To stay on track with your budget, avoid making these common but costly mistakes.

Creating a budget is often a far easier task than sticking to it. While budgets can be useful tools for reaching your financial goals, they can also lead to stress, frustration and more spending if you approach them in the wrong way. To stay on track, avoid making these common but costly mistakes.

  1. Using the Wrong Tools

    One-size-fits-all solutions for budgeting don’t exist, but it is important to find the right tools for your needs. For you, those tools may be an old-school pad of paper and a pencil. For some, the best tools may be personal finance software or a simple spreadsheet. The key is to choose tools that work for you and stick with them.

  2. Attempting to Track Every Cent

    While this seems like a great tactic for understanding your spending habits and sticking to a budget, most people end up abandoning it quickly and only end up frustrated that they ever tried. Instead of tracking each and every dime you spend, focus on the areas of spending that lead to the most trouble. Keep track of just those expenditures to make budgeting less time-consuming and easier.

  3. Being Overambitious

    Unreasonable goals kill budgets the same way they kill diets. You have to account for a bit of wiggle room for unforeseen expenses and plain old fun. Don’t pretend that you will give up all entertainment spending, for example, because you likely will not. Instead of wiping out such expenses, trim them down. For instance, if indulge in Starbucks every morning, vow to splurge on a fancy latte just once a week instead.

  4. Failing to Plan

    There are certain semi-annual or annual bills that you know are coming, and you need to plan for them accordingly to keep your budget intact. Plan for these expenses each month even if they are not due until next quarter. Think about your car or life insurance, holiday gifts and taxes in advance so when it is time to pay you are covered.

  5. Skipping an Emergency Fund

    Many people subscribe to the “it’ll never happen to me” mentality, but emergencies strike everyone from time to time. Unexpected surprises like medical emergencies, job losses, pay cuts, house repairs or broken-down cars can quickly ruin your budget if you don’t set up an emergency fund.

  6. Giving Up 

    Learning to create a budget and stick to it takes time, and you will probably make some mistakes along the way. The important thing is to not give up. Instead of letting a setback become a reason to quit, persevere. Regroup, take another look at your budget, and tweak it if necessary.