Trying to stretch your family’s income to cover the full month can be a tough task. However, you can give yourself the best possible chance of doing so by avoiding some of the most common budgeting mistakes.
These mistakes can range from being too optimistic, to not being optimistic or ambitious enough.
You could make your family budgeting schedule too rigid, but you could also make it too complicated. Simply put, if a budget is unrealistic then it simply won’t work.
With this in mind, let’s look at some of the potential problems or mistakes mentioned above and see what we can do to avoid them.
Being Too Optimistic
It would be fantastic to be able to put a big lump sum into our saving accounts every month, wouldn’t it? This way we could very quickly build up a very nice sum of money in our accounts.
Having said that, for most of us it simply isn’t possible to put away as much money as we would like to each month, so if you try and save more money than you can really afford then the risk is that you will have to access your savings before the month is out.
On the other hand, if you work your figures out correctly and save only what you can reasonably afford then you can top up your savings account without fear.
Not Being Ambitious Enough
This is the opposite of the previous point and it can be just as fatal to your plans for financial well-being. If you are earning enough to start to pay off your debts and put away some savings or even to start investing, then you should make every effort to do this as well as you possibly can.
You can’t expect to get this right at the very first attempt but over the months you should start to see how it is possible to find the balance between being too optimistic and not being ambitious enough.
If you feel that you always have extra money left over that you fritter away each month then it is time to be more ambitious.
Not Being Flexible Enough
One important point to bear in mind when working out your family budget is the fact that not every single month is going to be the same. For example, some months will have more special occasions in them than others.
If you try and budget exactly the same for every month of the year then some months you might come up short and other times you will miss the chance to save more money.
Each month can be worked out in the same way but you need to take into account any changes to your income of outgoings first of all.
Not Tracking Your Budget
It is all very well setting up a gleaming Excel spreadsheet with all of your figures on it. However, it won’t count for much if you don’t then track it and update it as the month progresses.
There are many different factors that could throw your family budgeting plans off track during the month and it would be wise to make any changes or updates as soon as possible.
It can be tempting to leave all of this until the end of the month but by then it could be too late to make any necessary adjustments.
Making Budgeting Too Complicated
Controlling your monthly family budget shouldn’t be a hugely complicated issue at all. All it really needs is a free budgeting spreadsheet where you plug in your monthly income and outgoings in order to work out how much you have left.
There are some budgeting mobile apps around that can help with this but it is only really worth getting a fairly basic, simple one. The more complicated you make it the more chance there is of you doing something wrong.
Keep it simple and there will be less risk of messing up your budget. Using the simple approach also means that you can share the responsibility of updating the budget with other family members if you like.
Can you think of any other family budgeting mistakes to avoid?
Post contribution: Today’s post was written by Adam who runs the UK based personal finance blog Money Bulldog.
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