We all start out with the best intentions. We make a vow to ourselves that this time we will stick to the budget and save money, pay off debt or save up for that trip to the Caribbean. But something always causes us to go astray. Learn what the 3 big budget busters are and how to avoid them so they don’t ruin your budget.
Budget Busters and How to Avoid Them
Budget Buster #1 – Emergency Unpreparedness
Emergencies WILL come up – like right after you set up your budget and forget to include a category for unexpected emergencies. Make certain that you set aside a certain amount of money monthly for unexpected emergency expenses. The last thing you want to rely on is a credit card. Especially if you are not in the habit of paying off the balance monthly. How much you put into this category depends on you. Do you drive an older car and feel car repairs are in the near future? If you are a pet owner, impromptu vet visits are more than likely to happen. Take all of this into consideration when setting up your budget and make certain that you put a sufficient amount into your “Emergency” budget category.
SOLUTION: Take a certain amount of each paycheck and put it into an “Emergency Reserve” category. Hopefully, you will be lucky enough to keep the emergency monster away. If this is the case, you will have a nice reserve built up in your “Emergency” category. If you feel the money saved is enough to cover ALL your unexpected expenses should they occur all at once – you can continue to add to it or reduce the amount that you contribute to it. Or allocate the money to another category all together. Remember it’s always better to have more money than less money in your emergency cash reserve.
Budget Buster #2 – Instant Gratification
You are smart enough to have an “Eating Out” category in your budget…….but you know ordering Chinese will put you over-budget again.
You have a “Christmas” category in your budget……but instead of contributing to that category you use the money to buy shoes again.
You have a small category for “Entertainment” in your budget …….but you decide to upgrade Hulu, Netflix and Cable anyway.
Adults can be like children and get a case of the give-mes. But instant gratification will never get you to financial stability. When you feel like throwing your budget out the window ask yourself: “Will buying [you fill in the blank] get me to where I want to be? I assure you that buying those shoes you covet now or adding more premium cable channels to your bill will not help you pad your IRA any quicker.
SOLUTION: Remember the big picture. You put yourself on a budget in the first place because you want more for yourself and/or your family. Stay on the path to financial freedom. Know that whatever you are coveting at this moment will go on sale later or you may not even want in a couple of weeks. Whatever you are “needing” at the moment will not help contribute to your financial freedom.
Budget Buster #3 – Don’t Jump the Gun
Become an expert and learn when certain items that you continually buy go on sale. For example, don’t wait to buy an air conditioner in July or a snowblower in January. Plan for it. We keep a category in our budget for “Future Purchases”. As soon as school ends for the year, I start contributing $50 every paycheck to a “back to school” budget envelope.
Even certain food items have great price reductions at certain times of the year. Learn to stock up on baking goods in the fall, dietetic meals in January, ham and pork around Easter, etc.
SOLUTION: Do a mental dump of items that you continually buy over the course of the year. If you give food gifts during the holiday season or do a lot of baking throughout the year, keep an eye out for sales on baking items. Sales for these items begin around October. To be even more economical, keep your eye out for internet coupons to print on these items to save more money. For more insight on how we save tons every week on groceries, read my posts here and here.
Teach yourself to know when bigger ticket items go on sale throughout the year as well. Items like electronics, televisions, tools and paint all have particular months where they are extremely cheap. Keep this list handy for reference so you don’t jump the gun and purchase items at times when they are most expensive.
What do you find is your big budget buster? How have you learned to avoid it? Let us know.