Avoid these bad budgeting mistakes
March 23rd, 2016 • No comments
The financial decisions you make (or don’t make) today will inevitably affect your future. Good budgeting practises now lead to a more financially secure tomorrow and bad financial habits can sink your future into debt.
Whatever your negative habits are with money, you can change them. It can be hard to break lifelong patterns but knowing the common bad budgeting mistakes will reduce your odds of making them:
Bad Budgeting Mistake 1# Not writing down expenses
It’s impossible to stick to your budget if you don’t know where your money is going . It’s very easy to forget the small things such as a parking receipt but over time these things can eat into your budget.
The easiest way to remember everything you buy is to update your budget regularly, every day if you can while your purchases are still fresh in your head. You could also make a note in your smart phone to enter in as you go! or make all your purchases with the same debit or credit card and keep track online through your bank app.
Mistake #2 Impulse Buying
Chocolates at the service station, takeaway coffees at your local cafe and checkout items especially if made weekly add up quickly as well. These seemingly inconsequential purchases like chocolate once a week, are costing you $8 a month, or almost $100 a year. Writing down even those minor $1 purchases every time can help you spend more wisely in the long run by seeing the bottom line effect they have.
Mistake #3 Busting the budget
Blowing the budget happens. You go out for dinner that turns into drinks after. You go shopping expecting something to cost a certain amount of money that you’ve budgeted for – but it’s more or you buy additional items. And this happens a lot but how?
These things do happen, however, if you know that you have a tendency to buy more than just one thing when you go to the store, or if you know that your friends have a tendency to change their plans, either avoid these activities or create a bigger budget for them ahead of time.
Mistake 4% Setting Vague Goals
Saying “I’m going to save” without determining how much by what time frame won’t set you up for success. Set some realistic goals with a specific and detailed action plan. For example, rather than saying you’ll save money, say that you’ll increase your superannuation contribution by $1,500 a year. Instead of saying you’ll spend less, say that you’ll cut $30 a week from your grocery bill or limit yourself to one takeaway coffee a week.
Mistake #5 Making things complicated
Budgeting doesn’t have to be hard. You don’t need to create an elaborate system or use special budgeting tools to develop a realistic spending plan. You can simplify your budget by easily keeping a running total of your expenses using your smart phone or even an excel spreadsheet while having the freedom to update and adjust your budget regularly.
Correcting these mistakes will help realign your budget and financial goals. You can find more helpful budgeting articles from our previous blogs here:
4 tips to change your financial life and make it stick
How to break the cycle of debt
How to take control of your money now
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