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Habits That Sabotage Your Budget

Spending Leaks Turning Into Perpetual Behavior

Maintaining your written budget can be a struggle for the first couple of months. Identifying where your budget is bleeding, like eating out or visiting the grocery store too frequently, is a great way to curtail your spending. However, these two practices alone are not the only way you can ruin your budget. Here are a few other habits that can affect your household budget.

1. Failing To Plan For The Unexpected

We’ve all been in the situation where the car battery dies or the boiler needs repairs in the dead of winter. Most people will turn to a credit card to finance the unexpected. In fact, lots of people will say, “I need a credit card for emergencies.” Well, you really don’t. You simply need an emergency fund to prepare for life’s little surprises that are guaranteed to arise. Most experts say you need £1000 for an emergency fund but if you are able to pad yourself more, you should.

2. Failing To Plan For The Expected

Big expected expenses include house insurance, car insurance, road tax, MOT, club fees, etc. It is advised to keep a separate fund, similar to your emergency fund, for your annual or semi-annual outgoings. If you know your car insurance expires soon, you could add the payment into your budget and start setting aside an amount each month so the cost will be covered when due.

3, Not Budgeting For Special Occasions

This is similar to planning for the expected. Special occasions include Christmas, birthdays, weddings, etc.

4. Paying Bills Late

How often do you receive a bill by post or email that isn’t due for a few weeks and then you forget about it? By the time you realize payment is due you are slapped with a late fee. There are several things you can do to ensure your bills are paid on time. The first solution is to set up a direct debit. You could also put calendar alerts in your phone as a reminder or download a phone app that notifies you of your due dates.

5. Throwing Away Your Groceries

According to research charity WRAP, UK households waste about 1/3 of the food they purchase. That means if you spend £300 a month on groceries, £100 of it is in the rubbish bin. To combat this waste, you need to keep an inventory of the food you have and meal plan.

6. Confusing Wants With Needs

If you are serious about your finances, you need to take care of your needs first and not conflate your wants as dire necessities. An easy way to differentiate your needs from wants is to follow the four walls concept. The four walls include food, shelter, utilities, basic clothing (nothing fancy), and transportation. That’s it. If the purchase does not fit into any of those categories, it’s a want, not a need.

7. Restricting Your Budget Too Much

When creating your household budget, it’s important to be realistic and not restrict yourself too much. Even if you are highly motivated to get your spending on track, it’s important to allow yourself to enjoy your money. Otherwise, you will end up getting burned out, frustrated, or tempted to quit budgeting. So whether it’s seeing a movie or enjoying a cheap and cheerful meal out with friends, always allot yourself a little money for socializing and entertainment.


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