There are some common budgeting mistakes I see through answering questions, coaching, or presenting. This is not a post to slight anyone, we all make mistakes, but my hope is to give tips on how to make your budgeting more impactful and useful in accomplishing your financial goals. Here are the top 3 Budgeting Mistakes:
As technology advances the idea of automation enables more convenience which is great! A downside to convenience, in some cases, is it may lead to laziness. This can lead to the budgeting mistake of a template budget.
What is meant by a template budget is using the same outlines budget with no changes each month. This is problematic because most people do not spend (or make) the exact same amount each & every month. Each month has different cost and income, so budget for each month specifically.
Instead, start with a template for your budget and change it to match what you expect to see for the month. This is why the second mistake I have listed is important to overcome, you have to budget at the right time.
2. Budgeting At the Wrong Time
If you spend money throughout the month and at the end of the month put it into a budget form... that's not a budget. Actually, you really wasted your time. I see many people budget at the end of the month for the same month or try to develop a budget in the middle of the month when things are tight. Both of those are the wrong time to budget leading to budgeting mistakes.
The right time to budget is the month before for the month to come. When you budget, you are forecasting what you think you will make and what you think you'll spend for a single month in the future. It's that simple, but takes discipline to build the habit. This leads me to the third most common budgeting mistake I see... a lack of consistency.
3. Lacking Consistency in Budgeting
When you budget one month and things go well then you drop the habit for two months and pick it up again you are budgeting sporadically. This is a huge contributor to budgeting mistakes.
The best way to become great at budgeting is doing it consistently each and every month. Developing the habit until it's second nature. To be honest, if you're new to budgeting, the first three months is hard and it may take hours to budget (especially if your married). But keep the habit going, have a tendency for it, and it will get easier and faster. Plus you'll have a better handle on what the money you're stewarding is doing.
I hope you do not fall victim to these mistakes and see that a budget is a foundational aspect to your financial goals. Once you are budgeting monthly see how your budget aligns with your long term financial goals. Remember have a holistic approach to your personal finances and have your budget be a pillar to that approach. Please choose Faith over Fear for your Finances and avoid budgeting mistakes.
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