Budgeting money can become difficult especially when impacted by a global pandemic. Once you fall out of the habit of not managing your money or if you’ve faced challenges such as losing your job or unexpected expenses, it becomes easier to fall into crippling debt. Saving for life’s unfortunate surprises and understanding your financial habits and goals leads you to a stronger financial footing.
Check out these five common pitfalls when budgeting:
1. Setting too many goals
Less is always more. At least that’s what banking editor, from financial web source Bankrate, Mary Wisniewski suggests.
“Assess where you’re at and what’s important to you. Then, pick a specific goal, like saving one month of living expenses or paying down an amount of credit card debt, and focus on making progress on that specific goal,” says Wisniewski.
Enrolling in resources like Banterra’s Money Manager within digital banking or utilizing financial calculators will help you stay on track for your budget goals.
2. Not having an emergency fund
Personal finance reporter from CNBC Select, Elizabeth Gravier, speaks on the burden
of not being prepared.
“When you don’t have any extra cash set aside, you’re forced to use expensive ways to finance your life. This includes racking up-interest credit card debt, taking out a cash advance or relying on payday loans,” says Gravier.
Balance your budget by thinking of emergency spending to cover expenses you may need.
3. Paying off the wrong bill or debt first
If you’re overwhelmed with several debt obligations, begin your debt payoff plan by writing down your debts and the interest rate for each loan. Pay the high-interest debt first to avoid racking-up a larger bill.
If you have several credit cards with high-interest payments, consider consolidating those debts into one, easy-to-manage credit card with one payment. Credit card companies and some banks offer special credit cards specifically for this purpose. In fact, Banterra’s Visa® Platinum Card features an extended introductory offer, so you can save on interest and pay down other credit card balances faster.
4. Tax time surprises
You need to know what to expect when filing your taxes.
Gather your personal information, determine the best way to file (personally online or with a tax advisor), prepare your income documents, and start looking at your credits and deductions.
Knowing what you may have to pay or what refund you could be receiving will help you budget. If you are lucky enough to receive a refund, plan to put some away for an emergency fund.
5. Hasty emotional spending
Impulsive spending is a huge no-no when trying to stay on-track. It’s easy to forget the process and break budget commitments when there’s a sale or special event. Build a resistance to temptation and keep in-mind the risk of overspending when you are in
an emotional headspace.
Establishing realistic goals and incorporating healthy financial habits is a great way to begin your road to success. Also, having a financial partner, like Banterra, who understands your goals, is a smart action step towards helping you achieve them.
March 17, 2021 by Banterra Bank
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