6 Budgeting Mistakes to Avoid, According to University & State Employees Credit Union

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“Think of your budget as a plan of action to determine where your money will go,” said Margarita Guerra, vice president of finance at USE Credit Union. “Spending and saving intentionally in the right places can help you achieve financial freedom and achieve your goals. “

6 budgeting mistakes to avoid

Developing and following a budget is one of the best ways to make ends meet and achieve your goals, whether it’s paying off student loans or saving for your first home.

“Think of your budget as a plan of action to determine where your money will go,” said Margarita Guerra, vice president of finance at USE Credit Union. “Spending and saving intentionally in the right places can help you achieve financial freedom and achieve your goals. “

When creating your budget, be sure to avoid these common budgeting mistakes:

1. Underestimate your monthly expenses

It’s a big one. If you’re not realistic about what to spend on recurring needs like groceries, clothing, and transportation, you won’t have enough to allocate to long-term goals like a house, car, or homes. vacation. You might also be frustrated and want to throw it all out the window.

Step one: be honest with yourself. Look at your actual expenses over the course of a month and use those numbers as a baseline. As you go along, you will be able to identify the categories where you can narrow down.

2. Budgeting based on your pre-tax income

Most people think of their income in terms of salary or pre-tax pay, not actual take-home pay. For example, if you are a single Californian with a salary of $ 60,000 per year, after withholding federal and state income and salary taxes, your take home pay could be anything over $ 44,000. Additionally, many people have additional payroll deductions, such as medical insurance, life insurance, 401 (k) plans, and FSA / HSA. Review the income that actually hits your checking account each pay period before you build your budget.

3. Don’t budget for emergencies

Things are happening. Cars break down, roofs leak, iPhones get lost at sea, and you can’t take all the possibilities into account. What you can do is start putting money aside in your budget for an emergency fund, so these unexpected expenses don’t reduce your savings goals or put you in debt. Most financial experts say an emergency fund should total between three and six months of basic living expenses, but it’s important to start somewhere.

If you’re discouraged by the prospect of putting away a large chunk of your next paycheck, try a quickening plan like this 52 Week Savings Challenge. You start off by saving just $ 1 your first week, but by the end of the year, you’ll have close to $ 1,400.

4. Do not track your spending

It’s one thing to create a budget, and it’s another to make your budget work. If you don’t keep track of all your spending from month to month, you risk overspending and not meeting your goals. There are many different systems to help you manage your money and keep track of your day-to-day spending. The key is to find one that works well for your particular lifestyle.

Tracking your expenses can be easy with USECU digital bank. You can use your laptop, tablet, smartphone or smartwatch to access free money management tools that allow you to create a personalized budget, categorize expenses, see all your accounts in one place, and track your expenses in real time.

5. Don’t budget for fun

It may not have the same financial consequences as not planning for life’s non-fun expenses, like home repairs and medical bills. However, it can definitely sabotage your budgeting process.

Many people think that the key to saving money is to forgo all entertainment and leisure activities, but this is just not a sustainable approach. Not budgeting for fun is likely to make you feel your budget, rather than seeing it as a vehicle for a fulfilling and happy life. A good rule of thumb is to allocate about 10% of your take home pay to fun activities: brunches with friends, concerts, windsurfing, or whatever makes your boat float.

6. Don’t coordinate with your significant other

Money is one of the main sources of conflict between couples, but it doesn’t have to be. It can be great to have a teammate in pursuit of big dreams. When it comes to budgeting for household income, it is important that partners set goals together and then maintain an open and honest dialogue, even if they choose not to have joint accounts.

One of the biggest budget cuts is when each partner spends a particular category without communicating. Holding regular “money meetings” and / or regularly discussing planned expenses or individual financial responsibilities can help keep everyone on the same page.

USECU is here to help you build a better future, and that includes providing you with all the tools you need to make budgeting easier. By setting up automatic transfers in your savings account, you can save money every month without even thinking about it, and with an improved online and mobile banking experience, you can spend smarter and instantly track your budget from the devices you prefer.

About USE Credit Union

Founded in 1936, University & State Employees Credit Union (USECU) enables nearly 60,000 members to achieve financial well-being through a full range of financial products and services, including checking and savings options, credit cards, loans, mortgages and more. USECU now has more than $ 1.3 billion in assets and provides access to its members through eight branches in California, nearly 30,000 no-additional ATMs across the country, and 24-hour online and mobile banking access. 24 and 7 days a week.

Membership in USECU is open to all employees and students of California universities as well as employees of the State of California, including the California Department of Motor Vehicles, California Highway Patrol, CalPERS, and CalTrans, as well as others who live, work, or worship in Alameda County, Sacramento County, San Diego County, Santa Clara County, and Yolo County. As a nonprofit community leader, USECU partners with causes, events, and organizations that reflect a commitment to health, wellness, and inclusion. Learn more at usecu.org.


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