Of course, once January rolls around, it’s also a time for new beginnings. New exercise programs, diets, and other goals are often started at the onset of a new year.
But one area not to be neglected when starting anew in January is your budget. In fact, to really start the year out right, there are budget mistakes you should avoid in 2019.
1. Using Pay Increases Unwisely
Clearly not everyone receives a pay increase at the beginning of every year. Some people do, although it might only be a cost of living raise rather than a true pay increase.
Nevertheless, those who get them may be using pay increases unwisely. This is one budget mistake to avoid in 2019 so you can have a better year, financially speaking.
In other words, if you’re lucky enough to get any kind of raise, use it the right way. Some good ways are paying off debt, building your emergency fund, or investing. However, if your budget’s already tight, and your bills increase too, you may need it just to stay afloat.
2. Not Budgeting for Everything
It’s simply not possible to budget for everything. Still, there are bills that come less frequently and sometimes get left out of a budget. They include car tags and taxes, auto insurance, property insurance, and pest control, among others.
Obviously, you must account for these, and other unexpected bills that come up. But in addition to these expenses, you may forget a few other items that should be in your budget. That’s why it’s important to review your previous budget to make sure nothing is forgotten or missed.
3. Forgetting to Plan for Emergencies
A job loss or injury can happen to anyone at any time and for a variety of reasons. Additionally, there are a number of other emergencies that can come up and really hurt your budget. Regardless of their cause, planning for these emergencies is one more of the budget mistakes you should try to avoid in the coming year.
According to a recent post from CNBC, less than half of Americans have a large enough emergency fund. You can add that line item to your budget this year and be prepared for the unexpected when it happens.
4. Putting Too Much Trust in a Financial Planner
Some people put too much stock in what others, specifically financial planners, tell them. Now, I am not saying that you shouldn’t have a financial planner. After all, there are many financial planners who will give you really good financial guidance.
I’m simply saying you should be wary and pay attention to your instincts. Not all of them have your best interests at heart.
For instance, if you aren’t their only client, which is likely, they may not always provide the very best advice. When they are pulled in many directions by clients who have larger accounts, their focus could be elsewhere. If you are unsure that they are giving you sound information, trust your intuition and check with another source.
There’s also a chance your financial planner doesn’t have credentials. Watch for certificates in their office that display their name with letters after it. Those letters might be, CFP, CFA, or CPA, which means they have had the training to provide sound financial advice.
5. Neglecting to Make Budget Updates
You may have created a really good budget last year or even a few years ago. But as events in your life change, so do your needs. Therefore, it’s a good idea to overhaul your budget, or at least update it, each year. As I mentioned already, you might not budget for everything you need to without making changes.
As an example, if you haven’t built in a bit of wiggle room in your budget, you might need to. Without giving your budget a small break now and then it gets tiresome and difficult to stay on track. When your budget is too strict you may feel like there’s no room for fun in your life.
Certainly, looking back on the year can be kind of fun. You get to celebrate triumphs as well as identify areas you could improve. It also helps you plan for the future and avoid budget mistakes in the year ahead.
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Have you made any of these budget mistakes in the past year?