If you have financial goals of any kind, you need a budget to keep you on track. A good budget can help you pay off debt or save to buy your first home—or both. But crafting a good budget can sometimes come with some pitfalls for even the most well-intentioned of planners. Here, Steve Butcher, Sr., a local real estate attorney in Rochester, NY, discusses five common budgeting mistakes and how to avoid them.
5 Budget Planning Errors
1. Not Tracking Finances
If you finally sat down and created a budget, that’s great! That is sometimes the biggest hurdle for people to overcome. The next step, though, is to track your spending and stick with your budget. This tedious part of budgeting is where most people get stuck—fortunately, there are plenty of websites and apps that can make tracking your spending easier.
2. Forgetting About Non-Monthly Expenses
When you first create a budget, you’ll probably focus on your monthly expenses, such as your rent or mortgage, car payment, and variables such as groceries. Not all expenses are monthly, though—some happen just once or twice a year. If you forget to account for those, you could end up in a tight spot when those bills come due.
3. Being Too Strict
Regardless of your current financial situation, it is possible to create a budget that is too strict. If you don’t leave room in your budget for fun things, you are bound to feel restricted and you may eventually give up. Set aside a little extra cash to do the things you enjoy and you’ll have an easier time sticking with your budget.
4. Not Planning for the Unexpected
Recent studies have shown that most Americans lack the savings to handle unexpected emergencies. If you don’t have an emergency fund set up yet, include it in your budget. Put whatever you can afford into this category each month so you’re prepared for an emergency.
5. Failing to Account for Long-Term Costs
When people buy a house or vehicle, they usually only consider their down payment and their monthly payments after purchase. What they fail to factor in are all the maintenance costs that can add up over time. Cars need regular oil changes, new tires, and other parts to keep them running smoothly. Your home may eventually need a new roof or water heater. Even the cost of basic lawn care can add up. Before you make a big purchase, think about these long-term expenses.
If you are considering buying or selling a house, you need a real estate attorney who understands New York property laws and regulations. Steve Butcher, Sr. is a trusted real estate attorney who has helped numerous clients buy their first home or purchase or sell an investment property. His legal services extend through the closing of the sale and he offers flat fees so you can budget for this expense. Contact him today at (585) 263-2444 for a free phone consultation.