The 5 pitfalls of budgeting

And how to avoid them!

Not planning for the unexpected

  • Social events that we want to participate in
  • The one-off annual expenses that are off our radar
  • Essential things we rely on needing repair or replacement
  • Urgent essentials/emergencies
How to avoid:
  1. A ‘buffer’ in your lifestyle spending account for the unplanned events we want/need to participate in.  Things will always come up, plan for them, set up a separate small online savings account if you need.
  2. Make sure you have an Emergency Fund set up for the major unexpected set backs. 

Not dividing your budget into spending categories

  • Having all your income and expenses coming out of one account
  • Needing to rely on line-by-line tracking or wishful thinking to know if you are within budget
  • If you try and manage competing priorities and timeframes in one account you are going to have a headache and feel totally out of control.
How to avoid:
  • Set up separate accounts for separate spending categories.  E.g. essential bills, groceries, lifestyle
  • Make it foolproof by automatically allocating money to these separate accounts.  Choose what you want to spend in discretionary areas putting yourself in control.

Seeing a budget as deprivation

  • You see it like a strict diet that deprives you of your favourite foods
  • Afraid you will have to go without and you’re not ready/terrified!
How to avoid:
  • Budgets done well mean you don’t have to go without!
  • Give yourself permission to enjoy some of your money guilt free
  • Transform your views on ‘budget’ as a tool that gives you choices

You don’t know what you are working towards

  • You know you probably should do a budget, but perhaps it’s in the too hard basket
How to avoid:
  • To take action we need to have something compelling we are working towards.  This is our purpose or our bigger picture and it needs to be our driving motivation.
  • We need to be clear on our values and what is important to us.
  • We have to shift our thinking and start seeing money as the tool that will allow us to live life on our terms.
  • Goals!  Goals! Goals!

Not being on the same page as your partner

  • Does one of you take control of managing the money and struggle to get the other on board?
  • Money is not a conversation you are having or there is conflict around it?
How to avoid:
  • Start the money conversation by bringing it back to two key things:
    •  your money stories
    •  your goals
  • Work out who is going to play what role and each commit to being across your finances – united by the shared goals!

If you want to explore all of this, take control and move your money management to the next step…jump on the waitlist to our Kickstart course…doors opening very soon!

MoneyMode Advice Pty Ltd (ABN 29 627 492 791) is a corporate authorised representative of Integrity Financial Planners Pty Ltd (AFSL 225051, ABN 71 069 537 855)

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This presentation provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

Renae Vercoe
Founder of Money Mode, financial professional, passionate educator, partner, mum and financial freedom fighter!