Wednesday, May 14, 2008

Personal Finance Budgeting: Major Personal Budget Mistakes

Major Mistakes That Cause People To Fail or Quit On Their Personal Budget

In my last post I gave you all a financial advising tip about personal budgets and tried to explain why we all must make our own personal budget worksheet. Today I am going to give you all a quick list of some common personal budgeting mistakes that people make when writing a personal budget.

1) Not having a personal budget

Sorry, I had to put this one first because I know that some readers out there are stilling thinking that they can get by without writing their own personal budget. This is the most important step and sadly most people don't even make it to the step of starting their personal budget. You cannot fail or succeed if you do not try.

2) Making sure that the personal budget worksheet is added correctly

This is another dumb, yet common mistake people make. People incorrectly add the numbers and end up thinking they are spending $200 less than they actually are. Double check all of the numbers on your personal budget template frequently to be sure they are correct.

3) Inconsistent Savings

This is another common mistake with peoples personal budget plans. People need a specific line item for savings in their personal budgeting worksheet and they need to stick to their personal budget and save the planned amount each month.

4) Failure to plan for unexpected expenses when developing a personal budget

Most people do not realize that you need a specific column in your personal budget for an emergency fund. This money is then set aside and kept in case of an unexpected expense.

5) Paying the minimum payment on credit cards

People often make the mistake of only budgeting to pay the minimum on their credit cards. People need to setup their personal budget so that it allows them to make the largest possible payment on their credit card. This will allow them to get out of debt quicker and eventually have a less restrictive monthly budget plan.

6) Cutting all the fun out with your personal budget plan

When you make your budget plans you need to plan for some of your money to go to entertainment and fun. If you do not set your personal budget up this way you will find it to be to restrictive and likely not follow it. You need allocate some of your income toward fun and entertainment and budget for it by cutting out some other expense.

7) Spending more money than you make

This is often a huge mistake. When creating a personal budget need to set it up so that you are only planning to spend what you actually make and no more than this.

This is a quick list of 7 major personal budget mistakes that people make. In my next post I will continue to talk about personal finance budgeting and give you more financial advisor tips that should help you on your quest for financial freedom and financial peace.


P.S. What is a purple parrot personal budget manager?

If you are looking for a personal financial advisor email me and I will give you suggestions on a few good financial advising companies.

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