8 budgeting mistakes to avoid in 2022

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Are you unable to stick to a monthly budget but unsure what’s holding you back? Or maybe you’re ready to get your finances on track in 2022 but aren’t sure how to create a budget that works. Either way, your monthly budget this year could be just what you need to help pay off debt, make payments on time and save for emergencies or large purchases.

If you want to put together a 2022 budget that works, make sure you avoid these eight common budgeting mistakes.

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1. Not having a budget

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One of the biggest budgeting mistakes you can make is not having a budget at all. If you’ve been winging it every month by keeping track of bills and due dates in your head and pulling out your credit card for most purchases, that’s a recipe for overspending.

To get started on creating a budget, download a budgeting app like Mint or You Need a Budget (YNAB). If you’re more comfortable with a hardcopy budget, you’ll find plenty of budgeting advice and templates online.

Find out: How to Create and Stick to a Monthly Budget

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2. Guessing at monthly bills

You may have to go by rough estimates on a few budget items for the first month or two. However, once your budget gets rolling, you should have a good idea of how much to allocate for rent, mortgage, car payments, insurance and everyday expenses. Pay attention to how much you spend and then adjust accordingly.

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3. Failing to track spending

Once you have a budget, track your spending to make sure you’re staying on budget. Knowing how much you spend each month or week can help you see whether the budget you have is working or needs to be tweaked next month.

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4. Allocating big bills to one paycheck

It may seem to make sense to allocate most of one biweekly paycheck to the mortgage or rent and the other check that month to car payments, health insurance or another hefty expense. However, it’s better to allocate an amount from every paycheck to large recurring expenses. That way, if you have an unexpected car repair, appliance breakdown or other emergency expense, you may still have enough to pay the big monthly bills.

Find out: 6 Cures for Living Paycheck to Paycheck 

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5. Being unrealistic

Few things are more discouraging than getting excited about sticking to your new budget and then realizing you often exceed allocated amounts in several categories. Budgeting on the low side for certain items may feel good when you put the budget together, but if it’s not realistic, you could get discouraged and end up ditching the whole budget.

Instead of giving up, make adjustments, raising allocations where necessary and learning from those early budget attempts. Soon you’ll be back on track with a more realistic monthly budget.

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6. Leaving out annual expenses

No matter how well your monthly budget seems to be working, if you don’t allocate a portion each month toward annual recurring expenses, you could be in a financial pinch later. Don’t forget to allocate money for savings designated for annual expenses like property and income taxes, as well as auto, homeowner’s and renter’s insurance, too.

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7. Not budgeting for emergency savings

If you’re depositing into your emergency savings account only when you have some money left over, you probably don’t make a deposit from every paycheck. It’s just too easy to spend the money on something else. Make sure you budget at least a small amount each month toward emergency savings. That way, when there is an expensive emergency, you’ll have enough savings to cover it so you don’t have to make late payments on other bills.

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8. Totally depriving yourself

Your budget may look good on paper, but if you deprive yourself of all pleasures when preparing the monthly plan, you could resent the budget that took away too many things that you love. For example, if you love to work out, budget for your gym membership and cut back by finding ways to save on groceries or other expenses. Leave room in your budget for small luxuries like dining out occasionally or a new clothing item here and there.

This article originally appeared on Debt.com and was syndicated by MediaFeed.org.

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