How to squeeze the most money out of your budget
One of the common things that causes people to mess up in their budgets is that they get overly optimistic in the planning stage. Entrepreneurs are really bad at this (believe me, I know from experience). What I mean by this is when working through the budget, they tend to underestimate costs and overestimate income. Additionally they forget some things each month that need to be a part of the plan but seem to slip under the radar until it’s too late.
For example, you may think you’re only going to make a few trips around town in the car this month so you plan to spend less gas. But you forgot about extra trips to the grocery store when you’re out of ingredients for tonight’s meal. Or your kids get sick at school and you have to pick them up and take them to the doctor’s office. These are things that happen to us all and they’re hard to predict. But they’re a part of life. No two months will ever have the same unexpected events happen, but every month is guaranteed to have something unexpected happen.
So when you work out your budget for the month, put a little extra cushion in the gas category. Add some extra room in the phone bill for when the kids rack up your minutes or your mother-in-law calls your wife every day for hours on end. Not that this ever happens in our house (wink, wink). Plan a little fudge money for yourself to have fun when the rest of the categories are spent or accounted for. And don’t forget to include some money for the kids’ activities, which always seem to cost more than just the registration fees. There are uniforms, special shoes, workout clothes, team pictures, team dinners, awards banquets, travel & meal expenses for away games, and more.
You need to plan for the worst case scenario so you don’t get surprised when you come up short at the end of the month. Plan for the worst, hope for the best. If the best case scenario happens, you’ll underspend some categories and you’ll have some money left at the end of the month for extra savings, debt reduction, giving, or just having fun. The best part? By planning for the worst case, you force yourself to live without a few luxuries for a little while, until you know the money’s in the account.
So go ahead, be an optimist. View the glass as half full (of expenses) and half empty (of income). You may just end up saving more money than you thought.