough money in your emergency fund to cover expenses for 3 to 6 months.
“I Get A Check On Friday, But It’s Already Spent” – Workin’ For A Living by Huey Lewis and the News
Your budget should include things like paying off debt, saving, and filling basic human needs. In lean times it might be tempting to cut back on savings or an emergency fund contribution in favor of buying food or paying rent. First, be realistic about what you can afford.
When it comes to basic needs, buy generic instead of brand names or forego pre-made meal kits and pre-cut veggies to save a few dollars. You might be surprised how much extra those items cost. Other ideas for saving on groceries include buying only seasonal produce and growing your own. You can also buy seasonal produce in bulk, and then freeze it for later use – this is a great tactic for summer berries, which might get expensive later in the year.
“Cause We Are Living in a Material World” – Material Girl by Madonna
While having the latest in fashion or the newest gadgets may seem cool, try to focus on not keeping up with the Joneses. The urge to splurge on these things may seem like a good idea at the time, but your budget may think otherwise. Plan in advance for a phone upgrade or any purchase that might go above and beyond whatever you are currently paying for basic needs like groceries, rent, or insurance. Being budget-conscious will help you in the long run, you’ve just got to trust the process.
“Got To Find A Reason Why My Money’s All Gone” – What I Got by Sublime
All this budget talk may seem like it leaves no room for fun. However, it’s quite the opposite! Not all times are lean. Budgeting from an early age can actually set you up to be in a position, later in life, where sticking to a strict budget is not as critical. The goal, after all, is financial stability, which comes with time and effort. In order for a budget to truly last, you need to put a little money aside enjoy the money that YOU earned!
It truly is the little things…