5 Budget Mistakes to Avoid

Think of your budget as the roadmap to your financial dreams — it's your tool for tracking, saving, and conquering all your goals—large and small. However, like any adventure, there are pitfalls to avoid. Today we'll go over the 5 budget mistakes you should avoid so you can become a master budget navigator in no time!

Mistake #1: Not Having a Budget

This may go without saying but the biggest mistake of budgeting is not having a budget at all. It's like setting sail without a map. Without a budget, overspending and debt can quickly creep into your spending. It will also be harder to track and manage your finances or save towards short-term or long-term savings. A great way to start a budget is to try the 50/20/30 rule — allocate 50% of your after-tax income to needs, 20% to savings, and 30% to wants. 

Mistake #2: Not Tracking Your Spending

Even with a budget, neglecting to track your spending can feel like wandering through a maze blindfolded. Tracking will help you discover where your money is going and how much you are spending and where.. By tracking where your money goes, you’ll be able to see how much you are really dedicating to dining out or buying online. After you identify trends, you can find areas to cut back on and add to your savings or additional debt payoffs.

Mistake #3: Setting Unrealistic Goals

Let's say you just started mountain climbing. While it's great to dream about one day tackling Mt. Everest, you would never start there right out of the gate. Begin with realistic, attainable goals, and gradually level up as you grow comfortable with budgeting. If you bite off more than you can chew you may get overwhelmed or overdraft your account by adding too much to savings when you're not ready to completely cut off all your spending habits. You can always add more as you get the hang of it. Start small and build from there. 

Mistake #4: Not Being Flexible

Flexibility is key when budgeting. Life happens — cars break down, you have too much fun on your vacation and overspend, or you simply are having a rough month and you let things slide. But don't give up! It happens to everyone, but the important thing is you keep at it. Budgeting is a marathon, not a sprint. Show yourself empathy and grace. Maybe next month you'll save more, and you can add additional to your savings account. And don't be discouraged if circumstances permanently change and you must re-evaluate. Saving a little is better than not saving at all!

Mistake #5: Abandoning Your Budget

A budget left behind is a goal unmet. While things can be overwhelming and spiral, it's important not to give up. Readjust if needed. Just keep going and keep tweaking your budget to your lifestyle. And don't be afraid to ask for help. A financial advisor is a great way to have someone in your corner, helping you achieve financial security and realize your goals. They are there to be your trusty companions on your budgeting journey.

There you have it —5 budget mistakes to avoid. Remember, at the end of the day, do what works best for you, and if you have questions about setting goals or opening a savings account, a Personal Banker from FNBO would be happy to answer them. Give us a call today.