It’s fair to assume that everyone makes mistakes when designing their financial plans. However, we can chalk most of these down to inexperienced people setting off on an uncharted territory. Thus, for our users, we have compiled a list of the most common mistakes people make when making a budget so that they have a better chance of avoiding debts when making a plan of their own.
1. Forgetting to Write Down Expenses
This is one of the most common mistakes that people make. After making transactions, people simply forget to write it down on a piece of paper. Not only does this make it impossible for you to stick to your budget, but it also creates problems for other people sticking to that budget. Ideally, you should keep a track of every single purchase whether it costs a few or a hundred bucks. Experts say that the best way to remember everything you buy on a daily basis is to update your budget plan each night before falling asleep. This ensures that you always jot down what you have bought and can recall it when reviewing your budget.
2. Intentionally Not Writing Down Purchases
Ask any student and he’ll agree that he has at least once forgotten something he deemed to be easily memorable and chose not to write down on paper. The same principle applies to budgeting. People often don’t write down micro-transactions and before long, all these minute purchases add up and can have a disastrous impact on your financial plan. Thus, it is important that you write down everything you buy so that you can stick to your budget.
3. Impulse Buying
Even the most frugal people are guilty of buying something off a rack on an impulse. Impulse shopping can wreck your budget, especially if you buy something for a lot of money and that you won’t be using very often. Even if you buy something as small as a soda can, you are bound to see the impact it has on your future because every single impulse purchase amalgamates and comes back to haunt your financial plan.
4. Buying Expensive or Branded Material
This problem happens more often than most people care to admit. People end up buying expensive stuff when cheaper alternatives are available. Brand conscious people are the ones who are most guilty of this destructive habit. Thus, buying expensive things when on a budget should be avoided as much as it can be.
5. Being So Frugal That It Makes You Miserable
Another mistake that most people make is being so frugal that they never treat themselves and live their lives revolving around just the bare necessities. Thus, it is important to think of budgeting like dieting i.e. if you deprive yourself too much, you’ll just end up binging later, which renders all of your hard work completely useless. Therefore, every once in a while, it is important for you to buy something that you really like and let yourself enjoy your purchase without developing a guilty conscience.