A really great budget requires a lot of time to put in place. For most people, it takes months of fine tuning in order to establish a budget that is both realistic and doable. If you’re in the process of setting up a budget of your own, here are a few common mistakes you’ll want to avoid.

Having No Budget

Can you believe there are people walking around this earth who don’t have a budget? If you’re one of those people, it’s time to change that ASAP. The problem with having no budget is that you earn a paycheck and then have no idea where it goes. There’s no real tracking, self-control or accountability in the process at all. When you work hard to earn your money, you want to make sure you know where it goes every month. Start by writing out your monthly expenses and work to create a budget that works for you. Remember to make adjustments as needed until you get it right!

No Emergency Savings

change jars

If there’s one thing we know about life, it’s that emergencies pop up. Don’t let them catch you off guard. An article written by Andrew Swinney for kasasa.com further explains, “Emergencies and the resulting surprise expenses are an unavoidable part of life. The only way to prepare for the unknown is to acknowledge that things happen and to build up of a financial cushion.”

How much of a cushion does a person need? The above mentioned articles goes on to say, “The general recommendation for an emergency fund is that it is large enough to cover three to six months of your total living expenses. Coming up with that amount all at once is hard, so set up a monthly contribution. Any month you don’t need to use it will be an addition to that fund.”

No Room for Fun

One of the most common budgeting mistakes people make is failing to allocate money to have fun. It’s unrealistic to think you can go month to month without setting any money aside for yourself. Even when money is tight, try to set aside a small amount each month.

Forgetting about Semi- Regular or Annual Expenses

holiday budget

It’s hard to remember all of the random expenses that aren’t part of your standard monthly budget. For example, that Amazon Prime membership is billed out once a year. Did you save money for it throughout the last 12 months? Your car registration is another example because it has to be done annually as well. If you have expenses of this nature, try to create a master list that houses all of them. You could also write them in your calendar as a reminder that the money is due soon. Having all of these expenses listed out will help you avoid surprises when it comes to your budget.

Don’t make these common budgeting mistakes. Instead, work to create a budget that will help you achieve your financial goals.

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