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BUDGET MISTAKES
If you are looking to regain control of your finances, budgeting is a great idea. However, setting-up a budget can be one of the most difficult things to do. Not only will you have to change your spending habits, you'll still need to find a way to live your life. Featured below are some common mistakes people make when developing a budget.

Cutting out entertainment
Every budget should have some sort of entertainment factored in. The trick is determining how much. Try and determine how much you currently spend on going out. If the amount you spend is greater than 15% of your total budget, it's too much. You will need to re-evaluate how you are spending your money on recreational activities. However, don't make the mistake of eliminating fun all together, otherwise your budgeting plan will definitely not work.

Not saving regularly
When it comes to managing your money, slow and steady wins the race. Automatic payroll deductions should be utilized once you determine how much money you can contribute towards long and short-term savings every month. This will allow you be to consistent with your saving contributions. By putting away $200/month earning 5% interest can earn you around $15,000 in five years.

Abusing debit cards
Debit cards give people the false sense of free-spending. Allocate a set amount of cash for purchases during the month, or week. Utilizing a firm cash-only plan will put your spending behaviors in perspective. It will also help you avoid making the mistake of impulse shopping.

Paying only the minimums on your credit cards
Carrying a credit card balance is like throwing money into the wind. Making only the minimum payments will result you in paying thousands of dollars in interest fees, taking you years to pay off your balance. This money can be used for contributions towards savings. Pay off your balances as soon you can by sending as much money to your credit card issuers every month. Use the credit card calculator to see how long it will take and how much it will cost when paying only the minimum on your credit cards. Get more info on eliminating credit card debt.

Not having any money put aside for unanticipated emergencies
If you have no money saved for emergency situations, you are risking the chance of financial ruin if you ever get sick or hurt and can not work, or if you lose your job. A rule of thumb is to save 3 - 6 months worth of living expenses in a high interest savings account. Individuals that are self-employed or work in an industry with a high turnover rate should look to have a year's worth saved.

Spending more money than you bring home
The number one rule of budgeting is living within your means. Unfortunately, this is easier said than done. The best way to learn to live with less is to change your idea about spending. Learning how to avoid buying on impulse is the most important aspect you can change. Also, do things like going on vacation unless you have the money in the bank. If you take a holiday, learn what you can do to avoid vacation debt.

Related Reading:
-Dealing with a Financial Emergency


 

 

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Managing Money Info: Financial Strategies | Financial Emergencies | Money Issues | Allowances
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Cut Grocery Store Costs | Avoid Wasting | Why You Should Budget | Developing a Plan
Mistakes to Avoid | Money Spending Challenge | Checking Accounts Money

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