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Five Common Budgeting Mistakes

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Tips on how to budget smarter

Regardless of your age or expenses, it's important to stick to a budget so you are always cognizant of your financial stability. According to, "Budgets can be a great tool to help you achieve your financial goals. But if you approach budgeting the wrong way, it can lead to frustration, stress and even more spending." Here are five of the most common budgeting mistakes and the steps you can take to avoid them:

Use the tools that work best for you. Whether you rely on a notebook and a pen to track your expenses or use an elaborate spreadsheet, there is no right or wrong tool. Find a system that works for you, and keep with it.

Don't set goals you can't reach. Setting unreasonable goals will make maintaining a budget much more difficult, and you'll be more inclined to give up if you don't reach them. Be sure to allow room for fun and for unexpected expenses. If you have debt you're trying to pay down, be realistic about how much you can devote to your debt each month.

Plan ahead for periodic expenses. Annual and semiannual bills such as insurance or taxes can be detrimental to a budget if you don't plan for them. The best way to prepare for these bills is to add up the total annual cost of your periodic expenses and divide it by 12 so you can save that amount each month. This way, when those bills arrive, you have the money saved to pay them.

Take advantage of automatic bill pay. Using an automatic bill pay feature can do worlds of good for your budget. Consider using a credit card to pay bills automatically so that you can also track your expenses automatically; a cash-back credit card offers the added perk of earning extra cash each month. Just be sure to pay off your credit card bill in full each month.

Don't throw in the towel if you make mistakes. Making mistakes is inevitable when you're trying to manage your money. Whether you splurge on something you shouldn't have or you forget about an expense, address the problem and continue with your budgeting.

The staff at offers a few additional pointers when it comes to keeping a budget:

Include every expense in your budget. Those little expenses, such as your daily coffee, can add up quickly and take a big chunk out of your available spending money.

Contribute to your savings. Don't simply put into savings whatever spare change is left over after your monthly bills are accounted for—or worse, ignore your savings altogether. Your savings is important for both your financial future and any unexpected emergencies.

Don't live beyond your means. "A successful household budget should include paying off debt (more than the minimum payment on credit cards), saving for variable expenses and saving for true emergencies. If you do all of those things, your budget should help you live debt-free."

If you have questions about creating a budget or managing your finances, stop by today for help from a financial professional.

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