The idea of having to account for every penny in your bank account can be overwhelming. After all, no-one wants to spend all of their free time worrying about money and how they’re going to pay the bills next month. However, ignoring your cash woes can also be a dangerous decision to make. The good news is that you don’t necessarily need a degree in math and a passion for numbers to have some control over your financial situation.
If you’ve been worrying about your budget lately, and you want to make sure that your entire family is on the right page, the first thing you need to do is make sure that you’re not making any basic mistakes. Here are just some of the biggest budgeting errors that families make, and what you can do about them.
Mistake 1: Not Tracking Every Expense
As exhausting as it may be to track all the money you spend each day, week and month, the only way you’re going to get an accurate picture of your financial situation is to sit down and add everything up. Ultimately, your ability to move towards your financial goals depends on you knowing how much cash you have coming in, and how much you have going out. Being too vague with your figures could mean that you’re setting yourself up to fail.
Before you set your budget in stone, make sure that you track your expenses for at least a month. This will help to give you at least an accurate foundation on which you can build your spending strategy.
Mistake 2: Forgetting Your Emergency Fund
An emergency fund means that you’re less likely to tap into personal loans and credit cards when unexpected issues happen. It’s the most important tool you have for protecting your savings, and it can also be a crucial element of avoiding debt. If you have nothing set aside for emergencies, then make creating that fund your first priority.
When you’re creating your budget and looking for extra cash to save aside, send the first few months’ worth of savings into your emergency fund, so you have a good safety blanket to fall back on. Once that’s done, you can start to work on your other goals.
Mistake 3: Obsessing Over Every Penny
You might think this is a contradiction to our first point but stay with us for a moment. While you do need to have accurate numbers, to begin with when you’re launching your budget, that doesn’t mean you should obsess over every penny from there out. While the little expenses do add up, make sure that the big costs are your priority.
The occasional iced coffee here and there should be fine if you give yourself some wiggle room in your budget, so try not to panic every time you go slightly out of the lines. What’s more, if something does go wrong, pick yourself up, dust yourself off and start again.
Mistake 4: Going it Alone
Budgeting is hard, but it’s even tougher when you push all the responsibility onto one person’s shoulders. As a family, you should be budgeting together, as a group. Let your partner know what you need to save for in the months ahead, and work together on a strategy that works for both of you. This will help to make sure that you both have a little cash left over in the budget to do the things that matter to you.
Additionally, it’s worth talking to your children about your budgeting needs too. While they might not understand entirely what’s going on if they’re younger, you can at least let them know that you’re going to be “extra careful” with money from now on – and why you’re trying to cut back.
Mistake 5: Overlooking Saving Opportunities
Finally, don’t miss your chance to save money wherever you can. Join up for couponing groups on Social media where you can get alerts about the latest sales and savings opportunities and think about signing up for company newsletters too. There are plenty of vouchers and saving solutions out there if you’re willing to look for them, and you’d be surprised how many families miss out because they assume that the first price they see is the best one available.
Everything from using coupons, to comparison shopping, and even using a cashback website can save you money in the long-term, so get creative and don’t overlook your options.