Budget mistakes: How loopholes cost you dearly

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By: sanderspatricia29
on 21st Jul,2015

Don't get overwhelmed by the gorgeous arrival of autumn with bunches of festival and holidays.
Budget mistakes: How loopholes cost you dearly

Don't get overwhelmed by the gorgeous arrival of autumn with bunches of festivals and holidays. Try to manage some time to evaluate your budget and avoid money mistakes. Making a budget and sticking to it is one of the solutions you can opt for. However, making a budget is not as easy as it sounds. Budgeting is not only writing down a few bills, the grocery payments and the mortgage payments. You must try and avoid the common mistakes that people make while formulating a budget.

Mistake 1: Underestimating your expenses

Sometimes knowing exactly how much you spend becomes very difficult. You may underestimate the amount of money that you spend. You may not even realizing it and spend more. The best way you can make a proper budget is by keeping track of every single penny you spend. Try to get a notebook that you can carry along with you everywhere you go, and keep a note of everything you spend. Even if the amount is insignificant, it should be noted down in your notebook. You must also make sure that all the members of your family do this. They must all record very minute details of their expenses. This is to be done so that you can estimate precisely what your expenses are.

Mistake 2: Not having a plan

You must ask yourself why you want to make the budget. There could be many reasons why you want to make a budget. It could be because you are living beyond your means and want to control your expenses before you get into serious money troubles. It could also be because you want to plan for your future and save enough to have your future secured. Asking yourself this question is very important because once you have a strong reason to make the budget, the reason will motivate you to stick to it.

Mistake 3: Only sticking to the basics

Some items appear on all budgets, they are called the basics. They include mortgage or rent payments, grocery bills and utility bills. One very common mistake that you may tend to make is ignoring the basics. There are many other categories that you should try and include. Some categories that are commonly forgotten and must be included are entertainment, allowances, medications, kids, gifts, etc. Skipping these categories may cause your budget to become very ineffective as it will not have many necessary details.

Mistake 4: Making a very restrictive budget

If your budget is very restrictive, you will not be able to follow it for very long. Try to make a realistic budget which you can stick to. If you want to spend less, then make a budget that makes you cut back gradually from your expenses.

Apart from the above points, you may implement some realistic methods while creating a budget. Remember, a small amount of money with careful budgeting can help you lead a stress free financial life.

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