DOLLARS AND SENSE

By Joe Plemon

A NEW BUDGET FOR A NEW YEAR? FIVE PITFALLS TO AVOID

I know. I know. You have made New Year’s resolutions before and they just didn’t work. You have tried budgets before and they just didn’t work. So “Why,” you are thinking, “would I want to start a new budget for the New Year?”

1. Leaving things out of your budget. Many people try the yellow lined pad, write down what they think of at the moment, and expect it to work. Budgets need to include EVERYTHING, including an appropriate amount of “blow money”. Why? Because in real life we really do blow money.

2. Overcomplicating your budget. Computer nerds: listen up. A workable budget isn’t a 10 page excel spreadsheet that you deliver from the mountain like Charlton Heston in “The Ten Commandments”. A workable budget needs to be simple.

3. You don’t actually do it. Some people talk about budgeting and think about budgeting but never actually get paper and pencil out and write one.

4. You don’t actually live on it. A common mistake is to write a budget, put it in a drawer and not actually follow it. Here is the deal: you control the budget, but once it is complete, it controls you until you decide to change it. How will you know if it works if you don’t actually follow it?

5. You don’t give yourself enough time. When it doesn’t work after one month, don’t give up. You are normal. These things take time. Allow at least three months before your budget on paper reflects reality. Even then, you will need to fine tune those numbers on a regular basis.

Don’t give up because of past failures. You work hard for your money and it should work hard for you. Get up, dust yourself off and try again!

Next week: “What Your Budget will do for You”.