Common family budgeting pitfalls

Common family budgeting pitfalls

In turbulent financial times, it is vital to keep a tight grip on the family finances. That’s common knowledge, and we also know that a key ingredient to getting that right is to draw up a family budget. So far so good, but why is it that despite the best of intentions, the budget we set down on paper seldom bears any similarity to reality?

Here, we take a look at the most common budgeting pitfalls. Get these ironed out and you’ll not only find it easier to meet your monthly expenses, but you might also even have some money left over at the end of the month.

Stop kidding yourself

When setting a budget, we have a tendency to try and make it look as impressive as possible. Inevitably, that means underestimating those costs over which we really have little control. For things like car costs or the monthly electricity usage, err on the side of pessimism. Far better to find that something actually worked out cheaper than you expected than the other way around.

Keep track of your expenses

To use the car costs example again, if you put £50 of fuel in the tank and pay for it with your credit card, it is there on your statement in black and white at the end of the month. But where many of us trip up is with the cappuccino and packet of crisps that we also grab on impulse and buy with cash. Two or three pounds might seem like nothing but do it three or four times a week and that can easily be £50 that’s disappeared over the course of a month. Keep track of every expense, and try to avoid using cash at all, as it has an annoying way of evaporating.

Make proper use of your savings

The other thing that evaporates unless you are careful is that little pile of savings you so carefully accumulated. Don’t just leave it in the bank, make it work for you. By opening an ISA like the ones shown here, you can also benefit from some handy tax breaks.

Be organised with your shopping

You probably know the importance of having a shopping list and sticking to it if you want to save on the grocery shopping. But as well as being organised about what you buy, you also need to factor in the “when.” Go to the supermarket for a weekly shop, just like your parents used to, and avoid popping out to grab “a handful of essentials” every other day. The problem with that is you end up either burning more fuel or spending over the odds in your local corner shop.

Watch out for the bills from left field

Not every expenditure is neatly divided into monthly payments. If you have oil central heating, for example, you probably order a delivery when the tank is running low, or perhaps you paid your home or car insurance in a lump sum to take advantage of a discount. Make sure you budget for these, too, so that you know when they are coming.

Disclosure: This is a guest post in association with Wealthify.

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