Money slipping away from your fingers every month?
Not sure why your credit card bill seems to be climbing?
These are the biggest things that can ruin your budget.
This article was written by a Financial Horse Contributor.
1. Not automating your savings
The biggest thing that can ruin your budget is not prioritizing savings.
Save first, spend what’s left after.
In order to always hit your savings goal, the best way is to automate your savings.
Allocate a fixed % or amount every month that goes immediately from your income to your savings (and make it hard for you to use this account to keep it safe).
One step further is automating your investments as well.
Some common strategies include allocating a fixed % to investing every month, or employing a form of DCA investing that works for your portfolio.
2. Impulse purchases
Impulse purchases take the biggest hit to your finances.
This could be because of emotional spending, or in some cases, emergency spending out of necessity.
This is why it is important to have an emergency fund.
If you do “accidentally” go over budget with an impulse purchase, make sure to replenish this ASAP.
Make it a priority to save extra the next month (or as quickly as you can), to get back on track.
3. FOMO spending
Related to impulse purchases are FOMO spending.
However, this can be more insidious, as it can affect your mental health, causing you to lose sight of your long-term goals.
Comparison is the thief of joy.
So focus on yourself, and yourself only.
Remind yourself that at the end of the day, you are working towards a comfortable retirement.
And you will appreciate that a lot more than any FOMO purchase you make today.
4. Small things add up
In many cases, it is the small things that do you in.
A small leak can sink a big boat.
A swipe of Apple Pay at lunch and after work, and several subscription billing cycles later, you suddenly find yourself strapped for cash.
Be mindful of these small purchases.
Set an automated SMS reminder for any purchase above $1 on your credit cards, to remind yourself that you are spending money.
Track your expenses for a week, and see how these little things add up.
Be more mindful about your spending, and your bank account will certainly thank you.
5. Lifestyle creep
Lifestyle creep is the ultimate killer for your budget.
A few night outs partying, taking Grab to work when you run late, buying expensive coffee/salad several lunches in a row etc.
With inflation running like wildfire these days, lifestyle creep x inflation can easily burn a hole through your wallet.
Lifestyle creep keeps you trapped in the rat race, because you simply spend more when you earn more.
This keeps you trapped as you’re always needing to work harder and harder to sustain your lifestyle.
A few indulgences here and there is certainly not a bad thing.
A self-care treat or spending money to save yourself time, can be smart ways to spend money.
Some may even argue that a lifestyle upgrade helps keep you motivated to earn more money.
Find the right balance for yourself.
Strike a balance between enjoying your life and keeping your budget in check, and you will achieve your financial goals in no time.
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