Creating a budget is the first step to taking control of your finances. Sticking to your budget is another challenge altogether.
Even when you believe you have factored in every cost you may encounter by week, by month or by year, somehow you end up needing more money than you allocated. If this sounds like you, you are likely encountering a budget killer (or several). Below we have gathered some of the most common costs that can cause you to veer off your budgeting course.
|Account Maintenance Fees|
Banks and credit card companies often sneak in fees on every statement to “maintain” your account. Some charge you extra if you don’t maintain a certain balance, if you write too many checks or if you don’t make enough transactions. These can add up quickly. Read the specifics of your account agreement carefully. Look into which checking accounts and credit cards offer services that fit your lifestyle.
While seemingly low monthly fees can be attractive, subscription magazines and online portals add up. These costs are hurting your budget if you are not using the services or if you could find them elsewhere online for free. Eventually, these just become another of your slew of monthly payments so it’s a good idea every so often to re-evaluate whether yours are worth keeping.
|Credit Card Interest|
Credit cards have several attractive features: allowing you to buy now and pay later, providing cash back and helping you earn points toward a new car, vacation or night out. Paying installments on your purchases over time may appear to be a great way to buy all your monthly and extraneous purchases. However, high interest rates add up over time if you carry a balance and you can find yourself deep in debt before you know it. You may think you are paying off your purchase when all you are doing is treading water by paying off the interest. To avoid this, it’s important to know the interest rates of your credit cards, pay off your balance in full every month and save before you purchase. Carrying a lot of debt can have longer-term implications on your credit scores too. If you want to see how your debt is affecting your credit, you can get a snapshot of your credit data and a personalized plan to improve your credit scores for free on Credit.com.
|Excess Phone, Cable & Utility Bills|
Many households are paying hundreds of dollars for TV, Internet, cellphone and utility expenses each month. No matter how comfortable these tools make us, they are taking up valuable space in our budgets. Look through your bills carefully and try to scale back from services you aren’t using or do not need to use, from running the air-conditioning while you are at work to paying for a DVR on a second TV you never even watch. Also, be sure you are not paying for a level of service you don’t need. If these alterations don’t bring a big enough impact on your budget, consider alternatives like prepaid phone services and switching cable providers.
Certain business tack on “convenience fees” when you utilize their goods or services as a way to make up any added expense that can incur during your transaction. This includes paying a bill online or receiving a paper statement from your bank. Even though it is usually only a few dollars a month, this can add up over the year to push you over budget.
Having an emergency fund can be a big help when you come in over budget. This money can save you from stress when you have fallen victim to these and other budget killers. It’s a good idea though to deal with the root issue instead of repeatedly busting your budget and having to dip into your emergency fund. If you do have to use that money, it’s important to replace it and frequently evaluate your budget to match your changing lifestyle.