Being an adult is far from easy and one of the hardest things to get the hang of is managing your finances and working out your monthly budget.
I wanted to share a few budgeting tips with you today so I started thinking about mistakes that are often made by even the most financially savvy people and this is what I came up with. I know most of you will have number 1 in some form or another but without number 2 it’s not all that great so I thought I’d go right back to basics today – budgeting 101!
1. You don’t have a monthly budget at all
If you don’t have a monthly budget written down with ALL of your outgoings and incomings then that’s your first mistake right there. You need to know what your budget actually is before you know how much you can spend after your bills have been paid. You can download my free monthly budget planner here if you want to have a go at getting your household budget down on paper.
Once you know what your monthly budget is you can work out how much money you want to spend, how much you want to save and more importantly, you can see where you can reduce your costs!
2. You’re not keeping your monthly budget up to date
Having your monthly budget written down is great but only if it’s up to date so make sure you regularly review everything,
3. You’re not keeping track of your spending
If you have your monthly budget and you know everything’s up to date then you should know exactly how much money you have leftover each month. This is your money to save or spend and I’d recommend using the budgeting envelopes system to make it easier to keep on top of how much you have left to spend as it’s so easy to spend more than you mean to. If you run out of money before you should then consider keeping a spending diary for a week (or even better a month) to see where your money is actually going. It can be an eye-opener, believe me!
4. You’re not taking into account annual or quarterly bills
My water bill always used to be quarterly so it was really easy just to ignore it for the two months I didn’t pay anything but that obviously meant a much bigger bill in the month I did have to pay it. I gave them a call and they were happy for me to pay them monthly rather than quarterly so now budgeting for it is much easier. I like to do the same with my annual bills and where that’s not possible, I budget monthly and put some money into a different account to save for it.
5. You’re not budgeting for special occasions like Christmas and Birthdays.
Christmas happens on the same day every year so it’s not like it should come as a surprise when it rolls around in December. Why not put aside a little each month to cover the costs yo know you’re going to incur at Christmas – trust me, Christmas is a lot nicer when you’re not worrying about money.
6. You’re not making sensible decisions
It’s absolutely not my place to tell you what is a sensible decision and what isn’t because we all know what’s best based on our budget but I will urge you to think about your budget when you’re making decisions that will affect you financially. Holidays are a prime example here, if you struggle to afford a holiday abroad and it really stretches your budget then why not have a holiday in the UK or just a holiday at home. Someone I work with has a holiday abroad every year and it cripples them but they’re determined not to give up their holiday even though they probably spend the whole time recovering from all the overtime they’ve done to pay for it.
(I’m not judging but it was the best example I could think of!)
7. You’re not meal planning
Honestly, I’ll say it again – meal planning is the quickest and easiest way to make a difference to your monthly budget.
8. You’re not checking to make sure you’re on the best deals
Never automatically renew a service/insurance/utility bill without first making sure you’re on the best deal you possibly can be on. This is one case where loyalty definitely does not pay.
9. When something breaks, fix it. Don’t replace it!
Most things that break can be easily fixed and often, it’s a job you can do yourself. YouTube has a million and one tutorials on just about everything you need or a quick status update on Facebook will usually help you find a friend who can help you out with most things. Anything else and a tradesman will still usually be cheaper than replacing whatever it is that needs fixing.
10. You’re not checking your bank statement every month
You should always, always check your bank statements every single month to make sure that you recognise every single transaction and that there are no Direct Debits you’d forgotten about and no charges you didn’t agree to.
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