Whenever you talk about getting your finances under control, you’ll be told that you need to make a budget, and it’s true – nothing will help you manage your money better than tracking your income and outgoings, but what happens when you’ve made a budget that you just can’t stick to?
Chances are, if you’re failing to meet your budget requirements, you’re making one or more of these common mistakes:
Your Budget is Too Strict
The main reason why you might find it impossible to stick to a budget is that you have made it too strict. Sure, you might want to save enough money for a property deposit, or to put your kids through college, but if you try to do this by cutting everything fun out of your life, you’re setting yourself up for failure. Give a little leeway in your budget and you’re much more likely to stick with it when you can have a treat or two now and again.
You’re Not Being Realistic
When you draw up a budget, you have it be realistic about what you can and can’t afford. If you allocate too much money to the fun things in life, you’ll soon be living from paycheck to paycheck with no financial security at all. If you fall into this trap, it is worth going back to basics, tracking every dollar you spend on essentials, so that you can see exactly how much money you have left to play with. Then, you can work out how best to allocate your disposable income.
You Aren’t Dealing with Debts
If you have debts, it is important that you tackle them head on before you do anything else. Instead of simply budgeting to make the minimum payments on your credit card, you should make paying off your debts in their entirety a priority, otherwise, the interest will build and build and your budget simply won’t cover the costs of dealing with your debt on top of all your other financial commitments. So, draw up a budget that helps you clear debts as quickly as possible.
If your debt problems get so bad that your credit score suffers, it might also be worth seeing how a credit repair company can help, because should you need credit again in the future, you’ll have access to better interest rates if your credit score is high.
You Don’t Have a Goal
If you are budgeting simply for the sake of it, and you don’t have a goal such as buying a new car, in mind, it is much easier to get off track and start spending money on things you really shouldn’t, which is why you should always have a target in mind to keep you motivated, when you draw up a budget.
You Don’t Have a Cushion
If you base your budget on the lowest possible amount you are likely to spend in a given month, if your electricity bill is a bit more expensive than usual or the dog has to go to the vets, your whole budget will be blown out of the water, and you’ll be knocked off course for a while. To combat this, you should always build a cushion into your budget, which will give you more room for maneuverer.
Do you live on a budget? What are your top tips for making it work?