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Just like everyone else, I've had my fair share of budgeting mistakes.
I'm not going to give you any “textbook” budgeting tips that every other financial advisor gives you. Partially because I'm the furthest thing from a financial advisor that you'll ever know or speak to. I've had way too many budgeting mistakes to count on both hands and toes, but I also can give you advice based on the budgeting mistakes I've made.
Over the past few years, my husband and I have struggled with saving money. We've tried, but one thing after another just keeps knocking us down on our asses.
(Mostly my fault, but don't tell him that. I like to blame it on him sometimes! LOL)
A couple weeks ago, when I was going over our finances (again, for the 20th time), I was horribly amazed at how much we've been spending on EVERYTHING. I was talking with my husband about our budgeting mistakes and how we should go about fixing them.
We talked about topics like: going out to eat, subscriptions, gas, utilities, and so on. You don't realize how much you're spending until you have no money to spend. Oops! But that's why I decided to write this post and hopefully, it will help out others who are in the same situation we're in right now.
My Huge Budgeting Mistakes & What I Learned
Write out a monthly budget
First of the budgeting mistakes is not using a budget and sticking to it. Now, this is something I've struggled with for the past 10 years. I print out the sheets, write it all in, and bam, they get moved to the bottom of my “must do every month” pile, that gets moved to the “Garbage” file eventually.
Make sure you write EVERYTHING down.
That means your income, your spouse's, child support if you receive it, etc. You also have to write down every single bill, every single expense, anticipated expenses, etc. DO NOT LEAVE A THING OUT! Do not leave out your eating out expenses, red box rentals, etc. Those all factor into what money you have to spend, don't have to spend and where you will need to cut expenses that are not needed.
It's extremely important to be 100% honest with your budget and yourself. If you can't be honest with your budget, you won't make your savings goals, ever!
Start saving and get rid of the budgeting mistakes now. The longer you wait, the harder it will be. I wish I would have started budgeting and saving back when I was 16-18yrs old. My grandmother always tried to get me to save, and my parents always said to, but I watched both of my parents living above our means all of the time. My mom would pay a credit card with another credit card or max out cards just to get whatever she wanted.
Work on a savings account
Second of the budgeting mistakes is not saving money. Your savings is important. You need to build up emergency savings FIRST. Figure out what your 6 to 12 months necessities are (Housing, Utilities, Gas, Food, Insurances, other monthly bills) from your monthly budget and make sure you have at LEAST that much put into savings. DO NOT TOUCH IT except for in an emergency. If anything happens and you lose your job, get injured on the job, etc you'll have PLENTY of money to help you until you find another job. Now, that doesn't mean that “eating out” is an emergency. It's not. Also, NEVER use your savings to pay off your credit cards.
I love Dave Ramsey! The Total Money Makeover has helped me succeed… when I actually follow his tips. Please follow the steps if you get the book and/or workbook. My problem is I start seeing success then I stop following the steps until I need to start all over from scratch again. The snowball savings program is a great way to pay down debt so you can build up your savings. It's not an overnight program at all, it's something that can take some people years to finish or even get to a comfortable spot that they don't have to pay down so aggressively. It all depends on how much debt you have and what your income is.
Calling utility companies get bills lowered
I suggest not going onto a budget plan for any utility unless you already own your home. If you plan on moving within the next couple of years, a budget can hurt your savings. Quite often your budget is much lower than what is owed so the difference goes into a balance that you have to pay off either every year or before you get your utility transferred to your new residence.
Instead of getting on a budget, talk to your utility companies and say “Look, I've noticed that my bill is higher than last year by $xxx and we've actually used less than 1/2 of the energy we did last year. Why? What can we do to get it lowered?”
A lot of companies will work with you. I actually just called our cable/internet provider and talked with someone and said “Hey, look, my bill is $100 for JUST 50 Mbps (megabytes per second) and I saw that there was a new plan out for $60 for 100 Mbps. How can I get on that?” The rep told me that I could do it without any questions and he took care of it for me. So now I'm sitting here typing this to you on my extremely fast internet.
Figure out a reasonable grocery & household products budget
If you can't stick to a budget for these 2 things, you're going to struggle every month putting any money into savings. You have to eat and you have to provide for the house. It's just the fact of life that as adults, we have to come to terms with.
One of the biggest budgeting mistakes with grocery shopping is not planning ahead and doing spur of the moment shops.
Couponing is a great way to save on groceries. Just don't get into the habit of spending what you save when couponing. It won't save you a single thing if you're spending what you've saved. Put what you have saved into a savings jar or account. You'll see your savings grow pretty quick that way.
Shopping at stores like ALDI USA & Dollar stores are great alternatives to big box stores. I'm an ALDI USA girl through and through for our groceries. If I can't get it there, I do end up going over to Walmart or Target. Target is my favorite store for items like cat food, litter, laundry soap, and dishwasher tabs.
Dollar stores are where I get a lot of my cleaning supplies such as glass cleaner, all-purpose cleaners, scrubbers, etc. They are also great for organizing.
Some things we buy in bulk, toilet paper, paper towels, tissues, etc because it's more cost effective for us, as a family of four with 2 teen sons who seem to think that a 1/2 of a roll of toilet paper is how we wipe butts. Most of the time we get our gas at Sam's Club and do our bulk shopping at the same time, which I'll talk about in a few seconds. Often when you buy items in bulk it's a lot cheaper. You're paying an average 10-25% less. What you can do, is what you save on your bulk items is put it into a savings account.
Acorns is a financial service that helps you invest your money. They enable you to start early, invest often, and feel secure about your financial future.
Work on meal planning
This goes hand in hand with figuring out a reasonable grocery budget. When you're writing down your grocery list, write down what you're going to use for that month's meals. If you work from home, make sure you factor in your breakfast and lunches as well as your family dinners. Don't forget snacks also. We always have fruit in our home. I can't keep it in the home for 2-3 days before it's all gone as my youngest is my fruit-o-holic!
We've started this in the past, but honestly, we quite suck at it. So it's back to the drawing board. I decided to not follow conventional meal planning methods and just do my own thing. It works out much better for us.
We have a binder that we've been keeping “Make Again” recipes. If it's in that binder, EVERYONE in our home has agreed it's a keeper. Having a “Make it Again” binder is a great way to keep awesome recipes that you find on Pinterest. Sure having a Pinterest account and board is great, but when you pin as much as most people do, some of your favorites get lost, or what happens if that website no longer is active? You'll lose your recipe. Print it out after saving it to your computer and you'll have it forever!
Figure out what is your most expensive meat, eliminate it. (It's usually high end cut red meats) If you don't want to cut it out, then only buy it when it's on sale, and buy it in bulk. Like I mentioned before, grocery shopping without a plan can and will be the worse budgeting mistakes you could make.
We have 2-3 meat markets that you can buy boneless chicken breasts for sometimes as low as $0.99/lb. up to approximately $1.49/lb. The catch? You often have to buy 40 lbs of the chicken breast in a box. Grind, cube, pre-cook, etc your meats and separate them to make them ready for meals. If you're a really good meal prep, look into Pinterest for awesome 45 days of meals.
Get the kids in on planning. Have them help you prep the food, make the recipes, and more. Once kids get into the habit of doing these things, when they eventually move out and on their own they will be naturals and won't have financial problems.
Stopping the eating out
Or at least drop it down to once a month. (I say this as we're eating Chinese Take-Out, don't judge.) The absolute biggest budgeting mistakes is thinking that eating out once or twice a week won't hurt. It will.
This is going to save on average $50-150 depending on the size of your family, where you go, and how much you spend at the restaurants. This past month we spent probably $200 while eating out because we've been on the run with school supplies, my mom's doctor appointments for cancer, the boys' doctor appointments and honestly, just plain being lazy.
Anything that you can buy in a restaurant, you can make at home. It's cheaper and it's healthier also.
Plan ahead and you'll enjoy it much more too. I always enjoy my own food more than eating out. Buy the main ingredients for $10-20, compared to $50-100+ at a restaurant, to feed your entire family and still have leftovers for at least the next day.
Get your credit report
I can't stress this enough, knowing what's on your credit, your credit score and what has been on your credit report is a MAJOR thing. You need to make sure you know what your credit is looking like. If you have credit cards that have a high balance, you need to pay those down. If you have cards that don't have a very high balance, you need to pay those down also. My suggestion, pay $5-10 more than the minimum payment on the lowest card if you can't pay the full balance off right away. The quicker you can get those paid down, the better your credit will be and if you have to, you'll have the available credit in case of an emergency if you don't have that emergency fund built up to a minimum yet.
My husband and I use Credit Sesame for tracking our credit. It's $10 a month per person and 100% worth it. You get all 3 credit reports monthly, can keep track of your score going up and down, lending potential when you're in the market for housing. Credit Sesame provides credit scores for absolutely free, no credit card required, however, if you want to do more in-depth tracking, you do need to sign up for the monthly service.
You can also get your report for FREE once a year in most states directly from the 4 credit bureaus. Just go directly to their websites and request your report. Experian, Equifax, TransUnion, and Innovis are the 4 credit bureaus in the United States. If you're outside of the US check out your credit bureaus in your country for your score.
Cancel unused subscriptions
I never realized the subscriptions that we paid for but never or rarely used. We've in the past had upwards of 15 subscriptions. Ranging from $5 a month to $20. Do the math, that is anywhere from $75 to $300 that we were paying out of pocket for maybe 3-4 of them we were actually using.
Last year I cut out more than half of them and last month I cut another 3-4 out. There are a few subs we use on a regular basis that we will not get rid of (ie Netflix, Evernote, subs that I use for my blog, etc).
Find things around your town that are free or darn near free. Every Sunday in the summer our local Metro Park has a movie night at the beach. Totally Free! You can go on walks, bike rides, treasure hunts or even look into geocaching.
For rainy or snowy days, there are tons of projects you can do in the house that use things around the home that you already have. You'd be surprised what you can do with a few things that are laying around the house.
We don't put off too many things when it comes to our vehicles. If you take care of your budgeting and factor in possible vehicle expenses like flat tires, broken tie-rods, or transmission issues; you should be fine. However, slight budgeting mistakes for these emergency situations, can end up leaving you stranded or without a vehicle all together, which could be worse.
Do NOT put off major vehicle expenses just in hopes of saving a few bucks. You'll end up spending a lot more in the long run and can risk your family's safety. A lot of times you'll find deals on “Winter Maintenance” or “Winter Ready Your Vehicle”.
There is an app called GasBuddy to get the best and cheapest priced gas with good quality, we use it ALL of the time! You also earn points towards gift cards when you use it and report gas prices, even if it's letting others know that the prices are accurate.
Good quality gas gets you better gas mileage, which means you don't have to fill up as often and it's better on your vehicle. Also if you keep the same type of gas in your vehicle, you'll get a better gas mileage per fill up. My husband and I have noticed that when we switch from our Sam's Club gas to a different station, our mileage drops 2-3 miles per gallon.
I hope you enjoyed my tips.