Now that a new year is here, one of your
financial resolutions
may be to develop a budget so you can stay on track with your finances.
Everyone should have a budget, but this is especially important if
you’ve been living paycheck to paycheck. Getting a budget in place is a
good start. However, if you’re not careful, you could end up busting
your budget soon after you set it. Here are four things you should not
do when developing a budget.
1. Not keeping track of spending
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Before you set up your budget, you should track how much you spend
for at least 30 days. That means everything from your monthly credit
card bill to your morning cup of coffee. No purchase is too small to
include in your budget. There are plenty of apps and online tools that
can make the process easier. Two tools to consider are
Mint and
Buxfer.
2. Making your budget too restrictive
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It is important that you set up a budget that is realistic and
manageable. Keep in mind your expenses will likely change each month, so
you’ll need to leave some room for unexpected costs. For example, you
may need to make an unforeseen trip to a doctor’s office or purchase
supplies for your child’s school project. Also leave room for a few
wants in addition to your needs. Depriving yourself will only make
you desire to spend more.
3. Forgetting to include savings
KAREN BLEIER/AFP/Getty Images
You should include savings as part of your monthly budget. This will
help you get a realistic view of your entire financial picture. Don’t
treat emergency savings as an afterthought. That emergency savings fund
can be a real life saver when you need it most. If you don’t think you
have what it takes to diligently sock money away each pay period,
arrange to have a certain amount of your check (preferably 10%)
automatically transferred to your savings account.
4. Impulse spending
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Spending on a whim will wreck your budget in no time. One way to stop
yourself from making impulse buys is to unsubscribe from email lists
for stores where you tend to spend a lot. This will help reduce the urge
to splurge whenever you get a notice about a sale at your favorite
clothing store or receive the latest coupon code. These emails make it
very tempting to go to the website and make a purchase. Even if you just
“browse” online, you’re setting yourself up to give in to temptation.
So do yourself a favor and click the “unsubscribe” button.
Culled from cheatsheet
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