If you find yourself short of money each month, it is a good idea to make a budget that suits your lifestyle. But many people who make budgets wind up not sticking to them, often because they make common mistakes they may not even be aware of. Your budget doesn’t have to be perfect for it to work, but it pays to be aware of situations that can throw your spending plan off balance.
The skilled and seasoned Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer understand that even the most well-intentioned people can find themselves in a financial hole. We offer a free consultation to evaluate your situation and help you take steps to avoid the kind of blunders that can blow your budget and keep you from reaching your financial goals.
The following are mistakes people commonly make:
- Not Starting Correctly
When you create your first budget, you may not even know where to start in creating the categories, assigning the right amounts to each, and dividing up your paycheck to cover each category, and you may not be realistic about where you can cut expenditures. It is a good idea to track what you are spending for a few months and examine this when you set up the amounts to allocate for each area. If you are being paid weekly, it also helps to divide each paycheck to cover a percentage of each category, instead of paying large amounts, (such as mortgage payments) from one paycheck and then being tight that week.
If you can, save up a month of income before starting, and use that for your budget. Then continue by saving what you are earning this month to pay for next month’s bills.
- Not Setting up Regular Payments for Regular Expenses
Know where your money goes and your true cost-of-living expenses. Start by budgeting for your major regular expenses so you have an idea how much it costs to just maintain the basics each month. It can help to set up automatic payments or a separate account to take care of regularly occurring expenses such as mortgage payments, property taxes, or insurance, so they are taken care of immediately.
- Being Unrealistic and Setting Too Strict Goals
Know yourself – why set a budget that you will never be able to stick to? For example, if you love to go out for lunch, do not totally eliminate eating out. It is better to brown-bag it three times a week and budget enough to allow yourself to eat out the other days, then gradually add another brown-bag day. Allow for some fun stuff, even if it is something small.
- Budgeting With Your Gross Income Instead of Net
It is foolish to think your gross income is what you have to work with. There is a lot that goes out of your gross salary for things like taxes and insurance, so be sure to use your net amount when setting up a budget.
- Not Realizing How Little Expenses Add up
Expensive coffee each day, magazine subscriptions, buying extra clothes and items you do not really need — little expenses add up to big spending. Find ways to curb impulse spending, even if it means leaving money and credit cards home most of the time and making a list and shopping just for what is necessary. And use cash instead of credit cards whenever possible as studies show that you spend more when using plastic instead of cash.
- Not Negotiating Bills
Did you know that you can often negotiate prices for things you may think are non-negotiable, like your gym membership or cable, newspaper, or cell phone bill? Get prices from different providers. Call and speak to a customer service representative and ask if there is a discount or other plan than can save you money. You may even be able to reduce interest rates on credit cards if you have a good payment record, or pay less for appliances at a big-box store. Always shop around to see if you can get a better deal.
- Not Setting Aside Money for Emergencies
Many expenses fluctuate, and emergencies do arise. Put away a set amount of money every month for unforeseen expenses and emergencies like car repairs, as well as for seasonal fluctuations and holiday expenditures, so you can handle the unexpected.
- Not Including Savings
Set aside something for savings each month. If this is hard for you, try tricks like saving all of your change in a jar and depositing that in an account each month. If you have a savings plan at work that takes money out of your salary directly, use it.
- Not Tracking Your Spending
Review your receipts and expenditures on a weekly basis so you can keep better tabs on where your money is going. If you get into the habit of registering a receipt on the day you make the purchase, you will be more aware of how you are spending and avoid spending more than you planned.
- Having Too Many Cards and Financial Accounts
If you have too many credit cards and checking accounts, you can lose track of how you are spending and making payments. Missing payments can create unnecessary late fees and revolving balances and may also damage your credit score.
- Never Updating Your Budget
Income and expenses can change from year to year, so update your budget periodically to see if there are areas where you can cut or increase expenditures.
The experienced Ohio debt-relief attorneys at Fesenmyer Cousino Weinzimmer know it can be hard to budget, but the biggest budgeting mistake is not having one. We offer a free consultation to evaluate your entire financial situation, including your budget. We will examine your income, your debts and your goals and help you find the debt relief solution that works best for you.
To learn more about how our firm can be of assistance, call one of our conveniently located office branches at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) or email for your free consultation so we can help you regain control of your financial situation.