Budgeting often seems boring. After all, shopping is more fun. From morning to night, the commercial world calls out via advertising, promotions, deals, and promises of happiness if we spend our money on objects and services. But listening too much to these messages can leave us facing sky-high credit card bills, empty accounts, and spenders’ remorse. But fear not. We’ve put together a list of the most common budgeting mistakes, and how to avoid them.
If we only ever bought what we needed, it would be easy to stick to a budget. However, commercial establishments are designed to show us new things that catch our eyes and our wallets. To avoid the trap of impulse buying, go shopping with a list, and stick to it. Set yourself specific goals. Beware of “special offers” that can tempt you into buying something you didn’t need. Remember, you’re not saving money if you didn’t budget to spend it in the first place!
Online shopping should, in theory, be less risky than its real-life equivalent. After all, there are no shop windows to look at, or product displays to stop you in your tracks. However, there are many virtual pitfalls. It’s easy. It’s convenient. Great deals are mere click away. And then there are those distracting pop-up ads, helpful suggestions and product recommendations. Our advice is to focus. Identify what you want, focus on it, find the best price, and then purchase. Your wallet will thank you.
Selective spending amnesia
We all do it. We somehow forget many of the purchases we’ve made when doing the mental math on our accounts. This makes for a nasty surprise when the bills come in. To combat this, get into the habit of noting down every single expenditure, no matter how small. There are apps to help you with this, such as the useful YNAB (You need a budget), available both on smartphones and on desktop1. But there’s no need to go hi-tech – you could always just carry around a small notebook.
Spending your savings
No matter what the special deal on offer, it’s not worth buying if you have to dip into your savings to have it. Your savings are there for a rainy day (every good budgeter has a “slush fund” for emergency expenditure), for the kids’ education, or for the deposit on your own home. Remember those priorities when you are tempted to borrow from your savings.
Knowing about potential budgeting mistakes can be the difference between an occasional splurge and a descent into debt. We all make mistakes, however, so allow yourself a treat now and again – as long as you’re careful.