Budget Like a Boss: Budgeting mistakes and how to avoid them
With the festive season looming dangerously close and our collective account balances set to move rapidly in the wrong direction, now is a good time to review your budget and identify any ways in which you could manage your finances better.
Here we have compiled the top Budgeting Mistakes people make and how to overcome them and become a Budgeting Boss.
Budgeting Mistake One: Not Having One
By neglecting to put a clear plan in place to manage your finances you are essentially setting yourself up to fail right out of the gate. Instead, commit to making a well thought out budget and stick to it with the view to reaching your financial goals.
Budgeting Mistake Number Two: Not Being Realistic About Your Expenses
There is no value in creating a budget that is not based on a true reflection of your outgoings. Take the time confirm what you spend on both your set living expenses as well as your discretionary expenses such as recreation and entertainment and don’t commit to cutting back in areas if you are unlikely to follow through.
Budgeting Mistake Number Three: Failing to Budget for Savings
One of the primary motivators for preparing a budget usually includes setting aside funds for saving. However, it should not be assumed that whatever is left after expenses have been paid is the designated savings amount. Instead define what your savings goal is and work that in your plan as a fixed amount.
Budgeting Mistake Number Four: Forgetting Non- Monthly Expenses
Its easy to account for the regularly occurring expenses like your mobile phone, insurances, utilities and the like that are usually payable if not monthly then quarterly and are usually front of mind when creating a budget. But it’s the infrequent expenses that can get often overlooked such as vehicle maintenance, school fees, and special occasion expenses such as birthdays and celebrations.
Budgeting Mistake Number Five: Not Allowing for Emergencies
Having an emergency or contingency fund is imperative as in life there are always unforeseen expenses that crop up. Whether it be for vehicle repairs, home maintenance, appliance upgrades and even medical expenses its unrealistic to assume there won’t be some expense that was not planned for. Setting aside a contingency fund will mean your savings most likely will remain unaffected in the case of emergency.
Budgeting Mistake Number Six: Not Negotiating a Better Deal.
Reviewing your outgoings also means reviewing where you can save and trimming some fat Approach your service providers and ask for a discount and if their best offer doesn’t match a competitor then move your business. Of course, this can also be said for your home loan. Make sure you speak to your broker and see what discount they can procure from your lender and if it doesn’t stack up to the rest of the market, a refinance may be a viable option.
Don’t wait until the new year to clean up your finances and become a Budgeting Boss, do it now. Your Blackburne Mortgage Broking team can coach you on what strategies may potentially work for you if you are not sure where to start because securing your financial future starts now.