Last week we created an awesome budget book. Now let’s make sure your budget book becomes a valuable asset for your personal finances and not just a waste of time and effort. Learn to avoid the most common mistakes that people make with their budget books and graduate to personal finance ninja.
We already talked about why a personal budget book is a great tool to manage your personal finances and how it helps you to understand your spending habits.
Now that you know all the benefits of a budget book let’s find out what to watch out for that might ruin all your efforts. Many people start a monthly budget book with the best of intentions only to fall off the bandwagon shortly after that. What if you invest your time creating a budget book only to find out it’s not helpful and numbers are not exact at all?
We will not gonna let this happen to you! You don’t have to do all the mistakes that come before learning because I already made them. Here comes what to keep in mind to create a perfect budget book with no frustration.
The Five Deadly Sins that Kill your Budget Book Success
It’s always the same type of things that smash a budget book. Avoid these common pitfalls and your budget book will become an awesome tool to rock your personal finances and not a complete waste of your time. Learn where your hard earned money really goes by avoiding these budget book mistakes.
#1 Not collecting all receipts.
You need to collect all receipts for reference and find a place to easily store them in your home. Maybe a cute recycled jar or box. Place your receipt jar in a prominent place and put receipts there as soon as you get home. Be aware of expenses that don’t come with a receipt like snacks or online expenses. If you tend to forget about them as soon as the change is in your pocket you want to consider writing them down in a notepad that you carry with you or on your phone. You could also use a free app to track your expenses on the go, like Monefy or Money Manager (Android) or HomeBudget Lite (iPhone/iPad).
If you are more of a memory artist than me you can just write down those expenses once a day when you are home.
Remember, you need to include everything that your family spends which can give you a hard time. This leads us to number 2.
#2 Not all family members are on board.
You will have to find a way to include all your family members’ expenses to make your budget book work. First, get your significant other on board by explaining to him why you do this and what good it is. Ask him to hand over all receipts and tell you how much he spent on what. If you have little ones that spend a dollar here and there for ice cream cones or chewing gum simplify and note their pocket money in your budget book not what they do with it. (This can work for a spouse, too!)
#3 Not working on the budget book regularly.
This makes it too easy to forget some of your expenses. You need to set a specific time to work on your budget book. Even if you have a monthly spreadsheet you need to work on it daily or weekly. Once a month is not enough because many expenses will just fade away. You will find yourself with a gap between money spent and expenses tracked. This will be absolutely frustrating and may even completely ruin your budget book benefits.
Choose to work on your personal budget book daily or weekly. Whatever fits your needs. Maybe try daily for a month and then weekly the next month.
#4 Not organizing the budget book spreadsheets.
If you use a paper budget book keep it at a prominent place so you will not have to look for it. Get a proper budget book from the store or print a monthly budget tracker for each month. Keep all sheets in one place.
If you use a digital budget book name the file properly and choose an easy to find location to store it. Organize all your expenses in categories and keep an extra category for uncommon things that don’t fit elsewhere. You don’t have to get it right the first time. Learn and get better.
Use the printables and spreadsheets I provided so you can easily organize expenses into categories and by date without much fuzz. The digital spreadsheets are completely editable. Just make sure you make a copy for yourself and then you are all set up for success. Edit where necessary. You will most probably develop your own standards over time. You don’t have to get it right or perfect the very first month!
It may be hard to see in plain numbers how much you spend on coffee to go. But you should face your spending habits if you want to make a change for the better. Don’t get gas, coffee, and some chocolate at the gas station and then write all of that down as “gas”. No one needs to know what’s in your book but you! Be brave and brutally honest.
Maybe you try your best and honestly track every dollar you spend. But then your spouse or kids hide things and your attempt to create an insightful budget book will fail. Decide that you will not comment or mock about expenses that you think are dumb. Get the family together and explain the rules of the game. Write down family guidelines for budget book maintenance. Everybody needs to know what the family budget book is for and that there will be no nagging and screaming.
You need to get the numbers. That is important. Remember, without a budget book there would be a lot of uncertainty and maybe even more hiding and cheating. If there is a need to talk about certain spending habits that are out of control discuss this in the fairest and most civilized fashion possible! Do not drive your loved ones off the budget book track completely. Let everyone make suggestions about how to cut her own spendings instead of just telling them they need to stop buying this or that or pointing your finger at someone.
Now you are totally educated about common mistakes people make when starting a budget book and you will not let these pitfalls get in your way to financial success any longer.
You will need a little bit of discipline to get the most out of a monthly budget book. But you will be so grateful if you keep going! A well-crafted budget book will be an extremely valuable tool in your personal finance management and can be an eye-opener. All you need is a tiny chunk of time each week. You will learn all about your family’s spending habits and find margins to improve without the need to earn/work more. A budget book is absolutely worth the little investment of time!
Let me know how your budget book work is going and if you prefer paper, an app or digital spreadsheets.
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