Are you making these common budgeting mistakes?
1/Not having a budget.
Let’s be honest, the term ‘budgeting’ in general has a bad rep. Most people don’t have a budget based on one of these common misconceptions:
- It’s going to be too restrictive and deprive you of the finer things in life
- Budgeting is only for people that are ‘bad with money’, ‘broke people’ or people on lower incomes or struggling
- You should only use a budget for periods when you are doing terrible with money or struggling to pay the bills
- It’s something that takes way too much effort or too much time
The solution? Switch up your mindset about budgeting. I personally like to compare it to brushing your teeth. You (hopefully!) don’t only do it when you have a tooth ache, because then it’s way too late to course correct. It’s something you do daily to maintain your oral health. Likewise, budgeting can be thought of as a maintenance routine (I personally like to create a new budget everything month) so that you keep on top of your financial health, not something you only do when shit hits the fan or only when money is really stressing you out.
Don’t know where to start? Grab your free copy of my budget template here
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2/ Illusion of Precision
Because we are working with numbers, many people feel the pressure to get every single number write or stick to their budget ‘perfectly’. This either seems way to daunting so they don’t even end up starting, or alternatively if they give it a go and realise that they can’t stick to it 100%, then they get frustrated and give up.
Reality check - I have been budgeting monthly for over 7 years now and I never get my budget perfect, ever!!! And I am totally down with that because I can still smash out my goals and enjoy spending my money on the things I value and in the end that’s the only thing that matters.
The solution? Embrace progress over perfection! Make sure to have a buffer in your budget – if you are doing it for the first time have an even bigger buffer as you will probably have forgotten about a few small expenses here and there. For things that are variable (e.g. petrol, electricity, groceries): round up in the beginning.
3/ Being too strict
Like a fad diet, some find themselves excited about hitting their financial goals but then get wayyyyy to strict with their first budget and end up giving up (possibly finding themselves binge spending afterwards too!).
The solution? Get real with yourself and focus on making small but long lasting changes. Real life example: if you have been spending $1000 a month on eating out, dropping to $200 straight away will be super difficult and cause you to give up or you most likely will spend more than this and decide that ‘budgeting' doesn’t work’. Instead, work your way down slowly - say cut it down to $900 in the first month, then $800 in the second….. (you get the gist).
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4/ Not allowing for fun or spontaneity
Are you someone that likes to say yes to a spontaneous girls or boys weekend away and don’t want a budget putting a spot to this? I got you! Sounds a bit counter intuitive but budget for it! It’s much better for future you than putting it on the credit card.
The solution: put a certain amount away each month into a ‘fun spontaneous things account’ where you can say yes to that last minute trip away or that cute top that you forgot to budget for as long as you have the money ready to go in your account.
