4 Minute Read
A sloppy budget is a lot like a car that won’t start. It may look nice, but if it doesn’t take you where you need to go, what’s the point?
Planning a monthly budget takes time and practice, and it needs to be refreshed every now and then. It’s time to look under the hood and get your budget working for you again. Here are seven signs you need to refresh your monthly budget.
1. Withdrawing cash before you budget
It’s the first of the month. You have no cash and need groceries—like yesterday. Why not swing by the ATM, grab some cash, and do the budget later? Because you’ll forget! And without a plan, you’ll end up wasting your money on things you don’t need. So before the month begins, have your budget ready. If you wait, it won’t get done.
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2. Not giving off the top (or at all)
If you want to win with money, you have to give. It’s as simple as that. When you give off the top of a well-managed budget, you may be surprised to find living on less can actually feel like you have more. That’s because managed money works harder. Charitable giving should always be the first line on your monthly budget.
3. Constantly worrying about “unexpected” big purchases
You need an emergency fund. It’s impossible to know when you’re going to need to patch up the roof, replace the dryer, or tune up the air conditioning on your car. Having an emergency fund will help you be prepared for life’s curveballs. Your budget will help you consistently put aside money each month for your emergency fund. As it grows, you’ll feel peace of mind knowing you have a buffer between you and the twists and turns of life. Your budget will keep you prepared for the unknown.
4. Robbing yourself to pay yourself
Are you constantly borrowing from one envelope to pay another? Or swiping your debit card for unplanned items just because there’s money in your bank account? Either your budget has a problem, or you do. If it’s you, then you’re buying impulsively and need to practice some delayed gratification. If it’s your budget, then you aren’t being realistic. Make your budget practical—not just pretty.
5. Forgetting about annual expenses
Dentist visits, pet shots, car insurance, birthdays—these annual expenses can leave you dipping into your emergency fund if you’re not careful. Instead of stealing from your savings, create a budgeting “cheat sheet” where you list annual expenses and the months they’re due. Leave your emergency fund intact by budgeting with the big picture in mind.
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6. Spending too much in one category
Are you spending half your budget on takeout? Straighten out your spending by giving each budgeted category a specific percentage. We recommend 10–15% for food , 25–35% on housing, 10–15% in savings, and 10–15% on charitable giving. And make sure your entire monthly budget—including clothing, transportation, insurance and entertainment—equals 100%. No matter what!
7. Using the same budget every month
Because there’s no such thing as “the perfect month,” a one-size-fits-all budget won’t cut it. You have to make a new budget every single month. It’s fine to look at last month’s budget for direction, but expenses change with the seasons. Set aside a specific time to review and revise your budget before the month begins and stop expecting an old plan to work for new expenses. Having good intentions with your money is a step in the right direction, but it won’t get you far. Reevaluate your budget and fix the areas that aren’t working.
It’s never too late for a fresh start.
If you’re not sure where to start with zero-based budgeting or how to manage your money, check out Financial Peace University. FPU gives you the opportunity to learn how to budget, pay off debt, save for retirement, and much more!