The 5 Biggest Budget Mistakes People Make
We all know that budgeting is a key to prosperity. You maybe have started budgeting, or maybe just thought about it, regardless the reality is, that even with the best laid plans we can come very unstuck.
This can happen very fast, if we do not reflect and work out why our last budget didn’t work for us, or why we have never had a budget before, and make changes accordingly.
Whether you have had a budget in the past, or never set one before, then take this opportunity to learn from those who have failed,
These are 5 of the biggest budget mistakes people make.
1. Honestly Was Not Your Best Policy
Getting the numbers right from the beginning by being brutally honest with yourself is very important when developing a budget that works for you. It is likely you were not 100% honest with yourself, or did not analyse your spending habits closely enough to write an appropriate budget. This time, take a week and write down absolutely everything you spend money on.
It doesn’t matter if its fifty cents, two dollars or four hundred, everything must be present and accounted for. This information will put you in a much better position to be able to assess where you money has been going each week.
2. You Aimed Too High
Deciding to create and stick to a budget is always a great thing, except when it’s a budget you created while in the midst of seeing yourself easily making drastic changes overnight. It pays to be incredibly realistic when it comes to writing a budget.
Work with the “small steps” philosophy and work your way to being frugal, rather than expecting yourself to go cold turkey and drastically rein in your spending overnight.
3. It Made Your Head Spin
When it comes to budgets over-complication may well be the root of all evil! We often hear from individuals and families who have multiple processes and ways of keeping track of their spending and budgets.
A combination of shoe boxes full of papers, spreadsheets, notes kept on phones and ratty old receipts in drawers is not going to help you when it comes to making head or tail of your finances. Keep it simple, in one place, and makes sure it’s clear for both you and your significant other to understand.
4. There Was Nothing Positive About It
The irony of budgets is that they are supposed to make life better, yet for many people they seem to make life worse! Usually this is because they make them so restrictive and punishing that in the days of their lives where they should be enjoying themselves they have their nose to the grindstone and never reward themselves.
There is absolutely a fine balance between enjoying your money and overspending, but do make sure that your budget includes some form of reward for the hard work you put into maintaining and sticking to your plans.
5. Others Were Not On Board
As the saying suggests – too many chefs spoil the broth. The same can be said when it comes to money. When there are too many fingers in the one pie the money matters can get messy.
Even though involving more than one person when you are in a relationship or sharing a home is pretty much unavoidable it pays to make sure you have one person who is the budget leader. This central person will be the one to oversee the budget and also pull others up when necessary!
When you sit down to create your budget, whether it’s your first time, or your hundredth, do yourself a favour and consider all five of our budgeting mistakes so you know where not to go wrong.
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