Expert's Corner - Top 5 Budgeting Mistakes

  • Posted on: 9 December 2015
  • By: admin

Expert's Corner - Top 5 Budgeting Mistakes

During my 10 years as a professional budget coach, I've had the privilege of working with families of all income levels, ages, and lifestyles.  Although everyone is different, there are certain problems that I see again and again.  I'm calling these my Top 5 Budgeting Mistakes.  Any of these sound familiar?

Issue #1: Multiple checking accounts
If you have multiple checking accounts and you cannot clearly define what each one is being used for, you have too many. Money should be simple and straightforward so think of multiple checking accounts as clutter.

 

Solution: Close the extra accounts
Streamline! Fewer accounts result in less work for you, freed up mental energy and more awareness. You may even make better decisions when you can see all your spending activity in one account.

 

Issue #2: One spouse handles all the finances.
A husband and wife don’t need to pay bills or balance the checkbook together, but the person who is not responsible cannot be completely uninvolved either. Sometimes I see a couple for their first visit and the disconnect is considerable. For example, the wife is stressed about their financial situation yet her husband had no idea there was a problem.

 

Solution: Step up the communication!
If you handle the bills, make sure you're sharing small achievements with your spouse and not only involving him/her when something goes wrong. Try sitting down with your spouse monthly. You want to ask the question, “What are we doing with our money this month?”

 

Issue #3: Saying “need” in place of “want.”
A better cell phone, a landscaper, a new car, nicer clothes, the list goes on and on...

 

Solution: Change your choice of words and your mindset will follow.
You can have all the things listed above and even more, but realize they are wants and not needs. Ask yourself, “What is it that I truly need?” Your level of appreciation for everything else will soar!

 

Issue #4: Paying bills late.
This is an expensive habit; I've seen people spend over $100 monthly on late fees. Most of the time, they had the money to pay the bill, but simply forgot or weren’t paying attention.

 

Solution: Make a list and check it twice.
Make a list of your bills, the amount, and their due dates. Sort the list in order of when the bill is due. Check the bills off as you pay them each month. It doesn’t have to be an elaborate system; remember, simple and straightforward is the best!

 

Issue #5: Not paying attention.
When was the last time you looked at your cable bill or other monthly statements? It’s common for my clients to save thousands of dollars per year simply by canceling services they don’t use or even realize they had.

 

Solution: Pay attention!
You don’t have to look at every bill every month, but you should be reviewing all of them a few times each year. Your credit card statement is one that should be reviewed each month to ensure all of the charges were made by you.

 

Regardless of our financial situation, it's easy in our hectic lives to stop paying attention to the little money details. It's those little things though that add-up. Pay attention to these details and soon you'll find that you will start managing your money instead of the other way around. If any items on the list above caught your attention, set aside a few moments this week to optimize your personal finances. Your bank account and blood pressure will thank you!

Kelsa Dickey is a Financial Coach with Fiscal Fitness Phoenix and can be contacted at 480-788-4588.
 
The views and opinions expressed are not those of Pathlight Investors and are intended to be for educational purposes only. Pathlight Investors cannot vouch for the accuracy of the information presented. Please contact the author of the article to determine how this information pertains to your specific situation.