Budgeting shouldn’t be too hard, right? In fact, most Australians do this regularly, and it is a technique that can have some impressive results. Still, many people are disappointed after creating a budget and give up on this idea. Generally speaking, there are a few mistakes that can lead to failure, and once you can no longer respect your budget, you may consider it useless or feel frustrated that you spend too much regularly.
Building a budget that is too strict
If you ever made this mistake, you surely remember the excitement of creating a budget, and then, the disappointment you had when not being able to follow it.
The feeling that you finally got your finances in order and started a budget is tricky because you can be easily tempted to go with an unrealistic budget. After a while of struggling with such a budget, you get to feel restricted, and the natural impulse is to spend more.
What you have to do in order to avoid this mistake is to think about the things you like, not only those you need. In other words, besides the bills you need to pay monthly and other similar expenses, also consider your hobbies or activities that relax you. The amount of “fun money” doesn’t have to be impressive, but it has to exist. Otherwise, you may end up frustrated, or you may spend much more than usual on these activities, because you need them, too.
Creating a budget without setting a goal
If you start budgeting without an actual purpose, you will find it way too difficult to stick with your budget. Think about the reasons you want to spend some money. For instance, if you wish to spare money for your education, build a budget with this purpose in your mind. This also works for those who are in debt, too. For example, if you are in this situation, you will undoubtedly find it convenient to create a budget now and allow yourself only a certain amount of money for several activities, in order to get rid of your debt sooner.
Not considering irregular expenses
When budgeting, many Aussies take into consideration only the monthly costs. But you don’t have to pay for your holiday or car insurance every month, do you? Therefore, how can you avoid being short of money or not respecting the budget when dealing with such an expense? One way to do this is to think about those quarterly or annual expenses when planning your budget. Some of them seem random, but, in fact, they are very predictable, such as school supplies, web hosting cost, yearly pet vaccination, oil changes and car maintenance.