Tiffany Raiford
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I already blew my Christmas shopping budget; and I’m ashamed. It turns out that in order for my holiday shopping budget to work out successfully, I have to actually create a budget. You see, I make the most basic mistakes when it comes to budgeting. My great intentions do not make for great success without laying any actual plans, making goals and actually budgeting. Perhaps this makes me someone you think you probably do not want to listen to when it comes to budgeting, but that’s not entirely accurate. I might fail to do it in my own home in most instances, but I know more about budgeting than you might think; I’m just lazy. All laziness aside, here are some of the most amazingly common budgeting mistakes people make, and precisely how you can avoid making them.
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Putting if Off
Most people are ready to make a budget, but they keep putting it off. This is my big mistake; I will, I will – and I don’t. The best way to fix this problem is to just sit down and create a budget. Sit down and do it. If you cannot sit down right now, schedule some time in your calendar. Give yourself an hour during the next available slot of time and write it down. There; now it is part of your schedule and you have no choice but to make it happen.
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Making it Too Tight
Listen, we all want to give up spending $5 a day on a latte from Starbucks if for no other reason than the fact that it’s like 7,000 calories and we don’t want to exercise more than we already do. However, sometimes we have to splurge. That means you have to make room in your budget for extras, like that coffee when you’re running late or feeling the urge. When your budget is so tight you have no room for fun, it’s very easy to get off track. Give yourself a “just for fun,” allowance and let it go.
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Not Making Rules
All budgets need rules, so make them. My husband and I have a basic rule that no one is allowed to spend more than $1,000 on an item without first checking with the other to make sure it is all right. It’s a big number, but we never use it. It’s sort of just a rule that we put in place so no one would go out and redecorate our home or make some sort of huge purchase for our home or our lives without the knowledge of the other party.
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Not Being Realistic
Let’s say you are going through your budget and you realize you spend $1,500 per month at Nordstrom. Deciding right then and there that you will no longer do this is not going to work out for you. You have to be realistic, so you have to budget for your needs. You spend $1,500 a month at Nordstrom for a reason and cutting it out cold turkey will never work. Instead, lower the budget a bit at a time and get used to that until you are where you need to be.
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Not Making a Goal
Why do you go to college? Why do you get married? Why do you buy a house? You do all these things for a reason; and that’s your goal. You go to school with the goal of getting a great job with that diploma, and you get married with the goal of living happily ever after with your spouse and you buy a house so you can have a home. If you budget without a goal, what’s the point? Here are a few goals for you; to save for an emergency account, to save for retirement, a house, a vacation, babies, whatever; just make a goal.
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Forgetting to Add in Incidentals
In a perfect world, I’d spend $1,017 on my mortgage, $219 on my car and life insurance, $111 on our cell phone plan, $180 on DirecTV, $52 on our home security system and $73 on our internet bill each month (I do not include retirement and health insurance since that all comes out of my husband’s checks before we ever see them so they really don’t count in my mind). That’s like $1652 a month. Sounds more than a little doable since we like to buy cars and not have payments, right? Well, what about our kids’ school? What about incidentals like that time I went in for an oil change on my giant SUV and was told that even though my car is only 18 months old it needed four new tires and I ended up paying $1500? Or vacations and gas and groceries and diapers and co-pays and entertainment and donations at church and tithing and our kids’ school needs and clothes and things? Now my budget is like $5,000 per month, so don’t forget those things.
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Forgetting to Expect the Unexpected
I was not expecting to spend $600 to save the life of my cat last year two days before Christmas when a dog attacked him, but I had no choice. I was not expecting to spend $900 in car repairs on my brand new SUV earlier this year after paying for a subpar oil change when I had no time to go to the dealer meant they put subpar oil in my car and literally destroyed a bunch of stuff in there. I did not expect my kids’ teacher to send home a note asking for $100 to adopt her class to help provide school supplies to the kids whose parents did not or could not. That’s why we have to save – and that savings has to be in the budget.
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Forgetting Infrequent Expenses
One thing that I am guilty of doing is always forgetting to include infrequent expenses into my thought process. I don’t budget, but I do have a list of things that have to be paid monthly so that I can check them off and make sure I’m not forgetting anything. I always forget little things like our pest control company, who comes out every other month, and our trash collection, which is quarterly. Don’t forget to add those things into your budget.
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Not Creating an Emergency Fund
We know that emergencies happen, so we have to budget for them. When my husband and I bought this house last year, we were very happy to have an emergency fund when we were spending about $600 a week on things we did not expect, such as septic issues, air conditioning issues and more. Not having an emergency fund for things like this is going to kill your budget.
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Forgetting to Look for Savings
We often forget when budgeting that we can make our budgets smaller by just asking and looking around. You can bundle your insurance policies, ask for a discount on your television plan and eliminate needless features on your cell phone plan and save a bundle. It’s a great way to make your budget work.
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Not Getting the Family in on It
It’s not a good idea to create a budget and then not keep the family in the loop. For example, it’s a good idea to let your spouse know that you are working with a budget now so that he’s not looking to spend money and upsetting you in the process. You need to do it together so that you can make a realistic budget that works for the entire family at all times.
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Not Using Cash
It’s a good concept to use cash when you have a budget. It makes it very simple to stay on track. For example, it’s not uncommon for my husband to spend $100 a week on lunches when he’s at work – and he’s not going anywhere expensive, either – when he’s using his debit card. He doesn’t see it, and $17 or $20 here or there seems like no big deal to him. So, I’ve given him a cash budget for the week – when he’s out, he’s out and that makes it a lot easier to budget.
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Not Tweaking the Budget
When you create a budget for your family, you have to change it as you change. You cannot leave it the same and expect different results. If it’s not working for you, change it. If it’s working well, see if you can make it better. You have the power to tweak your budget at any time, so go for it.
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Not Using Budgeting Apps
I love Mint; it’s amazing. It keeps track of everything and when I finally do get around to making a budget, I’ll already have the entire thing right there for me to see. All I will have to do is look at it and learn it so I can see where my money goes (I know where it goes) and our spending habits. Budgeting apps are a great tool that makes it impossible for you to forget to look at the budget every single day.
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Not Paying Yourself First
There might not be much of a budget in our house, but there is one thing that we always do; we pay ourselves first. I always transfer money to savings as soon as either of us is paid. It’s the most commonly underpaid expense on most people’s budgets, and many people forget to even add it into their budget in the first place. You have to invest in you before you invest in anything else.
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Deflating Lifestyles All at Once
Here’s the problem many people have with their budget; they try to cut back all the excess spending all at once. It’s a great way to fail at budgeting. A better idea is to cut back a little at a time. Go ahead and see if you can cut back on this one month and that the next month. When you pace yourself, it’s far easier to get better results. When you fly into something all at once, it’s difficult to stay on track.
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Depriving Yourself
There are some people who have to budget so closely that there is no room for anything outside the budget. However, if you are someone who has a little bit of room to wiggle, don’t deprive yourself. When you work so hard to do something and you make yourself miserable in the process, it makes life difficult. It also makes you more likely to explode and ruin your budget completely at some point.
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Not Learning to Differentiate Between a Need and a Want
If there was ever something at which I excel, it’s turning a sale into a need. We have a ‘no more gifts for ourselves from Thanksgiving through Christmas,’ rule in our house. However, I just turned that rule to dust when I ordered myself a pair of Tory Burch riding boots after Thanksgiving. My husband was upset because he had them on his list of things to get me for Christmas and I ruined it. However, as I told him, I needed go buy them. These gorgeous $595 boots were on sale for $339 and TB was offering a very short-lived sale in which I received 30% off my total order and I had a $50 thank you and happy birthday gift card from TB after my recent birthday. That meant my boots were only $187.30 – and shipping was free. He explained to me that this is not a need, and I get it; I do. We have to learn the difference.
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Using Credit
When something is not in the budget, do not whip out your credit card. Just put it away and do not use it. If this is too much of a temptation, allow me to suggest you get rid of that card and apply for an Amex charge card that requires you pay it off in full each month no matter what. It’s a great learning card for those who simply cannot stop their impulses.
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Not Taking the Budget Seriously
I feel that I’m guilty of this. We are not living paycheck to paycheck and we have disposable income, so I don’t take budgeting seriously. However, that’s a great way to fail, and it’s something that I have to overcome if I hope to create a very successful budget, which is my New Year’s resolution.
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