Common Budgeting Mistakes
Making a budget can be time consuming, but well worth every minute if it’s done correctly. You’ll be amazed at how much money you can save for the things you really want, when you budget correctly for those expenses that can easily get out of control. Below are some common mistakes people make when attempting to make a budget, as well as tips for avoiding them when making your own budget.
Under estimating your expenses on necessities
Groceries are one of the biggest budgeting blunders, because it’s hard to estimate how much your family will eat from week to week. The trick is to change the way you shop. Just about everything in a grocery store has a price cycle that starts high and gradually goes down until it’s on sale. That’s when you should buy things. At least once a month, Albertsons, Tom Thumb and Kroger all sell chicken breast on sale from $1.68 to 1.98 per pound. Pork and beef have similar price cycles – about once a month. Buy meat when it’s on sale and freeze it. Pay attention to when these price cycles occur so you can factor future sales into your budget. Stack coupons on your sale items to make them even cheaper, and set a limit on how much you’ll spend on meat and other grocery items during a pay period. When that money has been spent, your grocery shopping is over until the next pay period.
Non-grocery necessities like medicine and gasoline should also be factored in to your monthly or bi-weekly budget. These are regular expenses and need to be written down along with all of your other budgetary expenses.
Forgetting to budget periodic expenses
Periodic insurance payments, taxes, automobile registration renewal, seasonal sports expenses, periodic doctor visits, etc. are all easy to forget if they don’t have to be paid regularly. When making your budget, make a column for each month of the year and mark when these expenses pop up. With proper planning, you can start setting aside money several months in advance and avoid putting yourself in a bind.
Budget for Emergencies
The first rule of saving and budgeting is to pay yourself first. Even if it’s $10 or $20 per paycheck, you should have at least $1,000 set aside specifically for emergencies. Otherwise, you’ll end up using credit cards and putting yourself further behind. Try saving at least $100 a month by paying yourself first. Set your home banking to automatically transfer a set amount of money into your savings account every pay day. By the time you accumulate $1,000, you’ll be used to living without that small amount you’ve been putting aside. Start automatically depositing it to a separate savings account every pay day and watch your nest egg grow.
Stick to the Budget
Your budget is only as effective as your willingness to stick to it. Kick the impulse to buy something you don’t need when it’s not in the budget. You’ll thank yourself later on.
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