Hello everyone! Today I’m having a guest post from Stacy B Miller which is the content editor at Oak View Law Group. Let me know if you would like to guest post on Finance For Geek.
Enough is enough. Your debts are spiraling out of control. Your savings are going down every day. Your debt collectors have lost their patience. You have to do something now and do that fast. You have made a plan to get out of debt, and the first part of this plan involves creating a budget. Congrats! You’re walking in the right direction. But before you move ahead, let me tell you a few facts so that it is easier to stick with your first budget and avoid costly mistakes.
Fact no 1: You’ll mess up. You have to work harder
You’re a human being. This is the first time you’re creating a budget. You can make mistakes and that’s okay. There will be some bad months and there will be some good months.
There will be a few months when you’ll cross your budget, save less and spend more. Don’t lose hope. It’s okay to fail. Rather, find out where you’re going wrong. Learn from your mistakes, and try to make a perfect budget. If you have made a very tight budget, chances are high that you’ll fail; especially when you love buying beautiful clothes every month. But as you gradually learn the tricks to stick to your budget, you’ll feel good. You’ll save more and achieve your financial goals.
Fact no 2: Your budget won’t work if you stop tracking your expenses
What have you purchased 13 days ago? How much did you spend? What about your other purchases? Any idea?
If you don’t categorize your expenses or track your expenses, it will be difficult to stick with your budget. At the end of the month, you’ll break your budget.
You can note down your expenses on a piece of paper. The other option is to track your expenses through a budgeting application or software. The best option is to download an app on your smartphone so that you can track your progress easily (such as Mint or Personal Capital).
Fact no 3: Not many people will appreciate your budgeting efforts
You know why you have created a budget. It’s your personal choice. You don’t owe any explanation to anybody regarding your budgeting strategy. Plus, most people won’t understand you. The moment you’ll say in a restaurant – “ I would eat any food that costs less than $12”, some friends will start laughing. They won’t understand your debt problems or your tough financial situation.
Some people will understand why you have taken such a step. Many people won’t understand you. So it is better to not talk about your budgeting strategies or plans in front of your friends. You’re doing what’s best for your financial future. It’s not about the other people. It’s about you – your problems, your debts, your financial goals and your dreams. That’s all that matters.
Fact no 4: It’s pointless to create too many categories
The more categories you’ll create in your budget, the more problems for you. I’m not joking. It’ll be a tedious affair to manage too many categories in a budget plan. So, just create a few simple categories like monthly income, necessary expenses, other expenses, savings, investments, debt, emergency fund, etc.
Spend as much as you can. List all your miscellaneous expenses in the other expense category. Just make sure you don’t cross your monthly spending limit.
I made a lot of mistakes when I made my first budget. I failed, jumped again, and learned many things from my budgeting experience. Actually, I didn’t have any idea what to expect and what not to expect. Probably that’s why I had so many disappointments. It’s important to have an idea about what may happen and what may not happen beforehand. I hope this article will help you avoid learning basic facts in a hard way. These are just my top 4. There are so many other facts that could be added to this list.