Debt, Money Management

Financial Expert Reveals Common Budgeting Mistakes You Might Be Making

 June 4, 2020

By  Chase Edwards

Financial Expert Reveals Common Budgeting Mistakes You Might Be Making

Making a budget and sticking to it is one of the keys to financial success, but this system isn’t fool-proof, according to financial expert Canna Campbell. She recently told the Daily Mail that many well-meaning Australians are sabotaging their finances by making common budgeting errors. Are you guilty of making any of these budgeting mistakes?

1. Your budget is too tight

Australians who set their budgets too tight will struggle to stick to their spending plan. Ms Canna encourages budgeters to round up their expenses to the nearest $10 or nearest $100, as most things tend to cost more than expected.

2. You set and forget

Effective budgets are revised every two to four weeks. This process allows you to add and remove expenses and adjust their values as required. As the cost of living typically rises, working from an old budget is usually a recipe for financial failure.

3. You don’t have an emergency account

We all hope they don’t happen, but sometimes emergencies occur that you haven’t budgeted for. Perhaps you need expensive medical tests, a major appliance breaks, or your home needs urgent repairs. With an emergency account to cover these expenses, you can avoid putting them on credit.

4. You give up too soon

Just like all activities, budgeting is something most people become better at in time. However, many Australians don’t give themselves the time to improve. Instead they decide budgeting isn’t for them prematurely. You don’t have to budget perfectly first go. Instead, be patient with yourself and take the time to make budgeting work effectively for you.

5. You’re unrealistic

Many Australians are scared to acknowledge their actual spending habits. However, when your budget doesn’t accurately reflect your expenditure you’re only cheating yourself. If you spend a lot on entertainment, for example, own up to it, then see whether you can reduce your spending in this area or work around it. Cross-reference your budget with your bank statement to make sure you’re being honest about your spending habits.

5. You don’t talk about money

We’re taught to avoid discussing money, but this is a real mistake for effective budgeting. The best budgeters communicate with their partners about spending. Making budgeting a joint project and being honest about your progress will give you the best chance of success.

6. You don’t account for impulse spending

We all give in to temptations like lust-have fashion items and those nights out that get a bit boozier than planned. Too many people dismiss these indulges as little slip-ups that don’t need to be budgeted for. It’s much smarter to allow for a certain amount of temptation spending. If you accidentally exceed it, try to make it up next month to keep your finances on an even keel.

7. You don’t let yourself have any fun

No matter what your savings goal, you shouldn’t try to achieve it by sacrificing your sanity. Budgeting is about taking responsibility for your finances, but that doesn’t have to mean depriving yourself. If it is, you’ll be less likely to stick to it. A sustainable budget should include the things that make you feel good, like coffees and salon visits. Make your budget work for you and it’ll work for your money.

If you want to build on your budgeting practices and learn how to take greater control of your money, call Chase Edwards on 1300 854 833. Our financial experts will share smarter strategies with you that can help you reduce your debts and grow your wealth. Take advantage of a free, no-obligation financial health check to learn more about the current state of your finances and how we can put you on the path to a more secure future.

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