If you have a budget you are off to a good start in taking control of your finances. According to a recent Gallup poll, only just over a third of the American population put together and track a budget each month, with just under a third of the population laying out long term savings and investment goals. So the good news is that you are ahead of the curve already keeping a budget, but it is an evolving process, working month after month to continue to widen the gap between money coming in and going out, leaving more left over for savings and important necessary household purchases. If you find your budget falling short, here are a few things to look out for in your failing budget.
Reduce Impulse Purchases
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What good is a budget if you are not going to stick to it. Budgets are supposed to help you reduce unnecessary spending, not eliminate all together, so how about reducing impulse purchases first before you say “what fun is there in that”. Try sticking to a list when shopping, and if there are purchases you are quickly trying to make, take a step back and think about it for a few days or a week, and see if you still want it, and start to budget for it.
Forgetting to Budget for Non-Monthly Bills & Expenses
If you have included all of your expenses into your budget you are on the right track, but you will be caught off guard when the quarterly water bill comes in if you have not budgeted to have the funds available. If you make tax payments and insurance premium payments when they are due instead of monthly, then those should be budgeted for as well. Co-pay’s from doctor’s office visits and medical bills to hit yearly deductibles should be figured in, as well as regular auto maintenance. If you don’t sock away some extra funds for a rainy day you will find yourself drawing on credit and going into debt.
Neglecting Savings Account
Even if you have a successful budget in that the money going out never succeeds what is coming in is a great start, there is no addition of debt, but you need to be contributing to savings accounts. Take a look at your expenses each month and look to reduce unnecessary spending and use the excess to deposit into a savings account, as that is important to secure your financial future as you hit retirement age.