11 Budget Planning Mistakes to Avoid
11 budget planning mistakes to avoid. Budget planning is something that many people don’t really like.
Now that we’ve decided this, let’s also state that no matter
how much we hate them, we have to do them anyways if we want a stable financial
health because no amount of money is enough in the current economic situation
and upwards trends in inflation, we shouldn’t ignore them.
Let’s put forward some of the worst budgeting blunders that
anyone could ever do. 11 budget planning mistakes to avoid:
1. No Budget Planning At All!
The strategy of having not planning a budget at all is set
towards doom. If you don’t plan it or write it down, how will you keep track?
You don’t have a photographic memory that you will end up remembering all what
you’ve spent, unless you’re Sheldon Cooper.
2. Short Term Planning
Not planning for yearly expenses is also sure to let you
down. So if your budget planning is monthly and you are completely short
sighted, you will most probably lose track of annual payments such as insurance
or taxes.
3. Spending More Than You Earn
Properly planned budget can sometimes leave you blind to
your spending pattern, if you do it erroneously.
If you earn $38000 a year and end up spending $42000, where
is the extra $4000 going to come from? Ever wondered? This is where you start
going towards the debt alley and it really dark there.
Read Also: 7 Ways to Get Outside Of Debt and Commence To Live Debt Autonomous Of Charge of charge
4. Little Savings
Just having little savings is also a blunder. What’s the
point of keeping a budget if you don’t plan to save? Budgeting should be done
in a way to maximize your savings so that you can save up for that trip or that
new car, or that credit card repayment plan you had in mind.
5. Neglecting Emergency Funds
You can never know what is going to happen. Expect the
unexpected while making a budget. Keeping some money aside for contingencies
can greatly help if some calamity does come your way. See how to start an
emergency fund here.
6. Not Tracking Past Expenses
Your past spending pattern is really precious to you when
doing budget planning. How often your car went to repair last year can greatly
influence your decision to keep it or to let it go in order to avoid more
expenses on something already going down the drain.
7. Small items? What small items?
Small items add up like small drops and suck a whole bucket
out of your savings. $3 twice a day on a work day on a cup of latte can mean
$120 every month, just like that! See how these little things matter after some
time.
8. Never Adjusting Your Budget Planner
The inflation rates, your financial state, in fact nothing
remains constant. The only thing constant in life is change itself. The way
your financial state can change, your budget has to change too. Not doing it is
a surely a mistake.
9. Not Accounting For Interest
Neglecting interest rates on your car loan, or your credit
card can greatly cause a money shortfall. Interest rates, when you know them,
can greatly make you aware of how much you’re paying to borrow and can be a
discouraging element to borrow as well.
10. Relying On Bank and Credit Card Statements
They can go wrong! Never put all your eggs in one basket.
Keep receipts to keep a check on your finances and keep checking those
statements for any errors because no matter how good they are, they do make
mistakes as well.
11. Not Keeping a Check on Your Account
If you don’t see how much your bank charges you for every
checkbook or every withdrawal you make, you are sure to lose track of your
savings. Also, keep a basal line of around $100, and avoid using money from
your bank account after you reach that point to avoid charges or to see $0 in
your account.
Are there any additional budget planning mistakes according
to your experiences? Please let us know in the comments section below. (*)
