7 Common Budgeting Mistakes

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Broken piggy bank

I used to be one of those people who was terrified of the dreaded “B” word: budget.

After learning from personal finance experts about a better way to budget, I realized that the reason budgeting scared me so much in the past is because I was making many of the budgeting mistakes listed below.

The Most Common Budgeting Mistakes

To help newbie budgeters avoid those same mistakes, I’m sharing today the most common budgeting mistakes that can get a person to throw in the towel when it comes to a life of budgeting.

Avoid these mistakes and get ready for budgeting success!

1. Not Writing Your Budget Down

And that includes your spending. Every bit of it. From the muffin you purchased from the food cart at work to the latte you grabbed on the way home.

A budget will be much harder to stick with if you’re not tracking your spending and have a written budget to compare it.

Writing every expenditure down – whether on a spreadsheet, a notebook, or a free online money management tool such as Empower – will ensure that you know exactly where your money is going each month so that you can make changes accordingly if needed.

2. Setting a Budget that’s Too Strict

In our first successful year of sticking with a budget, we set a grocery budget of $300 a month for our family of six.

For us, that dollar amount was too strict and brought two problems into our budgeting world:

  • We failed continually at the budget and overspent nearly every month
  • The continued failure tempted us to give up on budgeting altogether

Luckily, we stuck with budgeting, and we also learned that the best budget has reasonable spending amounts for your situation in each expense category.

3. Forgetting Occasional Expenses

Insurance bills, propane fills, vet and medical bills; all budgets have those expenses that come up only occasionally.

If you leave them out of your budget, you’re likely to experience budget panic when those occasional bills come due.

Deacon suggests using an envelope system where you divide the annual amount of each occasional or potential bill by 12. Then, set that amount aside so all the money is there when the bill comes due.

4. Forgetting a Savings Category

A vital part of budgeting success is including a savings category and a retirement savings category.

If you’ve got kids at home, it may not be a bad idea to add a college fund savings category as well.

Successful budgeters report a much higher savings success when savings categories are treated like a bill and worked into each month’s budget.

5. Forgetting “Wiggle Room”

Another reason we used to fail so miserably at budgets was because we didn’t have any “guy/girl money,” as Deacon likes to call it.

The result was that we felt guilty if we wanted to make an expense that fell outside our normal budgeted expense categories. If we wanted to dine with a friend or pick up a treat at the store, immediate guilt set in for blowing our budget.

We also found ourselves resenting at times if our spouse wanted to make an “outside of budget” expenditure that one or the other of us didn’t feel prudent.

The solution? Guy/girl money. These days, Rick and I take an allotted amount of play money out of our budget each month so that we have some wiggle room money to spend with reckless abandon.

It’s not a huge amount of money, given that we’re in the middle of a debt payoff journey, but it’s enough to grant us some budgeting freedom.

6. Not Analyzing Your Budget Regularly

Life changes, and so our budgets need to change too. For this reason, it’s a good idea to analyze your budget at least quarterly to ensure the allotted spending categories are working for you.

It’s also a good idea to revisit your budget in preparation for upcoming larger expenses.  

Some reasons that your budget may need to be altered:

  • The realization that your older car may soon need to be replaced
  • The decision to move so that down payment savings can be added to your budget
  • Saving for a vacation or other bigger expense (check out our free vacation budget form)
  • A change in lifestyle, for instance, if you decide to switch your child’s education from public school to a private school

By analyzing your budget regularly, you can be sure to make changes that will help you plan for different events that come up in life, whether planned or unplanned.

7. Not Individualizing Your Budget

Many times peoples’ budgets fail because they base their budget on someone else’s lifestyle. In other words, they do a “keeping up with the Joneses” type of budget.

The truth about budgets though, is that they work best when people and families customize the monthly budget in a way that correlates with their wants and financial goals.

Your goals have the highest chance of being achieved when they’re set based on the things that are most important to you.

As an example, if everyone on the block is budgeting for a new car next year, but a goal of early retirement is more important to you than having a new car is, don’t let yourself be lulled into following the crowd.

Instead, choose goals and a correlating budget to reach those goals based on what is truly most important to you and your family. By doing so, you’ll have more motivation to stick with a budget that will help you keep your goal-reaching moves on track.


When you learn how to do it correctly – that is, in a way that best suits your life and goals – budgeting can actually start to become fun.

Whereas we once dreaded sitting down to develop a budget each month, we now get excited about making a plan for our money that will bring us one step closer to achieving our goals and leading the type of life we want to live: a life free of debt.

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  1. Vanna Lindholm says:

    That’s a nice quote: “Life changes, and so our budgets need to change too. For this reason, it’s a good idea to analyze your budget at least on a quarterly basis”.

    I have a problem because I am analyzing it too often – almost every week.

  2. I do our budgets in Google sheets. It’s helpful for me when making this December’s budget to be able to go back to last December’s and see how much we spent on Christmas or how much we budgeted for food that month, since we would be having more gatherings… It seems like our budgeting is constantly evolving, but that’s one thing that helps!

  3. Savings category? What is this… “savings” you speak of? πŸ˜‰

    1. Laurie @thefrugalfarmer says:

      That’s funny. πŸ™‚

  4. I’ve found that trying to save for everything at once is a mistake also. If you have 3 savings goals do them in a list instead of all at once. I feel I get better traction that way.

    1. Avatar photo Laurie Blank says:

      I think that’s a great idea, Sheri. That way you can focus clearly on one goal at a time.

  5. I keep a listing of my semi-regular recurring bills so I can remember to include them when they come up. For bigger bills (ex. auto insurance) I put a little aside each month so the expense isn’t a big blow when it comes due.

    1. Laurie @thefrugalfarmer says:

      That’s a smart move, Thias. I find budgeting really takes a beating when forgetting those occasional bills.

  6. I couldn’t agree more with keeping track of every expense. This has helped us tighten up in areas we didn’t realize we could as well as helping identify yearly expenses that should be in the budget but weren’t.


    1. Avatar photo Laurie Blank says:

      I agree, Chuck! It was spend-tracking that really opened our eyes up to those little “forgotten” purchases that so many people make. Those little things usually add up to thousands of dollars a year.

  7. We hit the “to strict” issue you detailed. When we first started on our FI journey my enthusiasm for our early retirement quest had me way to extreme. The trick to push your frugal thresholds without breaking them takes time to understand. Once you start feeling like you are living a deprived life the budget soon goes to crap. It takes constant reassessment, adjustments, and commitment. All of it is very worth it.

    1. Avatar photo Laurie Blank says:

      “Once you start feeling like you are living a deprived life the budget soon goes to crap.” That’s well said, Tommy. There’s definitely a balance that needs to be struck in order to achieve budgeting success.

  8. I like to keep track of the date and frequency of bills in my budget. Do they occur monthly, every 3-months, yearly, etc.? Keeping track of this information helps keep me better organized.

    1. Laurie @thefrugalfarmer says:

      That’s a smart plan, Brian – one that helped you dump 109k in debt well, I would imagine. πŸ™‚