Having a budget is important; we all know that.
It plays an essential role in our personal finance as our budget dictates how we spend our money. An excellent budget generally translates to outstanding management of personal finance.
There are a variety of techniques and systems of budgeting. However, they are susceptible to these usual mistakes. These common mistakes will immediately destroy your budget if left unchecked.
Becoming aware of these mistakes alone can help you fix them.
However, it won’t magically make your budget into a perfect one. It is not enough to know; you must take actions accordingly.
Being well-informed about these three common budgeting mistakes will undoubtedly aid you to troubleshoot your budget into an ideal one.
Not recording your budget
Most people are guilty of this usual budgeting mistake. In general, people tend to do their budgeting in their head, committing to memory all of their income and expenses. They do a spreadsheet in their minds instead of recording them down.
Our memory nine times out of ten is faulty. How many times did you fail to remember something even if you remind yourself a hundred times not to forget it?
The point is: we can easily forget something, especially if it seems trivial. Admittedly, it is easier to remember those substantial expenses that we made over those small expenses. However, these little expenses will eventually accumulate.
You can easily devise an ideal budgeting plan if you know how much are your exact income and expenses.
You can record your budget traditionally, by noting and writing them down. Or you could also use programs like Excel to help you keep track of your budget.
Whatever your preferred method may be, record your budget.
Having a very firm budget plan
Most people equate having a strict budget for excellent personal finance management. Afterall, having a firm budget plan ensures that you get to save more money that would later be used for different purposes in the long run.
However, being overly strict to the point of starving yourself just to stick to your budget is downright wrong. It defeats the purpose of budgeting.
Budgeting entails that you have a proper money allocation for different purposes and that includes your food. Starving yourself to save more money is not only limiting, but it could also lead to a severe medical concern.
Not keeping your budget up-to-date
When you record your budget, you have to be consistent. Updating your budget each time will tremendously help you manage your personal finance. It can be tiring at times, but you have to account for those variable expenses that occurred on a specific period of time. Moreover, any expansion in your income be it through: side hustle, part-time job or bonus should also be recorded.
Most people commit the usual mistake of not updating their budget within a particular time period. Keeping your budget updated is of utmost importance, especially if you have a very volatile lifestyle wherein your income and expenses fluctuate from month-to-month.
Consistency is one trait that will help you manage not just your budget, but also your personal finances too.
Michael started with a master’s degree in finance before he went into technology and coding. He is now a freelance journalist and video producer living in Berlin, Germany. When he doesn’t write, he will travel many countries.