Ever think to yourself: What would I do if I was trying to wreck my budget? Planning through the likely scenarios that may throw you off course might even be more helpful then adding on more and more “shoulds” to yourself. You know, the “shoulds”?
As in:
“I should do this”
“I should do that”
“I should make more money”
or “I should spend less money”.
Today, let’s flip the script and talk about the things we shouldn’t do! Let’s talk about surefire ways to wreck that budget.
***This post is part of a collaboration of 5 personal finance bloggers. The tips from the other collaborators are below, to view the tips that I wrote, you can click to any of the other posts to find mine!***
How To Wreck Your Budget
From Virginia at HappyHealthyAbundance
#1 Forgetting to file for reimbursement
Whether you have reimbursable child care expenses through a Dependent Care FSA, health care expenses through an HSA, or your standard work-related expenses for which you can file with your employer, you’d be amazed at the millions of dollars in reimbursable expenses that go unrequested each year in the US.
I’ve seen it myself – coworkers with a drawer-full of unfiled receipts for which they could have received reimbursement randomly found old co-pay receipts from last years’ medical check-up, and more. As organized as I generally try to be, some things still slip through the cracks. However, if you have reimbursable expenses of any type, set aside time ASAP to sit down and figure out how to file for reimbursement.
If you don’t file, you’re on the hook for that expense permanently. If you wait too long to file, it’s possible that the window for eligibility for reimbursement may pass you by. If you have an upcoming trip for work, for example, before you leave set an appointment for yourself on your calendar for the day after you get back that says “File for Reimbursement” with time blocked hour specifically for that task.
Have you been to the dentist or doctor lately? Have that receipt handy? If you have an HSA or FSA, you need to file for that reimbursement quickly. As with many things, if it’s not planned for and time-blocked, it may not get done, and this is one task you can’t afford not to do.
#2 Excluding purchases from certain places from your budget
Have you heard the phrase “it’ll all come out in the wash?” It could just be a Southern thing, but it basically means that things have a way of working themselves out. Unfortunately, it doesn’t apply to money as my 20-something self would have liked.
Amazon purchases didn’t used to be included in our budget. Since those purchases seemed peripheral and didn’t always fit into a certain category, I didn’t really know what to do with them. So, I ignored them. I always paid the bill, of course, and that always messed up other calculations I had going, but it took me months to integrate Amazon into my standard budget.
While my story might seem crazy, I encourage you to think about seemingly peripheral purchases that you make. Some people don’t count treat-stops for coffee, bubble tea, or ice cream in their budget, others try to ignore medical bills or cash loans to friends. The truth is we’re all crazy for excluding ANYTHING from the budget – where else could the money possibly come from to cover that expense?
One of my eccentric friends says shoe purchases don’t count (and wow does she have an impressive collection of shoes). In the same breath, however, she complains that it’s tough to make the bills each month. This is the classic behavior of someone who’s not willing to reduce or sacrifice their vice – exactly what I was doing with my Amazon purchases.
I later came to terms with the fact that I had an online shopping problem and enjoyed getting packages in the mail so much that I was willing to self-sabotage in other ways. So, what are your vices, your “just gotta have it” items? Are you buying anything outside the budget or that you’ve convinced yourself “doesn’t count?” “
#3 Unplanned and short notice outings/events
Short notice events, last-minute invites, and impromptu get-togethers have a tendency to wreck your entertainment budget. How can you possibly plan for something that wasn’t even on the calendar?!
Better yet, how do you remain cool and “part of the crew” if you always have to say no to these outings because of that dang budget? I felt this tug-of-war strongly for a few years when we first started budgeting – we’d budget out everything – groceries, the weekly family night out, retirement, savings, and utilities. Then Joe at work announces happy hour and you begin to feel like everyone’s going except you. Ugh.
There were times I went and subsequently felt guilty for days because I’d spent unplanned cash. There were times I didn’t and felt guilty for abandoning my team and missing the opportunity to get to know them better. I felt like I couldn’t win until…
I learned about sinking funds! Sinking funds are a line item in the budget specific to costs that seem to pop-up. You can add sinking fund line items into the budget for things like birthdays and weddings, happy hours, and other (currently) unknown events that are probably going to come up. Sinking funds allow you to set aside money for the purpose of covering unplanned, sporadic events such as these with cash, guilt-free. What a relief!
#4 Yearly or quarterly reocurring events that are forgotten and become an “emergency”
Even though events like Christmas, birthdays, insurance renewals, taxes, school supplies, and vet visits occur each year like clockwork, somehow these are expenses that accidentally get left out of the budget month after month. I’ve been there too – realizing it’s October and nothing has been budgeted for the quickly-approaching holiday season is an awful feeling I wouldn’t wish on anyone.
Yet, this happens all the time to people. I know you know what I mean – that panic ensuing moment when you realize your Mom’s birthday is in 3 days or when you realize your Anniversary is next weekend. It’s important we show up strong to these events and show these loved ones how much they truly mean to us, and often, that requires some cash to afford a gift.
My best advice for this is to snag a full year calendar at the dollar store and go through it month-by-month, writing down important dates and noting times of the year when your expenses are typically higher and why. Consider summer daycare costs versus after-school care during the school year, sports seasons’ beginning and end dates, national holidays (like Christmas) and personal holidays (like birthdays and anniversaries), insurance renewal dates, yearly doctor, dental, and vet visits, and other events that may occur only 1-4 times a year.
Becoming conscious of what events are within the upcoming 2-3 months will allow you to add a budget line-item for that expense and begin setting aside funds. Do this, and you’ll never pre-stress about an upcoming financial deadline or expense or holiday again!”
#5 Convenience is nice, but only if your budget can afford it.
“Food” is the #1 budget category people complain about, and even before the current pandemic hit, more and more people were opting for the convenience food delivery offers. Whether we’re talking grocery delivery, packaged meal ingredients, or hot-n-ready meals, ordering grocery/food delivery provides convenience and pressure-relief from the whole meal planning and grocery list kerfuffle, but at a premium.
If you haven’t allowed space in the budget for delivery fees, meeting minimum delivery requirements, or higher ingredient prices overall, and you’re just ordering to make life a little easier, I caution you. In comparison to my local grocery store visits in person, online grocery shopping (e.g. Amazon Fresh or Imperfect Foods) always costs more.
Getting hot food (e.g. DoorDash or UberEats) or pre-packaged ready-to-cook meals (e.g. Hello Fresh or Home Chef) is always more expensive than cooking it yourself too, but I doubt I had to tell you that. Some people swear by food delivery and the stress-relief from meal planning and ingredients-gathering it provides, and that’s fabulous! IF they’ve budgeted for it.
Based on my experience, Hello Fresh, Amazon Fresh, and even cool box subscription companies like Imperfect Foods cost as much as 20% more than what you’d pay at your local grocers like Sprouts or Aldi. If the convenience of grocery orders is high on your priority list, that’s totally fine, just make sure you’ve planned the budget wisely around affording this luxury.
#6 Not accounting for seasonal fluctuations of expenses. (Literal seasons & seasons of life)
“One of the most subtle, yet most impactful ways to self-sabotage is to ignore the seasonal fluctuations of life. There are physical seasons like Spring, Winter, and Summer, but there are also seasons of life in which someone or something is not only the focus but also requires some significant cash.
Just as we are resilient, flexible human beings, our money and our budget has to be flexible too. We have to account for the higher gas bill (heating) in the winter in contrast to the higher electricity bill (air conditioning) in the summer or the high daycare costs of having a young child in contrast to the league fees, electronics, and additional you’d provide for an older kiddo.
There are seasons of life – times when home repairs, events, or medical conditions need a larger portion of the budget. Whatever is in the forefront of your life and your budget now likely won’t require that percentage of the budget forever. When that season of life passes, you’ll be able to adjust the budget and allocate money to the next, most important thing.
Allowing yourself to adequately adjust the budget when needed, based on life’s seasons, and giving yourself grace through the toughest seasons is key to maintaining a healthy relationship with your budget (and your money) and avoiding what could be a hidden wrecking ball. “
#7 Home or Car repairs you weren’t expecting.
You never truly know when a hail storm will blow through or when the timing belt on the engine will go bad, so these types of expenses are very common budget-wreckers. One of the top ways to wreck your budget is to NOT save for a rainy day. This means spending all and saving none of your bring-home income and ignoring potential expenses on the horizon.
Haven’t had to replace your roof in 10 years? That’s great! But that’s also a sign that you may need a new one very soon. Oh, you haven’t had your car in the shop in 2 years? Impressive. That’s probably a queue that there may be car repair services needed sometime soon though.
The trick to solving this dilemma is to put away a small portion of your budget (2-5%) into mini-savings accounts, separate from your emergency fund. These savings accounts can hold your homeowners’ insurance deductible (in case of that hail storm), $800 for new tires on the car, or $500-$2000 for car maintenance and repairs.
Look around and find things you haven’t paid for in a while or that you will need soon and establish a mini-savings account for it. Ally bank’s savings accounts online allow you to set up “buckets” where you can allocate money and avoid wrecking your budget. Planning well and being thoughtful about where your money is or will be needed is key.
https://happyhealthyabundance.net/2020/07/31/how-to-wreck-your-budget/
More about Virginia: I’m a mom of 2, a financial coach and professional podcast editor. I started www.happyhealthyabundance.net because my financial journey toward a better life for my family morphed into an insatiable desire for overall happiness and abundance. I’ve designed a life focused on true peace (mentally, physically, and financially) and want to share this with moms all over the world to help them achieve their ideal abundant life too. The more moms I can help, the more children’s futures are changed, and the accumulation of these changes for future generations is exponentially magical.
I dream of a world where moms are empowered financially, where their kids grow up with money no longer being a taboo subject, and where mothers and children have the mindset and knowledge to manage their money in a way that brings them happiness their whole lives.
How To Wreck Your Budget
From Rochelle at RochelleAdamson
#1 Making the same mistakes but never asking for help
How many times have I done this!? Whew! Time and time again, I would make the same mistakes expecting some miracle to happen with my money. Maybe it would double in size overnight or walk itself out of the malls & back into my bank account. Nope! That’s not how life works.
The next time you make a money mistake, revisit how you got there and be determined to not be in that predicament again. Educate yourself to find solutions for your pitfalls. Read some finance-related books, test run different types of budgets, etc.
#2 Not sharing my budget goals with anyone
If you fail alone, who will hold you accountable so that you avoid making that same mistake again?
Do whatever you have to do to see change…grab a close friend to confide in. Someone who seems to make good money decisions & who will keep your money moves in confidence. Talking it out is one of the best things I’ve ever done to win with money.
#3 Unaware of the actual monthly bill amounts
“Oh my phone bill is about $100 this month”. This is dangerous talk right here. What if your actual bill is $110? Now you have underestimated your bill and set yourself up to possibly not have enough funds needed to care for your needs….and what’s more? If that bill is on autopay, it’s possible you could overdraft your account.
Stop the mayhem by getting a hold of ALL your monthly bills. Take a screenshot if you’re on the go so that you can edit your budget to match when you have free time.
#4 Using credit cards irresponsibly
This is one of the many ways to fall into debt without even realizing it. Too many times before, I can remember swiping my cards into the thousands with no real thought or plan as to how I would pay it off. I was in over my head before I knew it. Avoid this pitfall by using debt responsibly. Identify your needs and create a budget that covers them so that you don’t even need a credit card.
If you are a natural spender, find creative ways to get credit cards out of your sight (and reach) such as freezing them or cutting them up. If you are concerned about your credit score through this process, keep the cards open but don’t use them. If you choose to use credit responsibly, do so with the intention of being in control at all times.
#5 Refusing to change my budget when life happened
How many times have we counted our chickens before they hatched? Sure it’s great to budget but what about life events such as sudden job loss? I remember my job from years ago, cut hours in what was supposed to be our “busy season”. I made no adjustments to my budget and just “hoped for the best”. I don’t have to tell you what happened.
Use every opportunity to tweak your budget to really make it come to life. You shouldn’t be afraid of or bored with your budget. Stay excited to look for creative ways to simplify your budget and live on less so that when the unexpected occurs, you are less likely to freak out.
#6 Not checking my bank account everyday
My husband used to think I was a psychopath for checking my bank account so often. Forget everyday. I check it at least 2 or 3 times a day. I notice deposits tend to occur in the mornings and withdrawals tend to happen in the evening or late at night. I don’t like surprises so the thought of waking up to a negative bank account is just not in the cards for me anymore. I use a zero-based budget so that there are no surprises. I also keep a $100 buffer in my account. It’s the same $100 I’ve had for months that originated from savings.
Choose a banking system that is easy to access and that meets your needs without too much effort so that you can always know what’s going on with your everyday money. Leave the surprises for when you find that dollar down in the couch when you’re looking for the remote.
#7 Keeping my grocery budget too low (or not having one at all)
Me….and me. Yes I’ve done both of these. I don’t know what it is about buying groceries that used to stress me out so bad. Could’ve been the $1000 bill at the cashier. That’s right. For a family of 3. With no shopping list. Just rolling up & down the aisles picking up anything that looked interesting. Bringing it all home to no meal plan. Shoving it all in the fridge with no intention of meal prepping. Stop the madness like I did.
Choose to shop monthly for one big haul like we do or keep things small and shop more often so that food doesn’t sit on your shelf, withering away and drawing the attention of a feisty fly that used every piece of his being to fight to get in your house and head straight for those bananas.
https://www.rochelleadamson.com/post/how-to-wreck-your-budget
More about Rochelle: Hi, I’m Rochelle, owner of my travel company, ActuallyTravels and part-time nurse. I get to live life with my best friend & hubby of 15 years, Micah. We are parents to an amazing 8-year-old girl, Eva. I love budgeting so that I can travel and travel on a budget. I spend my free time talking about the journey to debt freedom, life after debt and how to win with money no matter where you are in the process on my side of YouTube.
How To Wreck Your Budget
From Dani and Mike at BucksAndDough
#1 Buying the fancy clothes to get your workout on
You will not get stronger and more in shape if you have the fanciest and most expensive clothes. You can work and sweat just as hard if you are wearing a pair of shorts that have a hole in them and are stained then you will in a pair of brand new $100 shorts. You don’t have to look like a workout model to get a personal record (PR) on your back squat.
If you think you have to fill up your drawers with the fanciest clothing to make you feel motivated to work out, then you need to reelevate the reason why you want to start getting healthier. Just start getting your heart rate pumping and start feeling better.
#2 Not asking for your receipt when you purchase things
If you don’t have a receipt, how are you going to be able to keep track of where your money is going? Short answer, you wouldn’t. You will just be wondering where all your money went at the end of the month.
Start getting a receipt, plug it into your budget, then you can throw it away. If you don’t track where your money is coming in and out at, then good luck getting ahead with your money. Next time you are asked “Would you like your receipt?” your answer should be yes of course. Then when you get the chance, which should be within the next half hour, plug it into your budget. Easy. As. That.
#3 Leasing that nice car, thinking it is less expensive
By leasing a car, you aren’t gaining any equity in your car. When you are done with the lease, you don’t get any money back. If there is damage to the vehicle that will come out of your pocket.
In most states, when you put money down on a leased vehicle you will need to pay taxes on that amount. In most cases, it will cost more to insure a leased car. For a financed or leased car, you have to include the name of the lienholder or leasing company as a named insured. Your best bet with a vehicle is to pay cash and not have to worry about a loan or leasing.
#4 Paying for a storage shed to store things you haven’t paid off yet
Storing things in a storage shed that you have to pay for monthly and then having to pay your monthly bill on the thing that you are storing is not going to help you save money and increase your net worth. That is like paying double of what your monthly payment is for that item.
Stop paying to store something that isn’t paid for. And most of the time when things are in storage, they don’t get used as much as they should be. So if you get rid of the stuff in the storage shed then you also get rid of that monthly payment of the shed. A win-win!
More about Dani and Mike: We are Mike and Dani also known as the Bucks & Dough Crew! We are a couple on the path to financial freedom through real estate and Entrepreneurship. And want to help others get out of the normal life and be more conscious of money. We strive to keep adventure in our lives through a budget because what’s life without a little adventure. We both grew up in Minnesota and met in Duluth Minnesota. Since then we have moved together to Ohio and Montana and found ourselves back in Central Minnesota. We are currently turning our house into a duplex, rent our house out on Airbnb, Dani runs a Nature Camp taking kiddos hiking biking and kayaking called Dani’s Nature Camp and Mike is a realtor specializing in hunting land and recreational properties. We love adventure and are the happiest outside.
How To Wreck Your Budget
From Kofi at 400lb Elephant
#1 Giving money to family and friends unexpectedly.
I have family back in Ghana and here in the US whose businesses have been terribly affected by COVID and have lost all sources of income. Well since they’re family of course I help them out but quite frankly it halts progress in saving, investing, and making progress in my financial journey.
It might sound crass or cavalier but there’s no end date to coronavirus and giving endlessly while trying to get out of debt can slow down your progress.
#2 Not price shopping or looking for coupons, especially for things like electronics or home appliances.
Maybe you feel like you’re getting the best deal only to see the same product at another retail store for several hundred dollars less…womp womp.
#3 But it was on sale.
It was a steal…Was it? You know they’ll run the same special for Labor Day, memorial day, mother’s day, father’s day, and any day they can use to lure you into thinking it was a good deal.
Just because something is on sale doesn’t mean you need to buy it and it might not be a great deal. Ask yourself is it a want or a need? Can you budget for this and wait a little longer to get it at another time with saved money to buy what you’re looking for? If the answer is yes then trust me my friend it can wait.
#4 Uhh did you forget about your friend’s baby shower that’s tomorrow and now your scrambling for diapers, bugger sucker machines, baby wash, and mysteriously rack up a $78 bill at Target.
I’ve been there. Roaming through the diaper aisle asking strangers with small children for suggestions for baby shower gifts. Let me tell you those gifts are expensive! Better to plan for these occasions and not ruin your budget.
#5 Spending money you don’t have but plan on getting can wreck the budget.
This doesn’t work so well or ever in my experiences. Sometimes we plan on a raise, a bonus, or a friend paying you back. Well maybe not the last one but a refund check. Some of us got a $1,200 stimulus check. Some folks spent every penny before the money hit their bank account or before their check arrived in the mail.
#6 My personal favorite. Spending money on food.
Last night we took a walk after eating dinner pretty late and before we opened up the door, I was craving ice cream. I fought my urges to get a late-night snack. This happens when we’re grocery shopping and I walk past frozen pizza which is not on the list.
The point is we budget food, snacks, desserts, and sometimes we act impulsively to buy pizza or sushi which can add up and be a budget buster.
400 lb Elephant: https://400lbelephant.com/how-to-wreck-your-budget/
More about Kofi: Kofi Gyebi is the founder of 400LB Elephant, a personal finance company that helps young professionals achieve financial peace. His coaching empowers people to get out of debt, save money, and build generational wealth. Kofi’s own debt-free journey is a testament to what is possible with a bit of focus and discipline: he paid off $34,000 of student loans in one year. He is a community leader, recognized as a Champion of Justice and Equality by the Urban League of Greater Atlanta. Kofi is a graduate of Bowling Green State University as well as the 2018 Leadership Buckhead Program and LEAD Atlanta, class of 2019. You can read about his story on his blog and find him on Instagram or via Twitter. His dream is to inspire a generation to become debt free and to start building generational wealth through empowering those who are ready to take the step to rid their personal debt.
FOR DISCUSSION:
***Which of these have wrecked your budget?
***What are your favorite budget saving tips?
An excellent post, congratulations !!
Thank you! Glad you enjoyed it!