5 Things That Are Destroying Your Budget

What is your first thought when you think about budgeting? Do you automatically think restriction and pure misery? Are you cringing at the screen right now? Well I’m here to show you 5 things that might be destroying your budget vibe. Budgeting has changed my life for the better and has given me the freedom to spend more in areas that bring me happiness (like travelling!). I know it can help you get there too.

Call it your money allocation or a spending plan, honestly, call it whatever you need to get on track and get it done. Here are 5 things that might be destroying your budget!

You’re Optimistic Not Realistic

It’s important to look back at your past spending and allocate your spending money accordingly. If you spent $400 on groceries last month, it would be silly to only allocate $200 for this month simply because you only want to spend that much. Let’s not kid ourselves, you’re going to be spending closer to $400. Be realistic and stop setting yourself up for failure.

If you want to get your food budget down the $200, start by cutting it down to $375 or $350 and keep going from there. A drastic change is only going to hurt, not help your ability to stick to a budget in the longterm.

You’re Too Strict

If you’re not changing your budget from month-to-month, you might be destroying your budget. Our lives change so much each and every month. I know I personally go out to eat more in the summer months and less in the winter. Patio season, am I right? If I average out my eating out spending and keep the same budget all year round, I’m bound to go over budget for eating out in the summer and will either a) feel guilty for it or b) say no to going out with friends, which would be sad because this is something that really makes me happy.

We all go over budget sometimes and that’s okay. Do your best to predict your spending but at the end of the day, life is going to happen. The important part is being mindful about where your money is going.

You Don’t Have a Buffer

Slip ups happen. Forgot you needed to get your best friend a birthday present this month and now you need to put it on the credit card? We can all do our best to predict our monthly spending but it’s really important that we have a buffer to take on the expenses that will inevitably pop-up from time to time.

When you’re creating your budget, make sure to leave a bit of room for miscellaneous spending. The amount of buffer you’ll need in your budget completely depends on your lifestyle but mine is around $150. And get this!! When I don’t end up spending it, I transfer the money into my short term savings at the end of the month. Just from doing this, I have enough saved to buy myself a new laptop when mine finally breaks down, which may honestly be any day now. Double the advantage of having no buffer at all!

You Don’t Have Short-term Savings

Short-term savings are life-changing. I cannot stress this enough.

Think about something you purchase every year or every few years and just imagine how much easier it would be to pay for if you saved up in small increments along the way.

Let’s go through some of my favourite examples: Christmas spending and car insurance.

We all know that Christmas is on December 25th every year so why leave all of your Christmas spending for December? If you really want to cash flow Christmas, start saving throughout the year. I personally start saving $50 a month in January and have $600 sitting in a savings account ready for me to spend when December rolls around. I am also racking up 2% interest (now 1.5%) in my high interest savings account so I literally get paid to save up in advance.

The same rules apply if you have a car. You know you’re going to need to pay for your car insurance and get some kind of car maintenance every year, so why not prepare for it? Maybe your car insurance will come out to around $1,200? Divide that by the 12 months of the year and save up $100 a month. When your car insurance is due, you’ll have the money ready to pay for it, no stress involved. By paying yourself every month instead of going for the monthly payments offered by your insurance company, you’re also bound to save money that way too. Paying up front is almost always a better bang for your buck. Go see for yourself!

What could you start saving up for today?

You Don’t Have Any Fun Money

At the end of the day, you need to enjoy life now while also doing your best to prepare for the future. Whether that means allocating $5 to a fancy coffee every month or $500 towards new clothing, make sure you leave room for whatever it is that makes you feel warm and fuzzy inside.

Budgeting is about prioritization not deprivation. It’s important to allocate money towards the important stuff first like rent, groceries and saving for retirement, but then it’s your time to shine! You get to choose what you spend the rest of your money on. When creating a spending plan for yourself, make sure to keep these 5 things in mind that might be destroying your budget. Saving money is really important but know that you’re allowed to spend it too!