The liberating feeling of going for a hike or spending a week in the woods, for many, promptly ends when we return to our daily life and are bombarded with the stresses of work and keeping up with our finances. Financial concerns are among the most common concerns people of all ages face today. Many individuals struggle with debt, and others feel that they simply never have enough money to get by from month to month. The fact is that many of these common concerns stem from common budgeting mistakes that most people make. By identifying them, you may be able to curb your behavior to enjoy a more relaxed financial situation. And that means you’ll have more money to spend on the things you truly love, like getting outside, and that you’ll be able to fully enjoy your adventures, stress free. By mastering these 10 budgeting mistakes, you can bring some of the serenity you feel from hiking back into your daily routine.
1. Failing to Make a Budget
While some people do have a budget, others have never prepared one. Even if you have prepared a budget, you may be one of the many individuals who have not updated your budget in months or years. Expenses and income can change, so it is imperative that you always have an accurate working budget on hand.
2. Not Reviewing Your Budget Regularly
Some people will actually develop a budget, but many fail to use it. This is a beneficial financial tool that essentially can help you to make important financial decisions. If you do not review your budget on at least a weekly basis, you are not properly using it.
3. Forgetting the Non-Monthly Expenses
When you do prepare your budget, it is important to keep in mind that not every “regular” expense is a monthly expense. For example, your homeowners’ association dues may be paid quarterly. This is a required expense, so you need to account for it in your budget in some fashion. One idea is to prorate quarterly or annual expenses so that you account for a portion of this expense each month.
4. Failing to Leave Wiggle Room for Life’s Little Extras
Many people complain that they are unable to stick to a budget because they are constantly having to deal with little extras, such as appliance repair bills, medical expenses and more. The fact is that these may not be regular monthly bills in your budget, but they are nonetheless expenses that you will have from time to time. You need to find a way to pay for these expenses through your budget, such as by creating a line item for “extras” for a reasonable amount of money each month.
5. Forgetting to Save For a Rainy Day
While you may want to plan for the irregular yet common expenses like medical bills, you also may benefit from saving for a rainy day. After all, you may need a more considerable amount of money on hand if you get laid off, become seriously ill or have another issue. Therefore, consider saving at least a small portion of each paycheck in a rainy day fund. There is a new app called Acorn that can help with this by saving for you.
6. Not Accounting for Your Pay Schedule
Some people struggle with their budget because their expenses are largely monthly, but they may get paid every two weeks. Budgeting might be far more simple if you got paid one time at the first of the month, but this is rarely the case. One idea to account for your pay schedule is to create an on-going budget, specifying which upcoming expenses will be paid with which paycheck. This means that you will regularly be updating your budget, and you may need to project your budget several months into the future for the best results.
7. Failing to Look for Ways to Cut Expenses
Your budget can tell you a lot about your finances, including giving you information about what expenses may be on the high side for your budget. You may review your budget to determine that refinancing a car loan or mortgage or consolidating credit cards is a wise move.
8. Not Planning for the Holidays
It is common for individuals to turn to credit cards to fund holiday purchases. However, you can actually use your budget to save for the holidays. You know that in January that you’ll need to make a large number of gift purchases and other related purchases in December, so consider saving a small amount from each paycheck to be applied toward these purchases.
9. Not Saving for a Vacation
Likewise, you will likely not magically come up with the several thousand dollars needed to pay for a summer vacation. If you plan to go on a vacation, you will need to include this in your budget. You can begin today by estimating the cost of the trip you want to take and determining what portion of each paycheck you need to save to fully fund your trip. Part of your travels should include natural environments such as the national parks. Traveling to a natural environment helps the mind escape from many of the mind numbing tasks that fill our days.
10. Failing to Plan for Seasonal Expenses
Each season will bring different expenses with it. For example, you may need to pay for the kids’ school supplies and clothes in the summer, and you may host a large family gathering that easily costs you several hundred dollars each Thanksgiving. Even Halloween costumes and Easter baskets can cost a small fortune. When you plan for these seasonal expenses, you can rest assured that you will have money on hand for them.
Your budget can be one of your most beneficial financial tools, but this is only true if you use it effectively. Consider how you can make a few changes to overcome these common challenges, and you may find that your budget is truly the beneficial tool that it is intended to be.
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