Budgeting is a main component of your financial plan. It helps you to allocate your financial resources according to your financial goals. The general idea of a budget is to use your income to take care of your expenses and help you achieve your financial goals. It seems really simple, right? Well there are a few things that you should consider when budgeting to help you achieve your financial goals faster and avoid many hiccups in the road, and one of the main things is to avoid the items that can ruin your budget. By ruin, I mean things that will take you so far off your financial journey that you will feel like you’ve been standing still or moving backward instead of moving forward. I’ve been there myself, so I know.
There are many things that can ruin your budget and I could probably come up with a list a mile long, but I wanted to focus on a few of the most common ones and ones that used to get me. Some of these may sound cliché but it is what it is.
Eating Out
We all enjoy a delicious meal out and love the convenience, but it comes at a cost. This scenario is all too familiar for me. There was a time when I was spending up to $125 a week eating out and the bad part– I HAD GROCERIES AT HOME. I would stop and get breakfast or at least a latte (The Latte effect), I would grab lunch, a couple of snacks and sometimes dinner. Talk about wasteful spending. I was literally throwing away $500 a month on essentially nothing and it was ruining my budget. The turning point for me is when I started having more month than money left. (Glad I finally came to my senses and so is my bank account.) I’m not saying you should never eat out, but it should be planned and be a treat and NOT the norm. One of the things that helped me was setting a much lower limit to how much I would spend eating out each month. I took the cash out and when it was gone it was gone.
Cable
The average cost of cable packages can cost anywhere between $100-$200. That is $2,400 a year spent to watch 5 of the 500 channels you’re paying for, if you are anything like me. Who needs all those channels anyway? That’s $2,400 that could go to savings or eliminating debt. Think about it if you’ve had cable for the last say 5 years, that is $12,000 that could’ve improved your financial outlook. I try not to look back on what could’ve been but instead look forward with clearer vision. Now, there are so many alternatives at a much lower cost such as YouTube tv, the fire stick, sling tv and amazon prime just to name a few.
Keeping up with the Jones’s
This is such a cliché saying but a timeless saying. There are so many people that try and keep up with the latest this or that or what this or that person has, and it is all at the expense of their own financial well-being. I’m not casting any stones here because I too USED TO participate. Eventually, I realized that my financial well-being was MORE IMPORTANT than trying to compare to others who I had no idea of their financial situation.
Emergencies
Face it, emergencies are going to happen and not being financially prepared could lead to financial disaster. A recent study showed that most people can’t cover a $400 emergency expense. It is so important to have an emergency fund set aside. There are some insurances too that can help with certain emergencies.
Fees (Hidden or Not)
This is an area of the budget that people rarely pay attention too, but fees can add up quickly. ATM fees, credit card fees, cable fees, and cell phone fees just to name a few. I make it part of my regular financial routine to check for fees (hidden and not) and follow up with the service provider to see if the fees can be eliminated or reduced.
Are any of these things ruining YOUR budget? If so it’s time to take control and free up some of your money so that you can achieve your goals faster.
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Let me know in the comments what is or has in the past ruined your budget.