As we head toward the end of the year, it's a good time to take a look at your 2015 budget and see how you did. If you didn't do well, don't be too discouraged. Creating a family budget can be challenging, and takes a lot of time and effort. As you create a new budget, consider these 5 budget mistakes you may be making.
You Aren't Basing Your Budget on Actuals
Creating a budget can be a lot of work, but it's worth the effort. As you create a monthly family budget, be sure that you review your expenses from prior years/months. You will have no idea how much you truly need to plan for, if you don't know how much you really spend. If you find yourself with a shortfall, then you can start cutting expenses in some of the more discretionary categories like eating out and clothing.
You Try “No Spend” Months
Like a crash diet, sticking to a no spend plan for a month is hard to maintain. Once you make one mistake, you'll likely abandon the entire premise. Instead, create a small discretionary fund each month that you can use for non-essential purchases.
You Don't Budget Infrequent Expenses
When creating a family budget, are you only looking at one specific month of expenses? Remember that some expenses will come up less frequently – like car maintenance, water bills, and quarterly taxes. Be sure to incorporate those into your budget so you are prepared for them.
You Don't Have An Emergency Fund
Experts recommend that all families have an emergency fund of 3-6 months of expenses, held in a short-term savings account. Just like it sounds, an emergency fund is used for emergency expenses – things like unexpected home and car repairs and medical bills. If you don't have an adequate emergency fund, then you'll need to pay for these expenses out of your regular monthly income, which can really destroy your budget.
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