Congrats. You’ve set a budget and it looks perfect on paper. You established different spending categories and what seems like reasonable limits. Yet somehow it’s not working out month after month. Sound familiar? It’s a common struggle. But the good news is that there is a solution.
The first thing to do is be realistic: is your budget reasonable given factors like income and goals? If everything looks set up for success, then maybe one (or more!) of these common financial habits are derailing your well-laid plans.
1. Impulse purchases
Buying on a whim might be the secret reason that your budget is failing. Even the cost of grabbing a candy bar every time you’re at the check-out counter adds up. It’s an even bigger problem if you can’t avoid an impulse purchase every time you walk into a store. (Pro tip: wait half an hour, and then if you must have the item, buy it later.)
2. Blurring the line between needs and wants
All budgets are loosely based on allotting spending between needs (like mortgage, bills) and wants (e.g. entertainment, eating out). In theory, the division between the two is clear. However, in the heat of the moment the line can get blurry. For example, you might justify dinner at a restaurant because you had a hard day, even if the cost means exceeding your “eating out” limits for the month. True – budgets don’t have to be a buzzkill. But don’t make a habit of overspending. If you spend more in one category, try to spend less in another.
3. Not tracking your spending
Review your spending regularly. Until the routine becomes automatic, set a schedule. E.g., every three days, take two minutes reviewing your checking account activity. (Pro tip: set reminders on your phone to make this a recurring event.)
Whenever you see an expense you don’t remember or didn’t plan, make sure you add it to your total costs for the week, month, or whatever timeline you’ve set.
4. Failing to comparison shop
If you always take the first deal you find, you’re probably spending more than you have to. Next time do a little comparison shopping to see if there’s a better offer. This is especially true if you’re buying online. With intense competition between online retailers, it’s always worth looking around for better prices.
5. You don’t automate your savings
Putting money into a savings account may be the most important part of your budget. However, if you transfer it manually, you may forget or avoid doing it because you’ve over-spent in other areas.
The solution? Set up recurring transfers from your checking to your savings account through online banking. Designate a day (preferably soon after you get paid) and a pre-determined amount, and let technology do the rest. That way, you’ll always hit your savings goals every month. Your Credit Union has a number of surprisingly high-interest savings accounts with low- or no-minimum balances. And we can help you automate your deposits via Online Banking, making savings effortless as well as rewarding.
