Overspending

Spending beyond your means is an easy trap to fall into, but it doesn’t need to derail your budget if you can learn to notice the warning signs. When people have a hard time delaying self-gratification or feel the need to portray an image that they can’t afford, it’s easy to overspend. This dangerous habit can sink a budget fast, and it can also lead to accumulating a significant amount of debt.  

Try shaking up the pattern if you know this is a problem you may be susceptible to. When you want something, set a goal, and save money to achieve it. This can help you retrain yourself to enjoy the anticipation of a purchase, rather than relying on the instant gratification of buying an item. 

Impulse Shopping

Impulse shopping goes hand-in-hand with overspending, and you can use some of the same tactics to counteract your shopping urges. Whether it’s the sudden whim to grab something that catches your eye, or the drive to take advantage of a good deal, shopping impulsively can cause you to end up with a lot of items you don't need or can’t afford.

To avoid this, it’s best to create a list—and stick to it—for shopping trips. For those times you find a sudden itch to purchase, redirect with a reminder of what you could be doing with your money instead or the reason for your budget in the first place. Are you budgeting to pay the bills, pay off debt or save for a vacation? Would you rather make this one-off buy or achieve your goal? Do you really need this item? If you just can’t let go of a little unexpected purchase now and then, that’s okay. Work that into your budget too, so you don’t have to feel guilty about an occasional splurge. 

Making Lots of Small Purchases

A coffee in the morning, a pack of gum during your morning break, a quick vending machine snack, and a grab-and-go item for lunch: all of these small purchases might not seem like a lot in the moment, but they can add up over the course of the day. 

If you can bundle purchases like this—maybe load your coffee rewards card up with a set amount at the beginning of the month, or add the gum to your grocery list so you’re not stopping at the convenience store, it’s easier to manage these little expenses and keep them from adding up over time. 

Not Preparing for Emergencies

Nothing can break good budgeting habits like an unexpected emergency. To avoid budget-breaching expenses that will derail your whole month’s spending, make sure you have a healthy emergency savings account stashed away just in case. 

This should be separate from your regular spending accounts, and experts recommend saving an amount equivalent to your expenses for one to three months. If that sounds daunting right now, don’t worry. Even a few hundred dollars in savings can go a long way toward covering small surprise expenses. Start building your emergency fund now, and help cushion your financial future. 

Keep your finances on track for years to come by avoiding these common bad habits that can quickly destroy a budget.  If you’d like to learn more about how a budget can help you save for retirement or major future purchases, contact the financial specialists at Rocky Mountain Credit Union today.

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