The Biggest Mistake You’re Making When Budgeting
Creating a plan to save money and actually committing to said plan is sometimes an uphill battle. The bills are piling up, weekly grocery shopping grows more expensive by the minute, and that’s all without factoring in expenses you didn’t plan for like your car breaking down. When you’re juggling all of these issues at once, sticking to a budget is understandably the last thing on your mind.
The good news is that regardless of how many times you’ve gone over your budget, there will be more opportunities for you to approach your finances from a different angle. The first step is figuring out where exactly things went wrong, and how you can course correct for the future. News flash: Budgeting a certain amount of money to spend each week rarely works because nine times out of ten, this number isn’t realistic and doesn’t factor in non-negotiable living costs (via The Balance).
Here’s how you can set more realistic and attainable budgeting goals.
Why do your budgets fail every time? You're way too restrictive
When it comes to effective budgeting, give yourself a lot more grace. Instead of putting a huge chunk of your paycheck in savings, test out the 50/30/20 budgeting method, which gives you the flexibility to pay your bills and support your lifestyle. Here’s the breakdown: Set aside 50 percent of your check for bills and other urgent costs, 30 percent for the things you really want, and the last 20 percent goes towards your savings (via Real Simple). What we love about this method is that it emphasizes the fact that you don’t have to go cold turkey when it comes to spending and can still buy things you want but don’t necessarily need.
An alternative to this is the 80/20 method, which still directs 20 percent toward your savings but which gives you a lot more leeway with what you can spend (via Lifehacker). If neither option feels manageable, you can play around with the money portions until it feels right for your personal situation.
When you’re coming up with a budget, the whole point is to make sure that the goals you set are actually achievable. Depending on your style, you can stick to consistent percentages and categories like the 50/30/20 method or practice a more fluid method like reviewing how much you spent in the past and make a new plan for the following month that way (via Money Crashers). The most important rule? Do what’s right for you.
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