The road to financial freedom – which can reduce unhealthy sources of stress – requires careful planning and ongoing awareness
- 85 percent of Americans occasionally feel stressed by money
- 30 percent describe their financial stress as constant
- Americans list finances as more stressful than work or personal relationships
- Persistent stress can affect health, productivity, and social interactions
- Even careful budgeting can include common mistakes
Money may not buy happiness, but it can certainly alleviate stress and open up new avenues toward life-enriching opportunities. The road to financial freedom is often full of delays and detours, and it’s easy to get lost along the way without a roadmap; a budget serves as exactly that.
Eighty-five percent of American adults occasionally feel stressed by money.
However, although creating a budget is an essential first step of your journey toward financial health, the work doesn’t end there. Being conscientious and aware of your spending habits is a key component of spending less and saving more, but common budgeting mistakes can easily derail your progress if you’re not careful.
Avoid speed bumps and roadblocks by protecting your budget from missteps that are all too easy to make.
Rough road to easy street
Financial insecurity affects more than your ability to enjoy experiences like vacations or a night at the movies. Eighty-five percent of American adults occasionally feel stressed by money, and 30 percent say they feel constantly stressed by money issues, according to a recent survey by Varo.
Data by Northwestern Mutual’s 2018 Planning & Progress Study listed money as the primary cause of stress among Americans, ranking higher than personal relationships or work. Persistent stress can affect your health, productivity, and social interactions, so a well-balanced budget can improve your life far beyond your bank account.
If you’re new to budgeting or are struggling to make your work, keep an eye out for the following speed bumps to success:
Making up numbers
Don’t trust your memory or interpretation of your monthly expenses; check the data. Review online bills and bank statements to get an average of your spending over the past three months to ensure that your estimates are realistic and based on history. Aside from a more accurate budget, you may be surprised at what you find in certain categories – and that’s the first step toward making a concerted effort to reduce spending in those areas.
Expecting the best
It may seem prudent to budget every dollar, but that’s wildly optimistic and probably impractical. Expect the unexpected and build a contingency plan into your expenses. Surprises happen – cars break down, appliances malfunction, and kids outgrow shoes faster than you may initially realize. If you fail to budget for these occasions, you’ll have to “borrow” money from another category or may find yourself coming up short that month.
Failing to track expenses
Budgeting isn’t a once-a-month task; it’s an ongoing process. Once you know how much you can spend, you have to keep track of how much you do spend. If you’ve budgeted $500 for groceries and find yourself nearing that number, it’s time to plan some frugal meals. Also, don’t neglect small costs like vending machine money or your weekly trip to Starbucks – every dollar counts. Use an online app or spreadsheet, and input costs and receipts either as you go or at the end of each day.
Forgetting to review and revise
Your initial budget represents how you hope things will go; however, you’re going to need to make adjustments periodically. As you make cuts and bring more awareness to certain costs, you may find you have more money to save in some categories, or that you have to readjust to accommodate for recurring expenses that you didn’t consider. Compare what you spent versus what you budgeted at the end of each month and revise as necessary.
Creating and keeping a budget can give you a new view of your finances and spending habits. Even with careful planning, there may be delays and setbacks on your journey to financial health – if so, assess the problem and reroute accordingly. The destination of a well-balanced bank account is worth the extra time and effort.
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