If you’ve managed to draft a monthly budget and stick to it, kudos! Many people know the theory, but they have trouble putting it into practice. No one is saying it’s easy, but it’s not impossible. Paying attention to where your money comes from and goes to is phase one of your financial management: managing bills, putting money aside for an emergency fund or saving for major expenses like a house or a car or major events like starting a family or sending your kids to college.
On the other hand, just because you’ve received a five-star rating from your budgeting app for how carefully you’ve drafted your budget, doesn’t mean it will work just as smoothly in real life. There’s actually a strong possibility that you’ll have to adjust your budget more often than expected, in order to meet your budgeting and saving objectives. So, let’s see what it is that you’re doing wrong and need to change if you want to live a better life.
You never have any money
While this might seem pretty clear, constantly struggling to make ends meet is an obvious indication that there’s something wrong with your current budget: it’s either unrealistic and impracticable or you’re not doing everything on your part to stick to it.
Chin up! All’s not lost yet. You can still do something to make your budget work: adjust it in a realistic manner and change your spending habits, even if we’re talking about minor changes, to make your money last longer every month. Also, check out 10 Unconventional but Legal Ways to Make More Money.
Your monthly standard of living is skewed
If your month starts with endless shopping trips at the mall and lavish dinners in fancy restaurants and it ends with you in front of the TV slurping noodles, there’s clearly a glitch in the Matrix. For one thing, you’re not properly taking into account the meals and groceries you’ll be needing in the next 30 days of the month. Furthermore, you’re probably miscalculating food costs in general. Not in your favor, I might add.
Try to allocate more money for food and other things that take a bigger bite out of your budget from the very start of the month, to avoid having problems paying for them as the end of the month gets closer. In addition, review your habits when it comes to grocery shopping and eating out and try to find ways to save money. You could start by cooking more at home, using coupons when shopping or looking for sales and discounts.
Most of your monthly salary goes toward one big expense
If you receive your salary in two installments, using most of the first portion to pay the rent or the mortgage might seem like the best approach. But if you have to pay for something out of the blue, like a medical bill or a house repair, your plan to pay the rent or mortgage on time could be seriously affected.
Therefore, to avoid having to struggle to catch up with your payments, try to set some money aside from every salary for rent, mortgage or other similar payments. By doing so, you can make sure you’ll always be financially prepared to deal with unexpected expenses one month.
You haven’t saved anything for emergencies
If you haven’t included any amount in your budget for emergencies, it’s time for a budget makeover. What if your car breaks down and it needs major repairs? What if you need to travel somewhere for a family emergency? If you don’t have some money set aside for these types of situations, even $50 to change tires could wreak havoc on your budget.
According to financial specialists, your emergency savings should cover five or six months of living expenses. It might seem like a lot but don’t despair. Start by opening a savings account, even if it’s just $100 at first, and then allot a certain amount each month toward that account. Set an objective, like saving $500 or $1,000 each month and once you reach it, increase your savings goal. Come on, you can do it!
Speaking of emergencies, here are 9 Ways to Be Financially Prepared for a Second COVID-19 Lockdown!
You credit card debt gets bigger every month
If your credit card debt increases every month, so much that it becomes almost impossible to pay off, you might want to reconsider your budgeting strategy. Pay closer attention to what you can cut, so you don’t have to use your credit card anymore. If you are looking for some inspiration, check out These 11 Unnecessary Expenses, and Save Money During the Coronavirus Crisis.
Think about it this way: do you really need all those streaming subscriptions? You never watch all of them anyway. What about your gym membership? When was the last time you went to a spinning class? Let’s not even mention utilities and the amount of money you could save there. Better read 20 Surprising Ways to Cut Costs On Every Aspect of Your Home instead.
To make sure you’re not racking up debt each month, try to change your spending habits and trim your monthly costs. This is the best way to avoid charging expenses on a credit card that you could pay with cash or debit card.
You never have money for special occasions
Are you the family slob who can never afford to buy a nice birthday present or go on a simple holiday? If the answer is yes, it’s time to make some changes. First, start by allotting a certain amount, it doesn’t matter how small, for expenses related to special occasions. You never know when your niece is graduating from college, or your brother invites you to a special family dinner.
If you have a month with no special event, don’t spend the money on something else. Just transfer the money to your emergency savings account instead and wait for the next special occasion. Speaking of gifts, here are 7 Ways Spending Money Can Actually Make You Happier.