Budgeting
Common Budget Busters
Page 5 of 12
Forgetting about annual expenses.
Don’t forget about expenses that occur on an annual or bi-annual basis, like auto insurance, home insurance, property taxes, tuition and homeowner association fees. Divide these costs by 12 to get a monthly figure and stash this amount in savings until it’s time to pay the bill.
Neglecting the emergency fund.
Nothing ruins a spending plan quicker than a flat tire or a broken refrigerator. Be sure to start an emergency fund to cover unexpected expenses that would otherwise find their way onto a credit card. Experts recommend saving 10% of your income each month until you have enough money to cover three to six months of expenses. If that seems impossible right now, stash at least $1,000, which should be enough to cover a minor issue. Since an emergency is never planned, put your money somewhere easily accessible, like an interest-bearing savings account or money market account.
Cutting out entertainment.
Don’t make your spending plan so strict that you can’t eat out, go see a movie or spend a night out on the town with your friends. Just as you’re likely to give up on a broccoli and cauliflower only diet, you’ll be saying bye-bye in no time to a budget that doesn’t allow for some fun and flexibility.
Giving up too easily.
So, you blew the budget within three days and you gave up, thinking this spending plan thing isn’t for you. Wrong! It is for you; you just haven’t found what works for your lifestyle. It’s okay to fail. In fact, it’ll probably happen more than once! Find out what happened, figure out how it could have been handled better, adjust your strategy and try again.
