Yay! You’ve done it! You’ve taken the time to come out with a budget of saving up or planning for tomorrow that your future self will thank you in time to come.
However while coming up with a budget for the month, we might have encountered challenges that caused us to fail in keeping up with our budget plans. It can be frustrating at times, especially when first starting out. We may have that thought of throwing the towel and just give up.
BUT not just yet ! Today, we will be sharing some budgeting traps to avoid so to keep the budgeting process much pleasant for ourselves. Let’s find out !
1. Not Paying Yourself First
Coming into a new month with our paycheck in our bank account may mean that it is time for us to make the necessary payments on our bills or splurge a little this month.
However, we fail to realize the importance of paying ourselves first before others.
In this case, paying ourselves may mean allocating our paycheck into our savings war chest and our investment ‘garden’.
We may have made the mistake of paying our bills, spending on our wants before we realize that we do not have enough for either our war chest or ‘garden of plants’.
2. Not Setting A Buffer
Have you encountered months where you just spend a little more ? Maybe it was your mum’s birthday that falls just in the month of December. So you had to buy both Christmas gifts and birthday gift for your mum and loved ones.
There will be months when our expenditure just gets a little higher than usual. Hence it might be important to come out with a buffer or wiggle room for our budget that we set for ourselves.
An additional room of 5-10% allocated for your expenses budget may just work well to keep your budget in place when expenses quirks
come along. Any extra cash at the end of each month can then be allocated to either your savings or investment budget
3. Not Setting A Budget For The 'Wants' and 'Fun'
“All work and no play makes jack a dull boy”
We might have set a goal for ourselves hence coming up with a budget to work towards it. Maybe it is to save a certain amount by a certain age, or to clear a loan that we might have taken up as soon as possible.
However, going on this budgeting journey without any fun or time to splurge and enjoy a little may not be sustainable in the long run.
We might be really excited about it in the first few months, having a strict and consistent budget. However, in time to come when we do not add in elements of fun to splurge and enjoy a little, we may soon get bored and fail to keep up with it.
Some Tips
So now that we have understood some of the budgeting traps to avoid, what are some of the tips that we can pick up to keep ourselves on track on our budgeting journey?
Keeping our budget realistic
Planning to save 100% of our income each month? We all know this is not realistic. But how about saving 50% of our income? This may seem more possible.
However, in some situations, you may feel that setting aside just 50% of your income each month may not help achieve your goals in time.
Hence this is when the ‘garden of plants’ comes in. How then can we allocate a budget for investing each month to grow our money. Having a realistic budget to save and invest will play an important role in achieving our financial goals.
Understanding what you are budgeting for It may be easy to start committing on a budget that we have set. But it may not be that simple sticking through with it. Understanding what and why we are budgeting may help us with this.
Whether it is to grow our wealth for retirement planning, saving for insurance coverage, for our child’s education, or maybe for the first car or house of yours. Understanding the why behind each budgeting plan can help make it possible to stick through with it.
It might seem really overwhelming to start understanding the reason behind your budgeting plan. If this is you, don’t worry and feel free to reach out to us as we are always here to listen and guide you along your financial journey.
Whether it is understanding what you are planning or budgeting for, there are many ways that could help reduce the friction to help achieve them. Find out how today!
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Learning about financial literacy can also be fun and easy ! Stay with us in this financial journey one post at a time to find out how !
If you haven’t already, you can check out our other work down below too, happy learning and reading !
Curious about different investing strategies ? Find out here!
https://www.janeongdistrict.com/post/everyone-can-reap-the-benefits-of-active-investing-here-s-how
Plan to save more ? Here’s how to get started 🤨
https://seedly.sg/opinions/plan-to-save-more-here-s-how-to-get-started
Ready for a New Year Financial Resolution ?
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