Last week, I talked about how I paid off my credit card debt before we got married. This week I'm going to talk about budgeting, in particular the budgeting mistakes I made.
I had tried to budget in years past, but it never worked for me. Here's why:
1. I didn't create a realistic budget. When I was in college, I started a budget and decided I should spend $40 a month on eating out. This is what I thought I should spend, but this number was not realistic at all. It's important to come up with a budget that is in keeping with your personality. If you love eating out like me, your budget needs to reflect that with a realistic amount set aside for restaurants.
2. Using a pen and paper budget didn't work for me. Most of the articles and blog posts I've read about budgeting seem to suggest writing down your budget and then tracking every single penny you spend. While I agree that it's important to track what you spend, there's no way I'm going to write down every single number by hand. That's just too time consuming. When I was working on paying off my debt, Sam introduced me to Mint.com. I LOVE it! Instead of having to write down everything I spend, Mint automatically categorizes my spending FOR ME! Occasionally they do get the categories wrong, but overall Mint has been life changing! I spend about 5 minutes looking at my budget everyday, and then I tell Sam if we're getting low in any of the categories. And that's basically it! It's super easy! The key to budgeting is figuring out what works for you. Maybe you're a pen and paper person. Or maybe you love Excel spreadsheets. Or you could use apps. If you make it simple, you'll be more likely to stick with it.
3. I didn't come up with a savings plan. In college I created a spending budget but not a savings budget. Savings should be part of your budgeting plan. Emergencies alway happen, and you'll be more prepared finanacially if you save for emergencies. For years, my dad told me how important it was to set up automatic savings. And it turns out that my dad was right. Most banks will let you automatically take money out of your paycheck and put it into savings. You never see that money in your checking account, so you never miss it!
4. My budget categories were too specific. As I said in #2, the simpler your budget, the more likely you are to stick with it. Using broad budget categories makes budgeting a lot easier. Instead of having one category for food, one category for toiletries, and one category for household expenses, my current budget combines all those categories into one. Less to think about. We also have a very broad shopping budget. This category includes everything from shoes, clothes, books, new sheets or pillows, printer ink, and decorating.
Do you have a budget? What are some mistakes you've learned from budgeting?
Linking up with: Something Fabulous Wednesday, Wow Me Wednesdays, Whimsy Wednesdays, The Wednesday Round Up, Wow Me Wednesdays (Polkadots), Whatever Goes Wednesdays, Imspire Me Wednesdays