We buy houses in Texas and surrounding areas for many various reasons, and ONE of those reasons is because people have financial problems or they fall behind on taxes for some reason. It’s easy to ignore these problems, but many of them are easier to avoid if you know how to prepare for them. While the budget mistakes below do not apply to every situation, they will still provide some helpful questions to ask yourself, and hopefully, will give you a small start to managing your finances and budget a little more easily.
In order to track and maintain any budget, you need a system. Some people use spreadsheets, some people use software or phone apps to track their expenses and even integrate with their banking systems. While technology provides multiple solutions, there is nothing wrong with a paper filing system. If saving receipts in a binder and writing down expenses and budgets on a notebook is the most manageable solution for you personally, then that is what you should start with.
Along these same lines – make sure, to be honest with yourself. If you need to save every receipt, to be honest with yourself, then save EVERY receipt and paycheck stub. It’s easy to fudge expenses and income without documentation, and while it may not be intentional, it will be impossible to balance your budget if the numbers are off.
You don’t need an elaborate system to track your expenses or even special budgeting tools. If a paper planner works best for you, try that. Start simple and do what works best for you so you can adjust it easily as you go.
When creating a budget and learning to follow it, you are most likely going to go through the process of creating new habits, which will involve some small changes in your behavior. It’s important to realize that creating new habits takes time, repetition and patience.
The first step in successfully creating new habits is to make small changes at a time and to repeat them often. For example, in the beginning, check your budget and finances weekly. This will give you manageable bits of information to process, as opposed to looking at the data monthly, which might be too much at first. Once you are in the habit of checking and tracking weekly, you might be able to decrease the frequency later.
You don’t have to have a lot to start – but you have to have an emergency fund. Maxing out your credit cards for emergencies or surprise expenses will worsen the problem, so having a small fund to draw from helps immensely.
A lot of specialists suggest you need several months’ salary in savings. That way, if you lose a job unexpectedly, your finances will be secure while you find a new position. While this is GREAT, people with a lot of debt may not be able to save that much in a short amount of time. In that case, it is better to have something rather than nothing at all. Start with $1,000 – which is not a large amount, but is often enough for a down payment on a big repair or surprise expense.
Expenses fluctuate month-to-month. For example, during the holidays when you go out of town, expenses might be higher. You can either account for this on a holiday-to-holiday basis, or just create wiggle room in your quarterly budget for surprise/spontaneous expenses.