Budgeting is crucial to efficient and effective financial management. When we don’t budget, we end up either squandering money or missing out on paying for important and/or time sensitive transactions.
Note that the lack of budgeting is the very reason why the poor remain poor–because they don’t take time to think about what they want and research on how much it will cost.
The question is, how will you know what to spend your money on if you don’t budget? Remember that there is more to living than paying bills. Therefore, take control of your finances and establish budgeting as a mandatory act.
Below are 7 budgeting mistakes to avoid.
Mistake 1:
When you don’t stick to your savings plan, or when you don’t have a savings plan. In order to achieve financial freedom putting away money as savings to either invest or fall back on in hard times, should be part of the game plan. If you don’t budget for your savings, you are basically rendering yourself vulnerable for financial disaster.
Mistake 2:
When you don’t update your budget plan:
It’s important to update your spending plan so that you are aware of what’s going on periodically. Get a note book, or download an app on your phone (www.everyDollar.com is a good one)) and use these tools to periodically update your budget.
Mistake 3:
When you underestimate or overestimate how much you spend: To avoid this mistake evaluate your previous month’s expenses to use as reference for your spending patterns.
Mistake 4:
When you don’t have a budget: When you don’t have a budget how will you know much to save or what to spend on?
Mistake 5:
When you don’t communicate with your spouse or people in your household about your budget standards: This applies if you have a family. You need to let your spouse know about your budgeting plans so that they spend within its limits.
Mistake 6:
When you only budget once in a while: You have to be consistent with your budget plans. It is an ongoing process, and the good news is that it gets easier with time.
Mistake 7:
Lack of budgeting before your payday: Getting money before you create a spending plan can be dangerous. Note that by the time you create the plan, half the money will be gone on expenses that can not wait for you to decide whether you need a budget or not.
Note that budgeting is a healthy financial habit that you should embrace. Doing it right will make all the difference, and having a success infused mindset is the starting point.
Looking to get more organized with your life and finances, check out my book, Do Not Force It, Tap The Good
Dr. Jacinta Mpalyenkana, PHD, MBA is a counselor, transformational coach, corporate trainer, published author and professional speaker. For more about her, please check out http://www.tapthegood.com
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