It can be easy to sit down and make a budget. Following it is the tricky part. Maybe you’ve just started out with budgeting. Or maybe you’ve tried it before and it didn’t work out. Regardless, it’s great that you’re thinking about your finances and we have some common mistakes to avoid when creating that budget!
SURPRISE! You’re not ready for anything. You may think that an emergency fund is independent from your budget. If you’ve built up a solid one, you are kind of right. But let’s say you’re not prepared for that unexpected expense, you’ll have to dip into other accounts. That can have a huge effect on your overall budget. Be ready when the time comes.
Stop the guessing game. The bills that stay the same each month are the easiest to budget for. Your water bill may not be exactly the same each month, but it’s usually close to the same amount. On the flip side, your power bill. Not consistent every month. If you’re going to estimate prices when you start laying out a budget, it’s best to err on the higher amount.
It’s only coffee! Your budget may not be complete if you’re neglecting the smaller bills and purchases. Something like a Saturday breakfast with friends can be easy to forget and really add up when you’re doing it on a regular basis. It’s important to take some time and really think about all the money you spend. If you’re still worried that you forgot something, it’s always smart to add a cushion to keep yourself in the black.
Two words: Annual fees. One bill that you may forget when budgeting is an annual fee. Whether it’s a credit card fee, club membership or Amazon Prime, make sure you include those fees in your budget. They can definitely add up!
East River FCU offers free tools to our members that can help you create and better stick to a budget. Our Money Manager tool let’s you view all your accounts in one place, create custom budgets to help you save more, track your spending and set financial goals. You can even add accounts from other financial institutions! Make this the year you manage your money!