Many millennials are sabotaging their budget – and they may not even realize it.
People tend to focus in on one aspect of their financial situation, such as their debt or income. They may not realize the power of their regular, day-to-day budget.
Here is how people tend to sabotage their own budget and how to overcome it.
1) Failing to Set Up an Emergency Fund
An emergency fund is imperative for any budget. Without it, you risk having to blow your whole budget to pay for some minor (or major) inconvenience that popped up.
To save your budget, set aside money each month into your emergency fund. How much you save is up to you. Even $500 can go a long way in saving you in the event of an emergency.
2) Not Earning Enough
So many people feel stuck, like they will only ever earn what their employer chooses to pay them. It’s not easy to work a full-time job, but if your job isn’t paying the bills, then you have a serious problem on your hands.
You can always earn more. If you aren’t earning enough at your full-time job, then maybe it’s time to consider finding a higher paying 9-5. However, for many millennials, they are in the process of getting their foot in the door. It may take a few years of underemployment before they can really earn their desired salary. If that’s the case for you, then perhaps it is time to consider starting a side hustle to earn extra money.
There is no shortage of side hustles available. You can earn money by doing anything, from freelance writing to handy work, or even blogging.
3) Spending Too Much on Wants
We all have things we want – but sometimes, we can get carried away with spending too much on wants and not enough on needs.
Everyone needs to save money for the future. It’s nearly impossible to ever plan to buy a house, retire, or pay off debt if you can’t focus on setting money aside.
A lot of people, however, forgo their needs for their immediate wants. While there is no harm in spending a little bit of money on yourself every once in awhile, it’s easy to get carried away and blow your budget entirely.
A good way to counter this is to allow yourself a set dollar amount worth of obligation-free spending each month. This is money you can spend freely, without any guilt.
4) Not Having a Budget at All
Of course, some people (more than you probably realize) sabotage themselves by not having a budget at all. Many people assume that budgets are tedious and time consuming. Instead of taking a few minutes to crunch the numbers, they make wild assumptions about their own spending – of which are often inaccurate.
The best thing you can do for yourself is to set up a budget. If you are someone who prefers to keep track of things digitally, check out Tiller. Tiller is an app that shows you a snapshot of your entire financial situation, all in one picture.
Or, if you prefer a more classic method of keeping track of your finances, download our free budget template that automatically calculates your spending and income for you.
5) Not Creating a Savings Plan
Without a plan, it’s pretty challenging to ever meet your savings goal. Having money set aside is imperative to any budget. Without it, you may find you are either unable to afford the things that you want, or you are forced back into debt. Neither situations are desirable.
To counter this, create a savings plan and a method to track your progress. Not only does it help to motivate you, but it helps you to reconsider all of the unnecessary purchases you want to make.
Related:
Have you self-sabotaged your budget? How so? How could you improve your current budgeting situation?
Check out some of our favorite personal finance resources:
Are you getting the best credit card rewards? Check out the top cash back credit card offers (updated daily)
Make extra money: 15 ways to make money from your computer
Get the First Chapter Free!
Join our online community and get the first chapter of the book Student Loan Solution absolutely FREE!
totally agree infact since I have a budgeet I have it for every area, also for fun stuff:P
So glad to hear! You are golden!