Creating a Budget Can Help
Having a budget just makes financial sense, but unfortunately, not everyone takes the time to do so. According to a Gallup poll, one in three Americans prepares a budget. This means that a majority of Americans do not plan their finances in advance, which can contribute to hefty financial costs like increased debt and smaller savings. But, having a budget doesn’t offer immunity to financial mismanagement. Many people with budgets fall short of their plans due to budget busters.
Many of Americans have trouble keeping to their budget, though the reasons for our budgetary transgressions vary. According to a poll from the Principal Financial Group, food is the biggest budget buster, with 22 percent of the participants admitting that they spend more money on dining out than they budgeted. Twenty-one percent said they overspent on groceries. Twenty percent said they spent more on gas than they budgeted. And entertainment and clothing/shoes are both major budget busters for 15 percent of the participants.
Save Money By Avoiding These Budget Busters
- Unwise food decisions. There’s a reason why dining out is the top budget buster among Americans; it’s delicious, requires little work, and it’s fun. But try to avoid the temptation, because with tip and gas included, it can be quite costly. Instead, plan social gatherings in your own home and encourage everyone to bring a dish. Beware of grocery store “super savers,” as they can actual bust your budget. Avoid coupons that require you to spend money on things you don’t need in order to get savings. Don’t buy things in bulk that you’ll never need or finish. And beware of buying prepared meals; they can be costly.
- Driving without an agenda. Gas is a necessary expense but you can still cut back. To save gas (and save your budget), make a list or agenda, of where you are driving each time you do your chores.
- Credit card rewards. Everyone likes getting bonuses and perks, but be cautious. Most credit card companies offer rewards or points for frequent purchases, but with a budget, you should be limiting unnecessary purchases. And while many of these points can be used for things that people want, it doesn’t necessarily buy things that people need.
- The little things. When budgeting, many people focus on the big purchases (like rent/mortgage payments, student loan payments, or car notes), but you shouldn’t overlook smaller frequent purchases. A daily Starbucks coffee can add up. Downloading new apps that cost one dollar or even five dollars may not seem like a big deal, but it can add up if you make frequent purchases. Stop this budget buster, by keeping a sharp eye on all your purchases.
- Winging it. Many people have a retirement savings plan or savings for future big purchases like a house or a car, but not enough people have savings for emergencies. A dead car battery or a sick loved one can be a difficult thing to manage, but they shouldn’t wipe you out. Stop “winging it” and be prepared for emergencies by saving extra money every month on incidentals.
- Costly family spending habits. Budgeting is a family affair. If you have a partner or kids, it’s important that they get on board with your plans. When your family doesn’t stick to the budget, all of your planning is for nothing. Sometimes it’s hard to get your loved ones to change their costly habits, but try to get them involved in the planning process, so they will fill more invested and dedicated to saving money.