Many people avoid budgeting like the plague. This is because the numbers can be pretty eye opening and frightening. The numbers also don’t lie and your budget will often blow up if you don’t have control of it. Budgeting may seem scary, but it doesn’t have to be. Here are the 3 biggest budget busters you will encounter in your finances and how to fix them.
For the longest time I under budgeted for groceries and we went over in this category all the time. I had completely unrealistic ideas of what we actually spent on groceries. This has to be one of the biggest budget busters for most people. Another area where you can consistently set an unrealistic budget is for eating out.
So how do you fix this? Start saving all your receipts for a month for when you eat out or buy groceries. At the end of the month total them up to see what you spent. At this point, you will need to decide if you will be finding a way to cut your spending or find other areas in your budget to cut to make up the difference. Want to find out what the average family spends on groceries every month to see where you stack up? The average cost of a moderate meal plan for a family of four is $1057.10 a month for 2 adults and 2 kids age 6 and up! That is not a typo! No wonder people constantly blow this budget item.
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Have you ever noticed that every time you start to get a handle on your budget that some unexpected expense comes along that completely derails your budget? It pretty much happens every time you have a few dollars in the bank right? The car needs a repair, your kid needs a big item for school or inevitably something big breaks in your house. This is why you have to find a way to plan in your budget for items that you don’t expect because they happen whether you want them to or not.
So how do you fix this? Well, first of all you have to acknowledge that many of these expense are not really that unexpected. You know eventually your appliances will break down, you know that the car will need brakes, batteries, and tires, and you know that nothing lasts forever. So what you need to do is set aside small amounts in your budget for these items each these types of expenses. Along with that you need to have an emergency fund of at least $1000.
Not sure how to start putting together your emergency fund or budget? Check out these books.
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What does it mean to have an unbalanced budget? This means that you spend far more money in a budget category than is recommended. One of the major categories that people typically overspend in is housing or transportation. Most good financial advisors will recommend that you only spend about 25% of your monthly income on housing. Now this does vary depending on the area of the country that you live in, but the general rule is 25%. If you are spending way more in that category it means you have less money to spend on everything else. This is true for most of your budget categories.
So how do you fix it? Well there is not always an easy fix for bigger expenses like housing or transportation. If you are renting, you could always move to a less expensive area or move further away from your job. If you live in a really expensive area and you own your home you could consider changing jobs and moving to a less expensive area of the country. If you are driving a car that is not really affordable you can look to sell it or end the lease and get a less expensive used vehicle.
It can be scary to actually acknowledge the problems in your budget and even more difficult to fix them. With a little practice, time and patience you can get control of the 3 biggest obstacles in your budget!
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