There’s no one right way to do a household budget. It doesn’t really matter how you do it, just as long as you do it. However, be careful you don’t fall into some of these common traps.
- Not planning for yearly expenses. When you make your budget, you put in your monthly expenses—groceries, electric bill, cable, gas, etc. But you might forget about those bills that only come once a year, like car insurance or property taxes. To add them to your budget, just divide the total by 12 and add that amount to your budget each month.
- Not putting money aside for emergencies. You’ll blow your entire budget if an emergency comes up, like if you need new tires or emergency dental work. Keep a small cushion of savings for these unexpected times in life.
- Spending money as soon as you get it. When you get a windfall, like a tax windfall or inheritance, instead of running out and buying that big TV you’ve had your eye on, put the majority of the money into your savings or emergency fund.
- Being inflexible. Just because you’re on a budget doesn’t mean you can’t enjoy life. Take some from Column A and put it into Column B if you need to. Skip going out to dinner one month and treat yourself to a new outfit instead.
- Impulse buying. Nothing blows up a budget faster than impulse buying. It could be anything from a new pair of expensive shoes to a “treating” yourself to a coffee every morning. Everything adds up. If you haven’t set the money aside, don’t spend it.
- Not tracking past expenses. The best way to keep your budget on the straight and narrow is to use your spending history as a guide. This is especially true when budgeting things like utilities, which usually vary from season to season.
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