Do You Make These 9 Budgeting Mistakes?

WE ALL MAKE MISTAKES WITH OUR BUDGETS, EVEN THOSE WHO SEEM TO HAVE IT ALL TOGETHER FINANCIALLY.

Do you make these 9 Budgeting Mistakes?

MISTAKE #1: NOT HAVING A BUDGET AT ALL. Taking the time to sit down and actually make a written budget each month is essential. Like Benjamin Franklin said, IF YOU FAIL TO PLAN, YOU PLAN TO FAIL. I made my first budget this year. Before that, I used to wing it. If I still had money after paying my bills, I would buy whatever I wanted. That was my budget! Before my budget, I’d be in line waiting to spend $199 for the new iPhone 5S.

MISTAKE #1: NOT HAVING A BUDGET AT ALL.

MISTAKE #1: NOT HAVING A BUDGET AT ALL.

MISTAKE #2: HAVING A BUDGET, BUT NOT USING IT. This is my biggest budget mistake! I sit down and write a monthly budget a couple days before each month. I think about what extra expenses I’ll have for the month: birthday gifts, Halloween costumes, football tickets, etc. BUT then halfway through the month, I see something that I really WANT and I buy it. And my whole budget it thrown off! Yesterday I bought Cole Haan shoes for 80% off.  I can always justify spending the money (i.e. It’s for a Christmas party!). But it wasn’t in my budget!

MISTAKE #2: HAVING A BUDGET, BUT NOT USING IT.

MISTAKE #2: HAVING A BUDGET, BUT NOT USING IT.

MISTAKE #3: NOT PLANNING AHEAD FOR AHEAD FOR AN EMERGENCY. Life happens! Before I started my emergency fund this year, every time that my 2004 Chrysler PT Cruiser broke down (which used to be pretty often!), my entire budget was thrown off. Every car repair was a crisis. Now, life is much less stressful with an emergency fund. You can add your emergency fund to your monthly budget and gradually save up to 6 months of your monthly expenses.

MISTAKE #4: MAKING A BUDGET THAT IS TOO STRICT. I listened to Dave Ramsey’s advice of cutting down on grocery expenses by living on “beans and rice” but I took it too far. I stopped buying meats almost entirely. I stopped eating dinner out with friends, ever. I stopped spending ANY extra money. I took extreme measures to become debt free and it worked. BUT in retrospect, living like that wasn’t healthy for me. There should be a healthy balance of living life while still budgeting and saving.

MISTAKE #5: NOT BEING SPECIFIC ENOUGH: It’s important to make a budget that is specific. When I wrote my first budget, I randomly came up with rough guesses on my expenses because I really didn’t know how much I was spending.

My first budget looked like this (And it was completely inaccurate):

Mistake #5 Not Being Specific Enough

Mistake #5 Not Being Specific Enough

MISTAKE 6: NOT BEING REALISTIC ENOUGH. In my first budget, I made assumptions that were completely unrealistic. I assumed that I spent only $100 per month on eating out. But in reality, I was spending over $800 per month on restaurants and dining out. Wow. I realized that when I looked at my online banking statements. It felt like I got a raise when I budgeted $100 for eating out each month (which isn’t a lot!) and started cooking at home everyday.

MISTAKE #7: COMPARING YOUR BUDGET TO YOUR FRIEND’S BUDGET. We all have different lifestyles and priorities. So, we all have different budgets based on those priorities. Your budget will be different than your friend’s budget and that’s ok. I don’t spend money on cable. Michelle at Making Sense of Cents also wonders about whether cable is worth the money. But John at Frugal Rules has excellent reasons for keeping cable (yes, footbal is one reason!).  I have a friend who spends $900 per month on a car payment, which I don’t understand because I don’t have a car payment.  But there are also some things that I refuse to give up to save money!

MISTAKE #8: GIVING UP WHEN YOU MAKE A MISTAKE. It’s easy to want to give up on a budget after buying something that ruined your budget for the month. But budgets aren’t perfect and they will evolve. So, instead of giving up on the budget completely, think about how to prevent blowing your budget next month. Was your budget not realistic or specific enough? Did you forget to budget for Halloween or a friend’s wedding? Use it as a learning experience and move on instead of spiraling into a shopping spree where you begin to blindly spend without a budget.

MISTAKE #9: NOT BUDGETING FOR FUN. Remember that having a budget doesn’t mean you can”t spend money, it just means that you’re not spending your money blindly. Make sure to budget money for fun events, vacations, or holidays. Crystal at Budgeting In This Fun Stuff writes about having fun while budgeting. Now, I budget $140 per month on FUN so I spend that money without feeling guilty!

MISTAKE #9: NOT BUDGETING FOR FUN

MISTAKE #9: NOT BUDGETING FOR FUN

I’d love to hear your thoughts! WHAT WAS YOUR BIGGEST BUDGET MISTAKE?

Thanks to these personal finance blogs for mentioning my articles this week!

  1. Budgeting In The Fun Stuff by Crystal
  2. Frugal Rules by John
  3. Young Adult Money by DC
  4. Digital Spikes by Rita
  5. The Frugal Farmer by Laurie
  6. Debt Blag

And Thanks to these Carnivals for including my articles too!

Carnival of MoneyPros hosted by Money Pros
Yakezie Carnival hosted by Money Life & More
Finance Carnival For Young Adults hosted by Degrees and Debt
Carnival of Financial Independence hosted by Savvy Scott
Carnival of Financial Camaraderie hosted by Frugal Rules
Carnival of Financial Planning hosted by This That And The MBA
Festival of Frugality hosted by The Frugal Toad
Carnival of Money Pros hosted by Money Wise Pastor

Femme Frugality

Leave a comment

  1. says

    Eating out is definitely a big one for me as well. The good thing is it is easy to control spending in this area. One of the things my girlfriend and I do to reduce the cost is simply having water with our meal and skipping dessert, as much as that hurts!

  2. says

    I’m just starting out on improving my financial situation. So these are great tips that will help me on my new journey to financial freedom. Thank you so much for all that you do.

  3. says

    I think currently my budget is a little to unrealistic in my savings aspects. I’m definitely not leaving myself enough wiggle room for unexpected events so that needs to be adjusted so I don’t keep dipping into my savings/emergency fund for non emergency stuff.

    • says

      @The Potato Head- I understand what mean about not leaving money set aside for unexpected events. It took me about 4 or 5 months to set a realistic budget that I could stick to.

  4. says

    I think the realistic portion of a budget can fall at both ends of the spectrum. There are people who budget too high in a category and then get all excited when they came in under budget. This hurts them though because that money could have been allocated to debt payment or a some other budget category.

  5. says

    Can I just say, I love those shoes! Ok now back to the point. I agree on all of these! Sometimes even if we think we have it all together or at least we’re trying emergencies happen and other unexpected expenses do pop up. It pays to be prepared, always!

  6. says

    That’s actually a really good point about having a budget that’s too strict. Sometimes people put down a budget that seems good but is just a little bit unrealistic. No need to make life miserable in order to stick to a very ambitious budget, unless the situation is dire. Life is to enjoy (responsibly).

  7. says

    Hello Monica. It’s great to learn about these possible mistakes in budgeting. We can all expect to fail somewhere but we should learn from those mistakes. It is important to be realistic and start early.

  8. says

    I only seem to screw up with #2…my budget is realistic, has fun stuff (and thanks for the mention!!!), plans for the unexpected, and is generally kick ass…BUT I still find myself at the end of the month looking at about $100 or more of crap that I decided I wanted (didn’t need) and wasn’t in the budget. Oh well…better luck next month!

  9. says

    I have to use an irregular budget because I am self employed. I got the plan from the Dave Ramsey class I took, 2 years ago. Sometimes I wish, I could have a normal budget but I’m depended upon my clients paying me.

  10. Karen J says

    Monica ~ I’ve seen you at the Hoombah’s many times, but this Title really caught my eye – and I’m glad I checked it out! thanks for this terrifically clear (and fun to read) post. :)

    I not only didn’t have a budget at all for a long time (years!), I was actively *ostriching* about my big-money issues.
    I’ve also found that I need to actively pay attention to my Time, almost as carefully as I watch my Money. Makes life a bit more complicated, but also easier and somewhat less stressful!

    Have a great (fun-filled!) weekend ~

  11. says

    Our ‘fun’ budget is just out of the ‘general’ fund that I have for everything that doesn’t fall into a specific category. I’ve thought about splitting it out as sometimes you end up with a bunch of other expenses and no room for fun, but haven’t made the move. I’ll have to consider it. Our budget is constantly evolving, which I think is another element worth pointing out, that even the perfect budget will need to be changed regularly as things change in your life.

  12. says

    These are all great things to think about when coming up with a budget! I like what you said about having balance–realistically, it’s not a good idea to try to live on rice and beans alone unless it’s absolutely necessary!

  13. says

    I used to make mistake number 6 a lot. Now, I backwards plan using my income and expenses from Quickbooks. It’s much more accurate since I can record what I spend, then tweak a few areas that need pruning. It took me many years to figure this one out!

  14. says

    This is such a smart way of planning out your budget. One summer I forgot to budget for going to the beach and had to take on some credit card debt. I paid it off really quickly but it’s so important to constantly plan ahead and take fun into the equation.

  15. says

    Love this, Monica! These are great tips. I love to budget but it does take some time to figure out that balance between being fiscally responsible while still allowing yourself to have fun. :) I find having goals is what keeps me on budget.

  16. says

    Really good tips. I think most of us have been guilty of breaking at least one rule, but the main idea is to learn from our mistakes and be consistent with our budgeting.

    • says

      @Stephanie- Thank you!! I’m glad you like the shoes and I’m excited to wear them for a Christmas party this year. I think you and I are VERY simliar with how we budget. I tend to go to the extremes with budgeting sometimes and I currently looking for some bablance too!!

  17. says

    Our budget is often too strict, which can cause tension when we don’t hit our goals. But I would rather err on the side of saving money than on spending it, so that’s generally been OK for us.

  18. says

    No problem on the mention! I think not planning for emergencies is the biggest mistake most young adults make. It’s so easy not to think about an emergency until it comes up. With health care it happens all the time. Young adults think they are invincible and all of a sudden they need surgery and have to figure out how they will come up with a few grand to pay for it.

  19. says

    #4 and #9 are so connected. We really got serious, and it was necessary to put a plan into action, but then we became rather extreme which led to being NOT FUN! Fun is our whole objective in our marriage, so we now budget for it. While we do eat lots of rice and beans, it is for health reasons and not because we’re on the austerity plan. I can’t imagine sitting there staring at each other on the couch all weekend. After all, we don’t even have a TV to entertain us!

    Great tips and reminders, Monica. Thank you!

  20. says

    Monica!!! We have recently been guilty of 4, 5 and 9. But it was really all related to 9. FUN must be a priority or else simple is not worth living. So on that note, have a wickedly fun one!!!

  21. says

    I think I passed the majority of these! My problem is making a budget and sometimes not sticking to it. I do budget for fun and I’m very realistic. I just need to have a little more discipline on the follow through.

  22. Romona Bradham says

    These are great tips. I always forget to budget for fun. There’s a lot of weekends where I say I’m going to save not go out but then I go out n end up dipping into my savings. But it’s definitely something I’ll change in my future budgets.

    • says

      @Romona- It’s so easy to forget to budget for fun when we have financial goals. But there is definitely a life balance when it comes to budgeting. Thanks for sharing your experiences with budgeting.

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