Two and a Half Budgeting Mistakes I’ll Never Make Again

Budgeting mistakesThere are two kinds of people in the world: those who budget and those who don’t. Actually, I’m sure that’s a much-too-simple view of the world. But let’s pretend it’s true for the moment (at least while you read this article).

Anyway, the point is, for most of my life I was one of the “Non-Budgeting People.” When I was kid I understood the concept of a budget in an abstract kind of way, like “Oh yeah, there are spreadsheets and calculations and you write down numbers to make sure your money does what it’s supposed to.”

I always figured I would start budgeting eventually, but in between all the life events that happened as I transitioned from being a kid to a teenager to a young adult, I never made that leap to using a budget. And I now realize why that was.

I think what stopped me from becoming one of the “Budgeting People” sooner were the following two and half mistakes:

Budgeting Mistake #1: Believing that being frugal is the same as budgeting

Budgeting mistakes - being frugal isn't enough

I’ve always tried (usually with some degree of success) to be frugal. At least in the sense that I always did a good job avoiding any purchases that I didn’t really need and finding the less expensive way to do something when possible.

For example, if I had a choice between buying a brand name pair of jeans or buying one from the discount rack, I’d go for the discount rack. And I certainly never tallied any thousand-dollar bar tabs or anything. So I figured I was doing pretty well. But the problem is that even if you’re being frugal, when you’re not tracking your spending, it’s still easy for money to slip through the cracks.

As it turned out, once I finally started budgeting, I noticed that too much money was being taken up by certain things, such as eating lunch out during the workweek. Only after getting serious about budgeting (not just frugality) was I able to identify some of those unnecessary expenses and start eliminating them.

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Budgeting Mistake #2: Thinking that you have to be perfect to budget

Budgeting mistakes - don't have to be perfect

I used to think that budgeting meant accounting for every cent and never spending a dime on something you weren’t “supposed to” purchase. Since that seemed like an unattainable standard, I figured maybe budgeting wasn’t for me. If only I had learned then that budgeting is helpful precisely when you aren’t able to be 100% disciplined.

You can actually include a category in your budget for “fun” or “unexpected” things. And even if you go over your budget each month, you’re still better off knowing why – it gives you the power to change your habits over time and eventually take more control over your finances. In other words, I eventually realized you don’t have to be perfect to be a successful “Budgeting Person.”

Budgeting Mistake #2.5: Assuming it would take lots of time to budget properly

Budgeting mistake - thinking it would take too much time

I’m counting this as only half a mistake because it ended up being partially true. I used to assume that budgeting would take up so much time that I would get fed up with it and never stick with it. I envisioned countless hours staring at a computer screen, entering numbers and decimals into a mind-numbing spreadsheet.

Instead, once I finally got around to trying a budget, I realized it doesn’t take that much time or effort. When you first start, there is a certain amount of time commitment necessary to go through and write down your expenses and then to push yourself into the habit of writing things down regularly.

But ultimately, that doesn’t take very much time, especially after you get in the habit of doing it.

And I guess that’s why I’m now happy as a “Budgeting Person.”

What about you?

Image 1 by jamingray; Image 2 by carianoff; Image 3 by andrewrennie; Image 4 by Ed Yourdon

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  • TB at BlueCollarWorkman.com

    What finally worked to get my wife and me budgeting was saving receipts for a couple months. Instead of trying to set up a budget or figure anytying out, we just kept our receipts for a couple months. AFter that, we wrote down how much we spent on stuff (cuz we didn’t even know what we were spending on — so how could we have set up a budget beforehand?), and could start to make categories and pick spots that seemed like we were spending a lot, etc. That’s what worked for us — not making a budget at first and just getting a handle on what we were doing.

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      That’s a really good way to get started, and one I hadn’t thought about before. It kind of allows you to break up the hard part into two pieces: first you collect the receipts and then you tally them up. Once you do that, then you know where you stand and what you need to change. Glad it worked for you!

  • Veronica @ Pelican on Money

    I always thought I handled my food spending well, but it took a really good look at my statements to figure out juts how much I was spending. I found out I was spending wayyy too much on Starbucks. Ugh, they got me good! As a result I made a budget on that sort of spending and try not to go over it, even if it means I can’t indulge a delicious iced caramel machiato. *Drools*

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Yeah, it’s surprising how quickly those little expenses can add up, huh? That’s great you’ve transitioned to a budget – and don’t forget, you can still get those machiatos every once in a while!

  • http://clubthrifty.com/ Greg@ClubThrifty

    Ben, this is a great post! It is so true that budgeting does not mean being frugal. For years, we lived what we thought was a relatively frugal existence. Yet, we couldn’t figure out where all of our money was going. It was only when we decided to do a written budget that we were able to really start saving. A written budget helped us to find hundreds of dollars a month that were just flying out the window. We are trying to explain this to a friend of ours at the moment…however, he is a little resistant to the idea. Hopefully, he will see the light soon.

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      It’s surprising, isn’t it? When you finally have that moment where you realize that there are actually leaks where the money is escaping, it’s sobering. Good luck with that friend of yours… That experience might make for an interesting blog post!

      • http://clubthrifty.com/ Greg@ClubThrifty

        I think it is probably coming to a Club Thrifty near you in the next few weeks:)

        • http://www.twitter.com/bwfeldman Benjamin Feldman

          Excellent! Let me know when it’s published! :)

  • http://carefulcents.com/ Carrie Smith

    I used to make the mistake of being way too perfect with my budget. I’d log every cent and wouldn’t make a decision without first consulting my budget. That’s all well and good, but it makes for a very stressful (and time consuming) money management strategy. Now, I spend a little more on things that I care about and completely avoid the things I don’t need. It’s all about finding a good balance and I’m proud to say I’m a budgeting person too!

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      I agree, Carrie – there is a cost to being stressed out too! Once you can reach that balance you described, that’s when you’re in business.

  • TheBrokeProfessional

    Great post. I just recently got into budgeting myself. Now I can see where my money is actually going and I find it kind of fun! My wife doesn’t but she plays along anyway. I started using the You Need a Budget software and that’s made things very easy and understandable.

    • http://www.twitter.com/bwfeldman Benjamin Feldman

      Thanks so much. I agree with you – it’s actually fun to see where my money is going and to feel like I have some control, rather than being surprised at the end of the month. Glad to hear your wife is on board and that the YNAB software is helping! Keep us updated on your progress. And if you ever want to write a guest post about your experience, let me know!

      • TheBrokeProfessional

        I would love to write a guest post about my budgeting experience thus far. You can contact me at questions (at) thebrokeprofessional.com, or through the contact form on my blog. Thanks and look forward to contributing.