If you don’t have a budget, then that is your very first mistake. However, we won’t be discussing that mistake today. Today, I am hoping that you already have a budget. Even if you already have a budget, you may be making other mistakes that you are unaware of.
Small budget mistakes or just overlooking parts of your budget can drastically affect your finances.
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Continue reading below and see if you are making any of the budget mistakes below:
You don’t include retirement.
Your budget shouldn’t only be created to track your spending and fix your spending. Your budget should also be created so that you can save more money and save for retirement as well.
You should always have a line item for retirement in your budget. Better yet, always save for retirement first by paying yourself first. This means whenever you get paid, set aside money right away for your retirement fund. This forces you to save for yourself since technically it is the most important thing to do in your life.
You don’t count entertainment spending.
Your budget should always be realistic. This means that you should always include entertainment spending when making a budget. Too many people skip this part and don’t include entertainment spending or a realistic estimate of their entertainment spending because they don’t think it should be included in their budget.
That is false.
99.99% of people spend something on entertainment spending so pretending that you spend nothing on it does not make it real.
You don’t track your income and expenses correctly.
Tracking your income and expenses correctly is a big NEED when it comes to budgeting correctly.
To track your income correctly, you need to have a realistic idea of what your income is. This means being realistic with whether your income amount is before or after taxes, you should be realistic with this amount. Your income needs to have a realistic amount of taxes in relation to it, as many people estimate their taxes incorrectly. Also, your income should be the correct amount. If you are paid bi-weekly, your income will be different then someone who is paid bi-monthly, even if your annual salaries are the exact same. This is an area that many people make a mistake in.
To track your expenses correctly, this means that you should include all expenses that you have. You should go over your spending over the past few months and include EVERYTHING. Don’t just create a fake budget with spending amounts that detail where you would like to be. Instead, include your actual spending amounts. That is the only way you will ever solve your spending problems.
Skipping an emergency fund.
If you have a budget, then that is great. However, you should always make sure you have an emergency fund as well. An emergency fund is something that I always highly recommend because it can help you manage unexpected expenses that pop up in your life a little bit easier.
What budget mistakes have you made in the past?
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