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If I asked you how much money you spent last week, would you be able to answer? If not, you’re part of the 65% of Americans who don’t track their spending. It’s an important habit to build if you want to succeed when budgeting. But getting started is one of the many budget challenges that you have to try and overcome.
If you’re a beginner when it comes to budgeting, there will be a lot of challenges. Here are 20 of the most common that people face, and how to beat them:
Budget challenges you can beat today
Some budget challenges are relatively simple to deal with. You can work on these challenges as early as today, and you can overcome them in no time.
1. Not setting a goal
A specific and achievable financial goal is the first thing you should have. This is because your habits will be built around trying to achieve this goal.
You should start with a short-term financial goal. Check out my article on this topic if you want to learn more.
2. Forgetting to track your expenses
Tracking your expenses is a simple habit to build but an essential one. It will help keep you from overspending and makes it easier to monitor your financial well-being. You can create an expense tracker right now on a spreadsheet or with an app.
3. Being unwilling to make sacrifices
When trying to hit a financial goal, it’s only natural to make a few sacrifices. You have to get into the mindset of delayed gratification. This will make adjusting to a better, financially healthy life more accessible. This is one of the many challenges of a budget that beginners aren’t prepared to face.
4. Inconsistent saving habits
When you’re trying to build your wealth, consistency is critical. My tip is always to save a portion of your payday check the moment you get your hands on it. Consistency in a budget can be a challenge, but you have to do it to grow your wealth.
5. Saving, but not investing
The US Dollar inflation rate is almost 7%, beating most bank interest rates. That means that if you’re keeping all your money in your bank, then it will lose its value over time. It’s essential to learn how to invest to keep generating passive income and beat inflation.
If you want to dip your toe into investing, here’s my list of the best investing books for beginners.
6. Spending too much when you could be paying less
There are many ways you could be spending way more money than you have to. For example, you might not be using discount codes or coupons that are readily available. With these, you could cut your expenses by quite a bit.
Check out my list of the best coupon sites here.
7. Eating out too much
This is the habit that many people have but won’t admit. There are a lot of hidden costs when it comes to eating out, like transportation and tipping. My best advice is to frame eating out as a celebration for a special occasion, like a birthday or promotion.
If you’re going to be eating out multiple times a week, be sure to make the most out of it. If you can’t finish a meal, ask for a take-out bag. That way, you can save the leftovers for another meal and save yourself some time and money.
Budget challenges that may take a while to overcome
Not all budget challenges are easy to beat, though. There will be some that will take some time, but with a bit of work, you can overcome them too.
8. Sticking to a job for too long
The average American stays at their job for 3-4 years, but this number is trending lower. You should always keep an eye out for your next career move, especially if it pays better.
9. Lifestyle inflation
But once you do get a better job, try not to fall for the trap of lifestyle inflation. You might be facing this budget challenge without knowing it. This happens when you start earning more money, but your lifestyle becomes more expensive as a result. Even if you nab that promotion, you should always try to keep your spending to a minimum.
10. Being too frugal
You might not have expected this, but spending too little can also be a problem. It’s important that you’re not depriving yourself too much. Spending on luxuries here and there, as long as they’re reasonable, can help keep you sane. It might not sound like a budget challenge, but believe me, it is.
11. Taking too much risk when investing
You might have heard stories of people getting rich off stocks or cryptocurrency. While these can happen, these investment platforms aren’t for everyone. I’ve heard too many stories of people going all-in on investment, only to lose most of their capital.
As a side note, make sure that you’re only investing money that you’re willing to lose.
12. Lack of an emergency fund
Too much risk is especially dangerous if you don’t have an emergency fund saved up. This is a separate savings fund that is for emergencies only. Saving up about 6 months’ worth of expenses will give you a lot of breathing room. This budget challenge can take a while to build, but it’ll be worth it.
13. Not taking enough risk
While there are a lot of safe investments, it might be good to take a few risks here and there. Before taking risky investments, you should always do your research first and make sure that you have an emergency fund set up.
14. Falling for scams and phishing
Scams and phishing schemes have gotten so good that it can be hard to tell if they’re fake. It helps to be suspicious of anything that’s “too good to be true.” You might want to get rich, but those “get rich quick” schemes will only hurt you in the long run.
Budget challenges that can keep happening
Some budget challenges will just keep coming back. The best you can do for these is be aware of them and avoid them if possible.
15. Impulse buys
Instant gratification is the enemy of financial well-being. The truth is that you might not need a phone upgrade or wardrobe overhaul. The inevitable surprise expense will pop up, but that isn’t always the case. Do your best to plan for all your purchases ahead of time.
16. Spending money to “save time” on shipping
Some websites like Amazon charge you more money to have your item delivered faster when shopping online. “Express delivery” is something that retailers have invented to justify charging extra money for quality service. It’s something that most people don’t need unless it’s necessary. If you can, avoid paying more money to get something a day earlier than necessary.
17. Avoiding debt
Nobody likes to deal with debt, but the sooner we face it, the better. That’s because many debts have a high-interest rate and will cost you more money over time. If you have debt, it’s crucial to eliminate it ASAP.
18. Lack of focus
Most of the problems I’ve listed can stem from a single issue: a lack of focus on finances. You don’t get to be rich by spending all of your money every paycheck. You get there by making sacrifices and keeping focused on your goals, no matter how hard it can be.
19. Giving up too soon
If you’re facing any of these challenges, it’s important not to get disheartened. Everyone runs into budget challenges, especially early on. What matters is that you’re trying to get better at handling these challenges over time.
20. Not listening to free expert advice
The last and most important budget challenge on this list is not listening to free advice. There are a lot of tips that you can receive for free that will help you grow your wealth. One such example is joining my financial family! As a member, you’ll receive personal financial advice from yours truly every week. Occasionally, I’ll even throw in a freebie here and there as well. The best part? Signing up costs absolutely nothing! So what are you waiting for? Sign up for the financial fam today!