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Common budget mistakes and how to overcome them

Whether you are aiming to reduce daily debt, accrue finances for a long-term investment or even put some small change aside to help with regular outgoings it pays to scope out a water-tight budget plan to eliminate the risk of it all spiraling out of control.

Living on a budget can be overwhelming, and bad habits can put you back a step when you should be looking ahead. Even if you have written a list but for some reason, your budget isn’t working, it may be time to take another approach. Here are 8 reasons why it may be holding you back.

1. Your budget isn’t right to start with

Maybe you missed hidden costs or you underestimated a grocery bill this month. Try to get your budget as accurate as possible for every income and expense so you are closer to meeting your financial goals.

2. It’s not realistic

Setting a tight budget can be attractive but if it’s not realistic, it’s not going to work. In fact, it may only bring on stress and worry, which in turn will lead to bad decisions. Give yourself some breathing room by setting something you can stick to and feel comfortable with.

3. It’s too hard to follow

Multiple expenses on different cards and accounts can soon lead you in circles, when there are ways to keep track of these important items. Simplify things as much as possible with direct debits and automatic payments.

4. There are too many people involved

If you’re managing a household, a great way to stay on track is to assign the budget to the most responsible person and abide by their plans. By all means contrinute to the budget planner, but understand that the final say comes from one individual, once agreed by all parties involved.

5. You’re spending more than you earn

Be honest with yourself, take another look at what you’re spending your money on and soon you’ll see what expenses can be avoided. Buying items that you want rather than need is a habit that should be addressed quickly to help you regain control over where your money is going.

6. Communicate!

If you haven’t told everyone in your household about the budget then it’ll be easy to go off track. Make sure that everyone who the budget affects are all being open and honest about their spending patterns. Even including parents or teenagers, all household members should understand that they have a responsibility to not exceed agreed budgets – set reminders if you have to.

7. You’re not rewarding yourself

Hey, we’re still human! Following a tight budget for a long period of time can be demoralising. Make sure that there’s some special rewards along the way, like keeping a small amount aside each week for a monthly movie night or bi-monthly camping trip. Treating yourself after walking a financial tightrope is a great idea for balancing your wealth and happiness.

8. You’re just not saving

Having a budget is great but if you’re not putting any money aside then your budget will only keep you in a ‘holding pattern’. Find a way to put even a small amount away each month. Start with small change and set dates for when you want to have accumulated a set amount – if you fall slightly behind on your targets, then find ways to minimise your spend the next month to help the savings grow.

You don’t have to work in a bank to be good with money and now with debt advice readily available online, you don’t need to pay the earth to get good, honest information to help you improve your own circumstances.