Do you ever feel like no matter what you do, you simply can’t get ahead financially? Anyone can make a mistake, even with what seems like a solid budget plan to follow each month. The reality is that budgets are only tools. The effort you put into using your budget and making it a success is what really matters. Hiccups and missteps are often part of process when it comes to securing your financial well-being.
Does your budget feel awkward or difficult to follow? It’s important to sit down each month and review your budget. Are you forgetting to track small expenses? Have you set unrealistic financial goals? Take a look at these five problems (and their solutions) to figure out what changes you really need to make.
Maintain Control Of Your Budget By Watching Out for These Mistakes.
Problem: You Delay Your Monthly Budget
Budgets are fluid and change from month to month. You can’t make your budget in February and expect it to be exactly the same in March. Failure to plan in advance raises your risk of missing something important, leaving you in a lurch if you don’t have enough set aside for a special expense.
Solution: Schedule a day where you’ll sit down and create a budget for the following month, preferably at least a week in advance. Be sure to review your calendar to make sure you aren’t surprised by birthdays, anniversaries, or other special events that may warrant extra spending.
Problem: Small Spending
It’s the little things in life that really add up, right? The same is true when it comes to spending. You may think that $5 cup of coffee is a small expense, but if you’re stopping everyday before work you could end up spending well over $100 per month. The occasional nail salon appointment, bottle of wine for a special occasion, spur-of-the-moment trip to the movies with friends or a quick trip to the local burger joint can really add up and blow your budget out of proportion.
Solution: Track all of your expenses every month. Consider each when you sit down to plan your budget for the following month. Where did you spend more than expected? Do you need to cut something out to make sure you aren’t overspending; or do you have room to move some money around and keep things more realistic?
Problem: Emergency Fund
As in, you don’t have an emergency fund. Planning for the unexpected is critical to financial wellness. An oil change for your car may cost $20, but a water pump or alternator may cost hundreds. Your mower could stop working the next time you go out to cut the grass. What happens if your home’s air conditioner stops working in the middle of July?
Solution: There should be a line item in every budget for emergency expenses — no exceptions. This will keep you from putting unplanned costs on high-interest credit cards. Don’t compare the size of your emergency fund to anyone else’s. Just make sure you start one so you have what you need to handle the situation calmly if something does come up.
Problem: Unrealistic Goals
It’s pretty common to set big goals, especially around the New Year. Are the financial goals you set for yourself still working, or are they causing stress? For example, did you allocate a little too much money for paying extra towards debt when you really should have considered purchasing a renter’s insurance policy? Are you setting a realistic amount aside for food or entertainment or are you subsisting on Ramen noodles and Netflix?
Solution: It’s okay to adjust your budget to make it more realistic. Change doesn’t mean you can’t still work towards your savings or debt goals. Make the modifications necessary to allow a more comfortable life.
Problem: You Never Adjust Your Bills
A lot of our expenses are the same, or at least similar, each month. How often do you look at each line item and consider whether or not it can be negotiated or decreased? A lot of your creditors and service providers depend on you being too comfortable, or apathetic, to question what you’re paying each month.
Solution: Choose one expense each month to question. For example, call your cable provider to find out if there are better packages available; or call other companies for rate comparisons. Is your car insurance coming up for renewal? Shop around — those “customer loyalty” discounts aren’t always as great as you’ve been led to believe. Take it a bill at a time and you’ll be surprised at how much you can slash from your budget.
Remember, you are in control of your budget. It’s a living tool that needs to evolve with you as you move through life.
~Here’s to your success.