3 Budgeting Mistakes That Could Be Tripping You Up

Don't fall victim to these blunders.

Following a budget is one of the easiest ways to improve your financial picture. Without a budget, you might struggle to get a handle on your bills and meet your savings objectives. But once you have a budget in place, you can more easily track your spending and make sure you're diverting money to your savings account on a regular basis.

But if you're going to make an effort to budget, the last thing you want are inaccuracies that render your efforts useless. So to that end, it really pays to avoid these big mistakes.

1. Forgetting about one-off expenses

In the course of setting up your budget, you're likely to remember your recurring monthly expenses, like your rent or mortgage payments or your cable bill. But you may not remember to budget for expenses that don't pop up every month.

Imagine you're a healthcare worker and you need to pay to get your license renewed every two years at a cost of $500. That's an expense you should be budgeting for every month, and setting money aside for. Similarly, if you work in IT and spend $100 a year to re-up a certification, you should be setting $8.33 aside monthly to cover that cost so you're not left to scramble to cover a larger bill on the spot.

2. Guessing at your variable expenses

You may be aware that your auto loan payment costs $400 a month, and that your rent is $1,250. But what about your variable expenses?

You probably don't spend the exact same amount on groceries or utilities every month. But if you guess at what those bills cost you rather than base your estimates on actual data, you could end up throwing your budget off-course.

Let's say you allocate $600 a month to groceries for your family when, in reality, you spend more like $750. That could make a huge difference. And so rather than guess at variable expenses, go through your credit card statements from the past six months and take an average based on actual spending.

Keep in mind, too, that inflation has made many living costs more expensive in recent months. So while you may not be buying more food at the supermarket, you might be spending more nonetheless.

3. Forgetting when bills increase

You may be used to paying your cable provider $102 a month. But what if your rate increases to $112 at the end of your contract and you fail to update your budget to reflect that? Granted, that's a small amount, but if you forget to account for that $10 plus another $20 here and another $30 there, you could end up with some pretty messy finances.

A better bet? Update your budget every time a recurring bill changes -- even if you're only talking about a small amount of money. Another good bet is to do a quarterly budget review to make sure the numbers you're looking at are still spot-on.

Budgeting could help you stay on top of your finances and work toward different goals. Just be sure to steer clear of these blunders, as they have the potential to really mess you up.