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The Biggest Budgeting Mistakes You Can Make

Budgeting • by Creditgenie • 19 October 2017

There are only a few of us who try budgeting these days. If you want to save money, plan for the future or simply know how your money disappears by the 15th of each month, then budgeting is the thing for you. However, there are a few common budget mistakes that crop up when budgeting for a loan or simply planning a budget. Here are a few common budget mistakes and some simple, clever budgeting tips to deal with them:
Rounding Down and Leaving Out

Budgeting only works if you know how much you’re spending. A common budget mistake that most of us make is rounding down those annoying rands or cents – whole numbers are just easier to deal with! The problem comes in when we don’t stop at those little amounts. A lost R20 to R30 here and there can soon become hundreds and this seriously impacts on your ability to save money and to budget for a loan.

An important budgeting tip is to keep track of every cent possible. If you like rounding off, then always round up. By doing this, you won’t underestimate how much money you spend each month and you will avoid making this common budget mistake, allowing you to budget effectively for a loan and save money!

Keeping Up with The Kardashians

OK, maybe not the actual Kardashians, but more along the lines of living beyond your means. It’s very easy to get caught up spending on a night out with friends or buying that expensive pair of boots. Suddenly the credit card is out and you’re spending money that you don’t have. This is a very common budget mistake that results in you losing instead on saving money!

When you sit down and make a budget, you need to be honest with yourself and set some limits. Yes, there will always be times where you slip up but the thing to remember is each time you use credit you are actually taking money from your future - money that you haven’t earned yet. This puts greater strain on your future financial health and impacts your future ability to save for a loan.

Zero Wiggle Room

Keeping to a budget is hard. Really hard. Keep this in mind when setting out your budget and try to keep it user-friendly. If you set limits that are too restrictive, you will always be discouraged when you don’t adhere to them. That discouragement can easily lead to giving up on budgeting and saving money altogether, creating greater problems in the future. Don’t worry, this is a common budgeting mistake.

Here’s our budget tip: simply leave some wiggle room in your budget for unforeseen expenses or fluctuating costs. Remember, this extra money isn’t an excuse to spend more – set it aside in a Tax Free Savings Account or some other form of investment to save money. This way you not only save money but it’s money you had previously written off– almost a double save!

Save For a Rainy Day

Along with a little wiggle room, you should also be including savings into your budget. South Africans tend to make the terrible budgeting mistake of not saving money and it’s starting to show. Our credit-based way of life has left so few of us with actual savings that it is impacting negatively on our future ability to budget for a loan and to provide for ourselves after we retire.

Building in some form of savings into your budget each month, whether you choose to start a separate savings account for this money or simply add it to your monthly RA payments, is always a good way to save more. This simple budgeting tip is easy to implement and will end up saving you money!

Be Realistic

This budget tip covers a large deal of how we spend and save our money. It reflects in how often we set aside too little for emergencies, or spend too much thinking we can continue relying on credit. Budgeting is all about being realistic, especially when considering large purchases.

Buying your dream home is something most of us want to achieve at some point. The common budget mistake lies in not being able to walk away if it just costs too much. Too many of us are unrealistic in the way we approach large purchases and neglect the lasting impact it can have on our financial health, making this a common, yet avoidable budget mistake. All you need to do is be realistic when you spend, and be realistic when you budget, especially when budgeting for a loan.

With these budget tips in mind, you’ll be saving money in no time!

Get more finance tips and tricks with our personal finance articles here.