An air-tight budget is one of the most valuable things you can have in life. They will give you a much clearer picture of your financial situation, both in the present and the future, and make it so much easier to afford some of life’s luxuries. With a good enough budget, you’ll know where every last cent you earn is going, why it’s going there, and how you can divert your cashflow more economically. While everyone should be able to enjoy the freedom of a good budget, it comes more naturally for some people than it does for others. Here, I’ll go over some of the common problems people have with budgeting, and what you can do about them.
One of the most common issues people seem to have with budgeting is that their category estimates are way off. When you first had to set out a budget, you may have copied out the categories you found in a simple guide. Like many people, you simply wrote out the list, made an estimate on what you needed to budget for each category, and then tried to live by it. Again, like many people, this first attempt at a budget may have been a total failure! When you’re not that experienced in managing finances, it can be pretty easy to get certain categories way off. Energy bills have a tendency to run higher than you expect. Food bills, on the other hand, tend to be lower. The various categories of your budget can fluctuate greatly depending on various lifestyle choices, and throw your estimates off drastically. If you’re suffering from this issue, then the best way around it is to start everything from scratch. Over the next month, save every little receipt and invoice you have, add up the figures for each category, and settle on a more accurate figure. From there on, everything will be so much easier to afford.
Another common problem which people seem to have with their budgeting is that life’s little emergencies cause it to fall apart. I know a lot of people who started off with what seemed like an exceptionally tight budget. However, many of these people quickly had to learn a hard lesson. Not every month is going to play out exactly as you’d want it to! You might have to have guests over, bumping up your food costs. At other times, you may have to spend more on general household costs when you or your partner gets ill. Sure, you might have a pretty good handle on all the regular costs you have to cover. However, if you’re not thinking about these variations which can come completely out of the blue, you could end up consistently going over budget, which will completely screw up your personal finances. This may lead to you obtaining cash loans, or having to tighten things up in other areas. You’re going to need a little breathing room, and you can create it by adding a little more to every category on your budget. Even an extra $40 under each heading can give you some wiggle room when life pulls a fast one on you. Sure, this might mean a little less recreation at the start of the month. However, you’ll probably be able to spend under your budget through most months, and have a little more money to play with!
If budgeting seems like a massive amount of work to you, then you may have done your first one with nothing but a pen, paper, and a calculator. You may have been keeping all your receipts in a single envelope, and stressing yourself out by sorting through them and writing down various figures. If this sounds familiar, then it’s no wonder that you avoid budgeting like the plague! Fortunately, there are several tools to make budgeting much easier, such as Mint. This makes sorting through your budget much easier. You can simply type in a receipt and the program will instantly sort it into the right category. You’ll no longer have to sort through a massive pile of receipts, or get angry with your calculator when you make a slip-up and have to start again! Some tools also have helpful forecasting features. Do some research, and buy some software which you’d mesh well with.