Budgeting Blunders: Top 10 Common Money Missteps!

Budgeting Blunders: Top 10 Common Money Missteps!

Hold onto your wallets, folks! We’re about to uncover the most common budgeting mistakes. We all have different Money Motto personalities, but we do have something in common: we all are at risk of making mistakes when it comes to managing our money. But, GravyStack is here to help an entire generation of kids begin to understand their tendencies to self-sabotage their own finances and keep them on track from as young as age 6! For you, the parent or guardian, let’s cover the most common budgeting slip-ups, so you can dodge financial disasters like a pro too! Get ready to grab hold of your financial future and bid farewell to those money woes!

First things first, let’s talk about the most common budgeting mistakes that people make. We’ll also share some strategies to assist you in not making these mistakes in the future.

The top 10 most common mistakes

1. Thinking You Don’t Need a Budget

The biggest budgeting mistake you can make is not making a budget at all. A budget sheds light on your current financial situation and gives you the information you need to move forward in your financial journey. If a budget seems overwhelming to you, you can start simple and just track your major expenses (i.e. mortgage/rent payments, credit card bill, weekly groceries, etc) and add to your budget as you gain more confidence. While it is beneficial to track every penny, in the beginning, your budget doesn’t have to include a line item for every category/expense.

If you don’t have a visual for your finances, you might think they are in great shape! Ignorance is bliss, right? But, just because you don’t “see” the problems in your finances, doesn’t mean they cease to exist. Not acknowledging your finances because you don’t know how to start a budget can lead to crippling debt.

Not sure where to start with budgeting? The GravyStack app has some simple budgeting missions in Level 1 (Eating Out vs. Eating In) and Level 2 (Dinner Budget Challenge) and more!

2. Not writing your budget down and tracking your spending

Beware of a common pitfall that countless individuals stumble upon when it comes to budgeting - failing to put it in writing. It’s easy to forget about expenses and spending when you try to keep track of all of it in your head. Expenses, and even other aspects of your budget, might change or even be forgotten. I’m looking at you, subscriptions!

If you don’t write down your budget, you’ll end up estimating or guessing your expenses, which can lead to overspending. And that’s the exact opposite of why you started a budget in the first place! You’re likely spending more than you think you are. A written down budget will help you realize where all your money is going and help you reduce those expenses.

Once you write your expenses down you can take the next step of separating them into different categories. By doing this, you’ll see which category most of your money is going and be able to figure out if this is in alignment with your goals, or not.

3. Not planning/saving for emergency expenses

Not leaving room in your budget for emergency expenses can throw your budget for a major loop and can increase your debt overnight. It’s important to create an emergency fund as a safety net to cover any unexpected expenses. You can factor some savings into your budget to build an emergency savings account every month and watch that nest egg grow!
It’s recommended to have 3-6 months worth of living expenses in your emergency fund. This can help cover any major home or car repairs, or give you the ability to support yourself if you lose your source of income. GravyStack starts this savings habit early through our revolutionary Money Machine™! Your kid will learn the value of saving through the use of our gaming and banking app!

4. Forgetting about occasional expenses

Occasional expenses are those expenses that you only have once, or maybe a few times, a year. Car registration, haircuts, and annual insurance payments are just some examples of these occasional expenses. These need to be factored into your budget, so you can make sure you have the funds to cover the costs.

You also want to take into account your income taxes. If you own money come Tax-Day, and you don’t have money set aside for it, you could add to your debt or have to dip into your emergency savings.

It is imperative to have money set aside, or included in your budget, to cover these costs and avoid any financial surprises.

5. Being overly restrictive and not building some “fun” into your budget

Nobody wants to live a life without any fun! But, what if you’re on a budget and don’t have a ton of extra money to spend? Plan one or two fun days a month into your budget. That way you won’t feel financially strained later! You can even swap out expensive outings with more budget-friendly activities. Instead of going out to dinner with friends at a restaurant, have a potluck party at one of your homes. Isn’t the whole point of a budget to take control of your finances and make a plan so you can spend your hard-earned money on what you actually want to spend it on?!

Are you an impulse shopper? Do you always grab extra items and throw them into your shopping cart on your way to the register? You can even build extra expenses like this into your budget so when you indulge in this activity, you won’t ruin your financial goals. Another alternative is to use free curbside pickup. This way you aren’t walking through the store finding extra things to buy on your way out the door.

Some circumstances, such as a financial emergency, living beyond your means, or struggling with debt, might require a super strict budget. But this is not sustainable in the long-term. Not having flexibility within your budget can lead to overspending. Make sure to add in some “fun” to your budget; even if it’s just buying yourself a small candy bar once a week. You can build this into your budget with a “miscellaneous” line item.

6. Not reducing your expenses

As you analyze your budget, it’s important to look at where you can reduce your expenses. Need some help reducing your expenses? Check out the Subscription Hunt and Grocery Savings Challenge missions in Level 1 of the GravyStack app so your kids can help you with this part of your budget! They can learn how to save money at the grocery store and how to cancel unnecessary/unused subscriptions.

Our average member saves $547 in subscriptions annually just from playing the Subscription Hunt Game!

7. Not reviewing your budget regularly

It’s important to check in on your budget regularly, like giving it a check-up or a tune-up. Just like how you might adjust your bike seat as you grow taller, your budget needs some fine-tuning too. Life is full of surprises, and your expenses can change fast. By reviewing your budget regularly, you can catch any sneaky spending leaks, make adjustments, and stay on track towards your financial goals. So, don’t forget to give your budget some love and attention - it’s the secret to keeping your money game strong!

As long as you’re doing well, it’s easy to overlook the need to review your budget. However, if you don’t take the time to reassess your budget, you may not realize how much you’re missing out on maximizing your money.

There are many reasons why you need to review and possibly update your budget. These reasons include, but are not limited to, changes in economic situations (inflation, recession), relocation, a promotion, job loss, and a new baby. By reviewing and updating your budget, you can make sure your spending matches your current financial situation and helps you reach your goals. For example, if you get a promotion at work, you might need to increase the percentage of money you are putting into your savings. Additionally, you may need to reevaluate your budget during different seasons when the prices of things you regularly need change.

8. Using your gross income

Should you use your gross or net income when budgeting? Well, first, what’s the difference? Gross income is what an employee earns before taxes, payroll deductions, and other benefits are withheld from wages. Net income is your actual take-home pay. Many people make the mistake of using their gross income for their budget. But, then they forget to account for taxes, health care costs, retirement plans, etc. If you choose to use your gross income for your budget (which is not recommended), make sure you subtract these amounts, or your budget will be thrown off balance.

9. Lacking Motivation and Having Unrealistic Expectations

In order for your budget to be successful, you need to set clear goals that you genuinely want to achieve. Most people don’t stick to a budget just because they know they should have one; they need motivation to continue budgeting and trying to achieve their goal.

Think about something you want to do with your extra money. Do you want to build an emergency fund? Pay off student loans? Save up for a vacation? Buy a house or a new car? If you have something you are working for, you are more likely to stick to your budget. Make sure you set a realistic goal. If you set an unrealistic expectation, you might end up disappointed and discouraged from using a budget. Take baby steps, saving a little at a time, to work towards your goals.

In our GravyStack app, kids are prompted to set savings goals so that saving becomes rewarding and tangible because they can see what they are working toward.

If you don’t have anything big that you want to save up for, give yourself small goals to start with. You can set goals for upgrading your tech gadgets or getting a new piece of furniture. By having a goal, even a small one, you will be more motivated to stick to your budget. Achieving a small goal will give you the confidence to use a budget to reach a larger goal.

10. Not communicating with your family

By fostering open communication within the family about budgeting, spending, and money, you can ensure the effectiveness of your budgeting efforts. Encourage everyone in the family to share their thoughts, concerns, and financial goals. This way, you can work together as a team to make informed decisions and prioritize your expenses accordingly. Remember, transparency is key to building trust and maintaining financial harmony within the household. Additionally, involve your children in age-appropriate discussions about money management to instill responsible financial habits beginning at an early age. By collectively understanding and respecting each other’s financial needs, you can create a supportive environment that promotes successful budgeting and financial well-being for the entire family.

So there you have it, Knowing about these common money mistakes is key for anyone trying to be really good at managing their money and making it last. With the power of self-control and grit, supported by tools designed to help you succeed, you and your kids can conquer these budgeting obstacles and blaze a trail towards a future that’s totally rockin’ with security and success! Seize control of your money adventure right now by grabbing a membership with GravyStack and bask in the glorious rewards that come from mastering the art of budgeting, rewarding you for years and years to come!