Budgeting Mistake: No Emergency Fund
An emergency fund is what saves your budget when you have to pay for a car repair or you need to cover a medical emergency. If you set aside money in your emergency fund, then you will be able to handle the unexpected when the time comes. Your emergency fund makes it easier to deal with the stressful financial situations in your life because you know you have it covered.
Budgeting Mistake: No Fun Money
When you restrict yourself of all fun or entertainment spending, you are more likely to blow your budget. Splurges are okay, but you need to plan for them, put them in your budget each month and stick to the amount that you are going to spend. Otherwise, you may crack and end up spending more than you would have if you hadn’t set up the restrictions in the first place.
Budgeting Mistake: Classifying Wants as Needs
Another mistake that people make is by classifying their wants as needs. When something is classified, as a need, you do not consider cutting back on it as much at first. You can also lump needs and wants into the same category, which can make it harder. For example, food is considered a need, eating out a want. Your basic necessities are needs, food, shelter, and power. Transportation within reason can be a need depending on where you live. Learn more about five common wants that people mistake for necessities.
Budgeting Mistake: Assuming Your Monthly Bills Are Set
Many people look at their monthly bills as a set. For example, your cable and cell phone bill may be the same amount each month. As a result, when looking at your budget, you may not be considering ways that you can decrease the amount that you spend on them. It pays to shop around for everything from insurance to your television provider to your gym membership. You should take time each year to see if you can get a better deal.
Budgeting Mistake: Not Having One
The biggest budgeting mistake is not having one. If you don’t have a budget, you are likely living in between financial crises. You aren’t saving for the future and just floating along, while you may be able to get by, you are not going to move forward. Take the time to set up your budget today.
This article was taken from: https://www.thebalance.com/biggest-budgeting-mistakes-2385610
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