Is budgeting really that important? Learn how to take control of your finances, meet your money goals, and avoid pitfalls!
In a Nutshell:
A budget is an important tool for tracking 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 made are getting lazy with tracking my spending, not putting enough into savings, and forgetting to adjust expenses each month.
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I’ve been budgeting my money for more than five years now, but different seasons have required different levels of adherence. Now that we are a single-income family, following a strict budget has become a lot more important. I’ve learned so much more than I had known before, and I’m now finding pitfalls I want to avoid in the future. I hope you learn from me before making the same mistakes!
What is a Budget?
A budget is a way of tracking income (how much money you make) and expenditures (how much money you spend). A budget can be a useful tool to allocate your money to areas that meet your financial goals. If you’re new to budgeting, check out Budgeting for Moms: Your Ultimate Guide for starter tips!
Benefits of Budgeting
- Pay off debt faster
- Meet financial goals
- Limit excess spending
- Identify spending habits
- Accountability and self-control
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 insight to gauge your financial wellness.
Why is Budgeting Important?
It’s so easy to accidentally overspend. You purchase clothes, groceries, household essentials, car needs, and pay utilities and a 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 help develop good spending habits and show you if your money is meeting your financial goals.
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 just realized recently that the money we were putting in savings each month wasn’t 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 any adjustments 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 a good sale is coming up, etc.
Ready To Start Your 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 beginner’s lesson. If you want to learn 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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