Typical Budgeting Errors Might be Avoided: Budget How-to
Budget planning in the simplest sense involves placing limits on what you want to spend over a given time period. But there is a subtle part of budget planning that is often overlooked: guidelines to keep you from stumbling into pitfalls that could ruin your budget. I call this bloop-proofing your budget.
A budget blooper is something that was not in the budget, is significant enough to bloop it, and could be avoided if there were a strategy to deal with it. Budget bloopers are different for different people. The irony is that you probably won’t know what bloops your budget until it’s been blooped at least a couple of times. Here are a few rules that help to keep me from blooping my budget.
Five budgeting steps
1. Evaluate a record of past income and expenses
2. Project income and expenses into the future
3. Balance your budget
4. Monitor income and expenses and compare to budget
5. Don’t bloop the budget!
Avoiding budget bloopers
- When eating out by myself, use fast food or as-cheap-as diners. My son-in-law would add: take a sack lunch to work.
- Get a second opinion on service recommendations (auto, house, medical).
- Don’t make discretionary purchases over $50 without sleeping on it and praying, or over $100 without consulting my wife. If over $500, keep looking until I find someone who tries to talk me out of it. The whole idea is to reduce impulse spending because my budget doesn’t have a category labeled "impulse expenses."
- Tell salesmen I want to look first by myself and then ask questions. For some items that I don’t know anything about, the opposite order works best. Either way, I need to be left alone to think by myself. If they won’t honor that, walk away so I can think. Having someone along to talk to makes ignoring the salesman easier.
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