Check out these 10 common budget challenges and key steps you can take to tackle them.
There’s nothing worse than being indecisive about finances. Financial indecisiveness can stop you in your tracks and prevent you from accomplishing your financial goals. Just the thought of even making a budget may be overwhelming, but the most productive thing you can do is to just start.
One of the hardest budget challenges to overcome is impulsive shopping. Most people are guilty of impulse shopping. In fact, Americans make 156 impulse purchases every year. The average spent on impulse purchases is roughly $450 a month, costing over $5,000 a year!
The key to overcoming the challenges of budgeting is having financial goals in place. If you don’t have a clear goal in mind, it can cause you to lose focus on why you created a budget in the first place. Financial goals can motivate you to stick with your budget and become financially successful.
When it comes to budgeting methods, it’s not a one size fits all scenario. One of the reasons you are facing budget challenges may be because you are using the wrong budgeting method. There are many budgeting tools and templates to choose from, and the trick is to find the one that suits you best.
Ignorance is bliss, but it’s devastating to your finances because you don't have a financial plan in place. The thought of sitting down and adding up just how much debt you have can be one of the most difficult budget challenges yet. However, the only way to regain control of your financial future is to create a debt payoff plan with your budget.
One of the most common challenges of budgeting is eating out too much. The average spent on dining out in America is a whopping $3,000 per year! That’s a huge chunk of money that could bulk up your emergency savings account for a rainy day. Eating out seems convenient, but it “eats” up your budget fast.
Even if you’re paying your bills on time, it doesn’t mean you are budgeting correctly. For example, if you aren't building savings into your budget then you aren't preparing for your future. One of the most important things to do when budgeting is to pay yourself first. The quickest way to save money is to build it into your budget. This way, you aren’t tempted to spend it, and it becomes a good money habit too.
As with most things, consistency is the key to a successful budget. Budgeting consistently prevents you from overspending and keeps you on track financially. Stay the course with a budget calendar to be sure you are paying your bills on time and sticking to your budget. You also want to update your budget frequently to ensure everything is correct.
It’s way too easy to reach for that magical plastic card every time you shop. However, unless you pay your balance in full every month, you spend way more than you should for those must-have items. Credit card debt is expensive, and high-interest payments can destroy your budget.
Rather than racking up debt, build up your savings and emergency fund instead. Paying for items upfront rather than charging them on your credit card can save you hundreds to thousands of dollars. If you find it hard to resist charging your credit card, lock it up in a safe space rather than carrying it in your wallet.
Life is full of unexpected expenses, and this is one of the hardest budget challenges to tackle. That’s why it is vital that you build up your emergency savings account because you will be prepared for the unexpected. Things like car repairs, medical expenses, or losing your job can throw you off track.
The goal is to save 3-6 months of living expenses to cover any unexpected expenses. To keep from being overwhelmed with a high number, work on saving your first $1,000, and build from there.
