Are You Making This Budgeting Mistake?

September 21, 2013
by Kyle Taylor
Save Money Piggy Bank

If you’re like many Americans, you sit down every month and make a rough budget.  You estimate how much money will be coming in, and you write down what you will do with that money.

Perhaps, like many Americans, when the end of the month comes, you find yourself looking at a negative number.

What happened?

You didn’t spend excessively.  You tried to stick to the budget.  What happened?  Why is it so hard to get ahead financially?

Did You Make This Budgeting Mistake?

For the last year or two, the above scenario has occurred in my family every month.  We stuck to the budget; we didn’t spend excessively.  What happened?

Simply put, we didn’t plan for recurring annual or semi-annual bills.

Why not?

Well, we’re trying to pay down debt, and I wanted as much money as possible to go on our debt repayment.  However, that left us short some months when we had large annual or semi-annual expenses like car insurance.

We were living with an unrealistic budget that didn’t really include all of our expenses.

If you’re having budgeting trouble, maybe you’re making that same mistake.

How to Fix Your Budget

If you’re creating a budget every month, you likely know what your monthly expenses are.  Now, it’s time to sit down and write down your other expenses that aren’t monthly.

Consider renter’s or house insurance, car insurance, life insurance if you pay annually.

Don’t forget registration on your vehicle.  Perhaps a yearly parking sticker?

Also, add in realistic expenses.  For years now, there’s been a little Dave Ramsey in my head shouting “It’s not in the budget!”

I never included a clothing category because my mental little Dave would always shout, “It’s not in the budget!”

Well, guess what?  My three kids keep growing, and whether or not the money is in the budget, they need clothes.  I can certainly buy used for the family (and I do), and that helps cut costs, but I still need to set aside some money for clothes and shoes. But, I do try to search for coupons online each month. For example, there’s a ton of great Snapdeal coupons out there and we’ve used them several times to save a bundle of money.

Now, we have $50 a month set aside for clothing and shoes.  We certainly don’t spend it every month, but we set the money aside and save it until we need it.

Don’t Forget to Set Aside Money for Savings

If you, too, are paying down debt, you may want to do as I did and set aside every extra penny for debt repayment.  However, that’s not wise.  What will happen is that some months you will make great progress on paying down your debt, and then other months you’ll have unexpected expenses that will plummet you into new debt if you don’t have ample savings.

Make sure you set aside some money every month for savings.

If you can only afford to set aside $5 a month, at least set aside that amount.  If you can set aside $50 or more, great.  But make saving a regular line item in your budget.  You get used to being in the habit of saving, and your money will add up month in and month out if you have an emergency and need to dip into your savings.

If you create a realistic budget and consider ALL of your expenses, you’ll likely have much more success adhering to the budget.

I know a realistic budget will slow down our debt repayment speed, but my guess is that it will also ensure that we have steady debt reduction progress every month.

by Kyle Taylor
Kyle is the founder of

Share Your Thoughts

Top Articles

What Makes a Good Accountant?

According to the U.S. Bureau of Labor Statistics’ “Occupational Outlook Handbook,” there are a few concrete traits and educational requirements that make up a good accountant. These include analytical skills, being detail oriented, possessing a great ability to compare, interpret, and analyze complex figures, and having keen organizational skills. Oh, and obtaining a bachelor’s degree […]

What Annuity Options Are Available Post-Retirement?

Retirement is something many of us will look forward to. Saying goodbye to the world of work, the daily grind and having to get up at 7am every weekday morning are just reward for decade after decade of turning up to our jobs on time, putting a good shift in and contributing to the economy […]

Are You Making This Budgeting Mistake?

If you’re like many Americans, you sit down every month and make a rough budget.  You estimate how much money will be coming in, and you write down what you will do with that money. Perhaps, like many Americans, when the end of the month comes, you find yourself looking at a negative number. What […]

Company Car or Car Allowance: Which one to choose?

One of the employment benefits most often talked about in Australia must be the company car. It’s a valued benefit, but with a variety of options due to tax law changes back in 2002, it’s hard to tell what is the right choice for you. Let’s walk through the two options, and explore some of […]

Are You Saving All Wrong?

With saving interest rates so low on most accounts, you may be depressed each month when you look at your bank statement.  It was only about 5 years ago that you could easily earn upwards of 5% in a money market fund.  That just isn’t the case now.  But if you’re stuck at 0.50% or […]

The 4 Best Lottery Winner Stories

Whether you go to the gas station or convenience store and pick up your lottery ticket or instead frequent a site like William Hill 49s, you likely play the lottery because you dream of winning it big.  Who doesn’t? It’s hard not to imagine what life would be like as a multimillionaire when you hear stories […]

How to Save Money By Bundling Your Services

There are many ways to be a Penny Hoarder:  find free money with bank and credit card offers, find ways to make extra money on the side, and find ways to save money.  The latter may not get discussed as much as the other two options, but it’s still important. Saving money without diminishing the […]

Setting Your College Student Up for Financial Success

Ah, the end of summer.  Time for the kids to go back to school, including the college students.  The first year of college can be quite a learning experience, not just academically, but socially and emotionally as well.  Unfortunately, for many college students, it’s also a financial learning experience.  I say unfortunately because many college […]