Making mistakes via your budget is nothing new.
What exactly does that mean?
Quite frankly, your budget might be filled with some holes, but this swiss cheese of a plan can easily be filled and the shortcomings don’t have to define how you not only save money but also spend.
The real core issue to a budget is making your money work for you, not deprivation. Far too often, you think about saving money as taking away what you enjoy as a “punishment” of sorts. While in some cases that can be a part of it, your budget doesn’t have to be defined by it.
Budgeting mistakes can consist of not having one at all (an easy fix, of course) or spending money on what is perceived to be a good buying decision when something of an alternative can do much more for you in the longer run.
For that, you might want to consider used versus new as much as possible, even if you’re talking about something as small as a piece of clothing or larger scale like a car, potentially in this situation saving thousands of dollars.
You can always shop around as well for lower rates for things like electricity or perhaps match yourself up nicely with a budget plan that allows you to have a lower monthly fixed rate and not be surprised by a $300 gas bill in the dead of winter, but rather spend $40 per month throughout the year, a tool that makes budgeting much easier, too.
Another large-scale mistake might be the largest and most important purchase you make: your home. You need to ask yourself if you’re buying a house that is too large for you. Countless people end up spending way too much on a house when something small, modest and relatively inexpensive will certainly do the trick. New home buyers, in particular, tend to want to make this first house their last, and they’ll overspend to the point that they are “house poor,” a term coined to describe what it’s like to have a large mortgage and no money to spend elsewhere.
You also have to, and this might be the most important element, is to avoid spreading yourself thin when it comes to saving money or how you spend. If you’re trying to pay off debt, make that your first priority. If your debt is good, and you want to save money, focus on that. Sometimes taking up too much in the way of savings versus debt management is a war of attrition that you can’t move one pile either way.
Budgeting can be the most reliable and powerful tool in your financial closet, but if it’s not implemented correctly, chances are you’ll continue shooting yourself in the foot with every money move.
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