Get ready to find out why budgeting is important and how it can empower you to take control of your finances!
In a Nutshell:
A budget is an important tool to help track income against expenditures to ensure you meet your financial goals. Budgeting is a skill that takes time to learn so expect some mistakes along the way. Some mistakes I’ve personally made are getting lazy with tracking my spending, not putting enough into savings, and forgetting to adjust expenses each month.
I’ve been budgeting my money for more than 5 years now but different seasons have needed different adherence to the plan. Now that we are a single-income family, we’ve had to be much more strict. Budgeting has become a lot more important. I’ve been learning so much more than I had known before and I’m now finding pitfalls that I want to avoid in the future. I hope you can learn from me before making the same mistakes!
What is a Budget?
A budget is a way of tracking your income (how much money you make) and your expenditures (how much money you spend). A budget can be a useful tool to help see where your money is going. If you’re brand new to budgeting, be sure to check out Budgeting for Moms: Your Ultimate Guide for starter tips!
Do I Need a Budget?
Are you making and spending money? If yes, then budgeting is for you! A budget helps you track your money so you know if you can afford to get another streaming service or go on that vacation with your friends. It can help you save money, pay off debt, and provide you with stats to gauge your financial wellness.
Why is Budgeting Important?
It’s so easy to overspend accidentally. You purchase clothes, groceries, household essentials, car needs, and pay for utilities and your mortgage. With all that money leaving your hands it’s hard to know how much you have left from your paycheck unless you track it. Budgeting can be an important tool to make sure finances are adding up and develop good spending habits.
My Top 3 Budgeting Mistakes
The less money you have after paying your monthly expenses, the more important it is to stick to your budget. As a single-income family, money can get pretty tight. Here are some mistakes I made that showed me just how necessary it is to track our spending.
1. Carelessness
At different times I’ve gotten lazy tracking spending. I’ve lost receipts, ignored multiple purchases because they were “too small to matter”, and just plain given up on paying attention to the budget. In the months I’ve been careless, I’ve noticed our bank account getting lower than normal. By not paying attention, I allow myself to overspend.
2. Quarterly and Annual Bills
Bills like car insurance, life insurance, car tabs, and garbage collection are paid annually, biannually, or quarterly. On a dual income, we always pulled the payment for those bills from savings without issue. We were putting enough into savings every month to cover those costs. Now that we have less money each month, we have less to put into savings. I had realized until recently that the money we were putting in savings each month wasn’t actually enough to cover these bills.
Now the plan is to add up all these yearly costs and divide by 12 months in the year. The goal would be to put more money than that number into savings each month. If I hadn’t been budgeting our money, I wouldn’t have been able to figure out what caused us to drain our bank account over time!
3. Monthly Adjustments
I love using the EveryDollar app for budgeting. It makes creating a new budget each month so easy! However, when I carry forward the same numbers from the month prior my budget plan usually fails. It’s important to look at each month individually to see if there are any adjustments that need to be made. Examples of adjustments are allotting more money in December for Christmas presents, planning for an oil change every 3 months, putting extra money into the grocery category when you know there is a good sale coming up, etc.
Ready To Start Your Own Budgeting Journey?
Budgeting takes a lot of trial and error practice. Give yourself grace as you learn one month at a time. If you’re new to budgeting, check out Budgeting for Moms: Your Ultimate Guide for a beginners lesson. If you’re interested in learning more about living on a single income, I’ve created a free Budget Guide with Conversation Starter questions to help you decide if you can make it work. For additional resources, I highly recommend checking out the library of Dave Ramsey articles on the topic!
Good luck, I’m rooting for you!
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