The Most Common Ways a Personal Budget Fails

Common Personal Budget Mistakes

Common Personal Budget Mistakes

Sticking with a personal budget can be tough. To gain control of your finances, you will have to make major changes to your spending habits and lifestyle. Some budgets are doomed to fail, because of poor planning or unrealistic expectations. Here are the most common ways that a personal budget can fail!

Bad Maths

If you miscalculate your total income or completely forget to add certain bills to your budget, it will fail.  After you create your budget, continue to come back to it and add or remove expenses and income.  Double check your figures and spend a few days creating your budget.  Take your time and try to think about every aspect of your financial life, including the unexpected events.

Unrealistic Budget Expectations

Many people attempt to do too much when creating their budget.  They set some expenses far too low or expect a sudden dramatic lifestyle change.  It is usually better to make continual improvements instead of massive sweeping changes to your spending.

Not Including the Irregular Bills

Some people formulate their budget without including bills that come in rarely.  You may have an expensive water filter that requires a $200 cartridge once every year.  Your car may require it’s tires be replaced once every 5 years.  Your car battery might need to be replaced every 4 years.  These kinds of bills are often difficult to foresee, but you should do your best to do so.  These irregular bills can throw an entire budget off track when they come in close together.

The Budget is Too Tight

Like a pair of jeans that you can barely squeeze into, a budget can be too tight!  You should leave free cash to deal with unexpected expenses or for when you just slack off.  No one is perfect, you might have a bad week and need to get away on the weekend.  Leave enough room so you can afford to make the occasional unexpected purchasing decision.

You Haven’t Attached Goals and Rewards

All budgets must have overarching goals and rewards attached to them, for long term success.  What do you hope to achieve with the budget?  Are you saving for a house or a new car?  What is the reward at the end of the process.  If possible, attach incremental rewards to your budget to help motivate yourself.

You Haven’t Used the Available Tools

To maximize the chances of having a successful budget, you should make use of available tools.  There are various software platforms which can help you automate the bill paying process.  Simply forgetting to pay your bills is a common mistake.  You can also use software on your phone to help manage your budget and daily spending.  Find the best personal finance tools and use them as much as possible.

You Stop Having Fun

A budget will not work in the long run if it eliminates fun from your life.  Make sure your budget has a decent amount of money for leisure activities, but save money where you can.  Also, look for fun activities that are cheap. Instead of spending big at restaurants, put some money aside to start a vege garden and share your fresh food with friends.

Not Prioritizing Expenses

Some bills are more important than others.  Pay off debts that have high interest rates attached to them quickly.  Make sure you give attention to debts that have penalties attached to them.  Make sure you pay utilities before spending money on items that are optional.  Always think about spending priorities and squeezing the most out of your income.

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