Budgeting Mistakes that are Easy to Make

Hopefully by now in the second month of the new year, you’ve mapped out your monthly budget and expenses. If not, get started here ASAP.

Once your budget is set, it’s definitely not always foolproof. Here are a few categories in which you might forget to include in your budget, and a couple mistakes that are easy to make so you can be sure to avoid them.

Are you really ready for anything? Did you remember to include an emergency fund when you created your annual budget? If not, this is a big category you don’t want to forget about. If you have an unexpected emergency and you have no emergency savings account back-up, you’ll either be taking money out of other accounts you shouldn’t be touching or racking up debt on your credit card. Either way, it’s going to put a major dent in your budget. If you don’t have an emergency fund, start one as soon as possible.

Do you keep guessing about monthly bills? If you have utility or other bills that vary from month to month, you may have to guess what they may be when you are setting up your monthly budget. When you are estimating bills that change each month, be sure you factor in a number that’s higher than you think it would normally be. This way you won’t short change yourself and you can be prepared for anything that comes up.

Your budget won’t always be fully complete. Most likely, things are going to pop up for the month like a spur of the moment dinner out with friends, or that family member’s birthday gift you forgot to include when you initially crafted your budget. Things like this can really add up on a monthly basis though, if you forget to include them. At the start of each month, sit down and look at all the dates on the calendar for the month ahead. Think about who might have a birthday coming up, if there’s a weekend outing, and so forth. Factor in as many expenses as you can, and if you have a little leftover – give yourself a bit of a buffer just in case anything comes up last minute so that you won’t have to use your credit card.

Don’t forget about annual fees. Look back over what you spent last year if you can. Do you have a credit card with an annual fee, or maybe a gym membership, insurance policy, or warehouse shopping club annual fee? Jot them all down and take note of any annual fees that might be due. Plan ahead and try to set the money aside so you know you are covered when the bill comes in.

Like anything, there is a learning curve when you are first getting used to doing something like creating a monthly budget. Give yourself a bit of wiggle room and if you make a mistake, try to get back on track for the next month.

In addition to our budgeting guidebook above, also check out our online fillable PDF budgeting worksheet here. Come back each month and fill it out for the upcoming weeks ahead!

Article Source: John Pettit for CUInsight.com

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