When you’re looking for a quick fix to all your financial woes, a budget may seem like it has all the answers. Common financial advice suggests the budget is the single best way to take control of your spending and accomplish big goals.
And it’s true, this spending plan has the potential to help you become a better money manager. But it’s not guaranteed to magic away all your problems. You may still struggle with money even with a budget if you make these two mistakes.
You Don’t Factor in the Unexpected
What’s the difference between a budget that’s just alright and one that’s superstar material?
A mediocre budget makes sure you have enough cash on hand to cover your expected bills. It ensures you have what it takes to pay rent, utilities, and groceries.
A fantastic budget does the same thing while also putting aside money in savings to help cover any bills that you don’t expect. Because try all you can to anticipate what comes next, life has a way of throwing you curveballs.
When it does, they tend to be expensive. Car trouble, a trip to the ER, or a household repair can end up putting a dent in your budget.
Without savings, these surprise bills may be too much for you to handle on your own.
If you need help covering unexpected emergency expenses, you may turn to a direct lender installment loan for help. These short term loans act as a safety net when your budget fails to prepare for an unexpected emergency, and they may even be available even if you have bad credit.
Like any cash loan, direct lender installment loans come with unique terms and conditions, so be sure to check them out before you apply. If the benefits of direct lenders for loans outweigh any possible drawbacks, you know you’ve found a possible solution.
Better yet, retool your budget before an unexpected emergency expense puts you in the lurch. Try to set aside a hundred dollars or more into an emergency fund with an eye to save as much as six months’ worth of living expenses.
You Don’t Work in Absolutes
If you don’t like working within the black and white of a budget, you probably fudge the numbers from time to time.
Have you ever thought to yourself, “my rent takes up roughly one-third of my income”?
You’re in for a surprise if that’s a rounded number. If rent is actually 37 percent, that “extra” four percent or so has to come from somewhere — leaving you with less money to spend on utilities and groceries.
What about something like, “I don’t spend too much on takeout?”
If a closer look would reveal you spend 12.5 percent of your budget on pizza and falafel, you may be turning a blind eye to bad spending habits.
Winging your finances like this shows an inaccurate picture of your spending habits that hides the real issues preventing you from paying off bills and saving more money. So, if you rely on rounded numbers or guestimates, start working with real, accurate figures.
Do These Problems Sound Familiar?
Act soon! While these errors may not trip you up right away, they will get you eventually. Before you fall on your face, plan for the unexpected, and start using accurate numbers. These subtle changes can help your budget become a more powerful financial tool today.