Budgeting is a skill that takes practice to master. You’ll improve as you learn from experience. By avoiding these common mistakes, you’ll cultivate healthy financial habits and become a budgeting pro.
Mistake 1: You don’t track your spending
If you don’t know where your money is going, you can’t make informed decisions about your finances. With 22seven, you can see all your spending in one place. It’s easy to follow the money and make necessary adjustments to stay on track.
Mistake 2: You ignore the small expenses
Those small expenses add up. Take your daily coffee run – it’s only R30, but add that up over a month and you’re spending nearly R1,000! Keep an eye on seemingly insignificant purchases and try to identify areas where you can cut back. Doing this will free up more money to save and invest.
Mistake 3: You neglect your savings
Some people only focus on paying urgent bills, but you also have to allocate a percentage of your income towards an emergency fund, a retirement investment and other financial goals. Automate your savings by setting up a debit order – that way you won’t have to think about it, you’ll stay consistent, and you’ll build a safety net for your future.
Mistake 4: You don’t plan for irregular expenses
Budgeting isn't just about managing your normal monthly expenses, it’s also about planning for unpredictable things like paying for your car to be repaired or fixing a window at home thanks to that errant cricket ball… Set money aside each month specifically for these kinds of things. Bonus: If you don’t need to use the money, you can add it to your emergency fund.
Mistake 5: You don’t prioritise debt
High-interest debt is a killer. Ignoring your debt repayments or paying only the minimum amount prolongs the debt cycle and increases the total interest you’ll end up paying. Adjust your budget so that you pay more than the minimum whenever possible. You’ll clear your debt faster and free up more money for savings and investments.
Mistake 6: You set unrealistic goals
A budget only works if you have clearly defined financial goals, but if those goals are unrealistic then the whole process can quickly become demoralising. Be honest with yourself about what you can afford, then break down your long-term goals into smaller, measurable targets that you can track and celebrate as you progress.
Mistake 7: You don’t review and adjust
A budget is a work in progress. Your life circumstances can change, your income can fluctuate and your priorities can shift. Set a reminder in your calendar to review your budget once a month, or at least once a quarter, and make the necessary changes so that you stay on track.
Mistake 8: You don’t negotiate
Don’t just settle for the price you’re given – explore every opportunity to save money. Negotiation skills can lead to substantial savings, whether it’s getting a lower interest rate on a loan, a lower premium on your household insurance or a discount on that new washing machine you need to buy… Shop around, get different quotes, do your research and fight for the best price.
