For family or personal budgets to work requires the determination to run a tight ship. Otherwise small leaks can turn into a torrent that sinks your good intentions. Here are five problems that can torpedo a budget and ways to cope with them.
1. Food Eats up Your Budget
When it comes to food, few of us like to deny ourselves. As a result, we’ll spend too much at the grocery store, or treat ourselves to meals out as compensation for a tough day at the office. When at the grocery store, don’t pay by debit or credit card. Make out a budget and take cash, so you can only spend up to a set limit. Also create a shopping list and stick to it, avoiding impulse buys. And don’t be afraid to use coupons. Trips to restaurants should be treats, not a matter of course. Don’t be afraid to use coupons here, either. And liquor is always priced many times above its actual cost. Have water in the restauant and save your real drink for when you get home.
2. Forgotten Bills Surprise You
Sometimes we lose track of our bills and expenses, and then they arrive when we don’t have the money to cover them. Most online banking services will let you set up automatic payments for bills and other expenses. See if you can time the payments for just after your paycheque goes into the bank, ensuring that funds are available.
3. Irregular Expenses Throw You Off Your Game
Unexpected expenses can lay waste to a tight budget. It might be unplanned entertaining when friends drop by, or your home office printer suddenly dies and needs replacing. You should give your budget breathing room. Add 10% to the amount you regularly spend in all your budgeting categories to prepare for choppy seas. And create an emergency fund for big unexpected expenses, such as car repairs.
4. Your Spending Patterns Change
Your budget needs to change as your financial picture does. If you have a new child, change jobs or food prices climb, then your budget needs to be revised before you get into trouble. At the very least, you should revise your budget at least once a year to take into account things like changes to the cost of living and rises in property tax.
5. Non-Essentials Become Important Problems
Just because something doesn’t cost a lot doesn’t mean that it isn’t eating a large hole in your budget. An afternoon coffee at work, cigarettes, a drink on the way home, the weekend newspaper – take the expense and multiply by the number of days a year you estimate you indulge yourself and you will be shocked by the final figure. Do without and you will feast on the sight of a rising balance in your bank account.