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12 Common Budgeting Mistakes to Avoid (for Personal Budgets)

Avoid overspending, embarrassment, arguments and headaches by learning how to avoid these common budgeting mistakes.

Setting up a personal budget for the first – or 10th – time, and you’d like to know common budget mistakes to avoid?

"woman in light blue blazer pulling money out of wallet, text overlay "most common budgeting mistakes to avoid to save money"

I totally get that.

Budgeting is not an exact science; it’s more like part science and part art.

Which means that even if you have the best intentions and set up the best budget on paper, in practice, things might not go as planned.

That’s why I’m creating this list of common budget mistakes to avoid, so that you’ll get a running start from people who have been doing this for years and get the help you need.

Most Common Budgeting Mistakes

The most common budget mistakes are not always the most obvious ones.

For example, you might think the most common reason for people to out-spend their paycheck is because they failed to “budget right” and don't know their true expenses and income.

In reality, this usually happens because of other budget mistakes people fail to account for ahead of time, like:

  • Failing to build in annual expenses (a bill that you only pay once per year) into your weekly or monthly budgets, causing your budget for the month that the expense falls into to fail miserably since you have to find the money from somewhere).
  • Failing to accurately estimate monthly expenses
  • Failing to line up bills and paychecks

See? There are all kinds of other things that can cause a budget to fail.

Let’s diagnose some common, avoidable, but not-often-discussed budgeting pitfalls below.

Psst: got a teenager? Here are common teenager budgeting problems and how to fix them.

1. Choosing the Wrong Budget Duration

You can create a weekly budget, a bi-weekly (or by-paycheck) budget, or a monthly budget.

Not one is right or wrong. What makes it right or wrong is simply what works for you.

If you’re brand new to budgeting, then you might find it hard to stick to an entire month’s budget simply because you don’t know how (yet) to estimate all of your costs and categories and such.

So, a budgeting tip for beginners? I suggest you start with a weekly budget (or bi-weekly, which aligns with your paycheck – here are free budget by paycheck worksheets).

You could also start with budgeting by paycheck – something that’s more bite-sized to wrap your head around.

As you get better and better at estimating your true costs and needs throughout the month, you can work towards a monthly budget (here’s 11 cute printable monthly budget worksheets, and free printable budget binders, by the way).

2. Failing to Build in Irregular Annual or Semi-Annual Expenses to your Monthly Budget

Woman in teal shoes on bed, looking ahead at personal calendar to budget annual expenses

When you make a monthly budget (or a weekly budget), you mostly think about weekly and monthly expenses. It’s easy to forget about irregular expenses that only happen once or twice a year.

Then when that annual living expense comes due – such as your semi-annual auto insurance bill, or an annual software subscription renewal – there’s no money set aside to make it and you falsely think they're an unexpected expense.

This can causes not only missed payments, but messing up next month's budget because of having to put out the fire.

To free yourself of this pitfall, you’ll want to make a list of each of your costs and bills that happen infrequently – like once a year, once a season, etc. – and add up the estimated amount you’ll need.

Then, divide that total number by 12, and write in a line on your monthly budget for “Big Expense Savings” or “Sinking Funds”. Set aside that amount each month into a savings account so that when the bill comes due, you’ll have it without throwing off your monthly budget.

Psst: you might want to check out these free sinking fund trackers.

3. Getting Lost Moving from a Credit-Based Budget to a Cash One

woman in orange sweater with cash in hand, working on a cash budget

You get your budget sheet filled out, and you’re ready to move from a credit-card-based budgeting system to an all-cash one.


But what you might not realize (until you try to start the budget plan, in real life)? Is that you don’t have enough cash to fill in that lovely set of free printable cash envelopes you created.

Switching between a credit card-based budget system to a cash one, can cause some hiccups (here's a list of the personal budgeting methods to choose from).

Mostly because you likely still have a credit card payment from last month’s spending (at least) to pay off, while at the same time you’re trying to fund this month’s expenses completely based off of the money that comes in.

Actually, I’ve experienced this one myself! The best I can tell you is to either:

  • Fund your first months’ worth of cash envelopes from savings and pay off your credit card bill entirely with this month’s cash (we chose not to do this, though)
  • Partly fund your envelopes with cash and make it work

Here's how to transition from credit card to cash.

We chose the second option. Know that it might take a month or two of partially-funded cash envelopes and categories for you to get fully caught up on past credit card bills and “in the current” on spending (meaning, your expenses and budget money comes directly out of your current month’s income).

But, I can say from experience, that it’s well worth it!

Psst: don't miss my other article, 33 most common money mistakes.

4. Forgetting to Fill in “Actual” vs. “Planned”

There are only two ways you’ll get better at budgeting:

  1. Actually doing it
  2. Actually reflecting on your past budget

And the way you reflect on your past budget is by going back after the budget duration is over (the week, the month, the paycheck – however you choose to budget) and filling in the actuals.

See, it’s one thing to plan out a budget. But it’s completely different to put it into practice. In practice, things happen.

Extra school fees come through. Coupons expire and things cost more than you thought. You get a statewide freeze and electricity costs go through the roof. Maybe you get a raise – who knows?

This is why in my article on how to fill out budget sheet, the free budget sheet I created includes a column to go back and “reflect” on your budget by filling in what you actually spent. Then, you can subtract that to your planned amounts, and see if you have a leak or a surplus.

This information will help immensely when doing your next budget. And your next. And your next.

Psst: here are 11 beginner printable budget worksheets.

5. Budget on Paper Only, and Not in Real Life

This one’s a biggie. And, more common than you think.

You see – you can make a budget or spending plan work on paper (here's how to keep track of money on paper). But, the tricky part is to translate it to everyday life.

Oftentimes, your paydays or bills don’t exactly line up to when your budget-on-paper is supposed to start.

Then what happens is you put it off for a few days, or a week, until the funds come in and you think you’ll be done putting out fires.

But then what actually happens? Is another month goes by, and you never actually put the budget into practice.

Psst: have a family? Go ahead and check out some of these family budgeting tools.

6. Failing to Translate Your Budget in a Way that You’ll Use it

Oooohhhh this one’s a biggie.

Again, your budget plan is what happens on paper, in a perfect world. But where the rubber meets the road is your budget in real life.

How are you going to express your budget plan, on a day-to-day basis?

Here are some options:

  • Pick a couple’s budget app with your partner, and load it in with your budget plan so that the two of you can quickly see where things are in real time.
  • Use free printable cash envelopes and refill them with each paycheck (or once a month – you get to pick!)
  • Spend on a credit card that you fully pay off during the grace period, so that you get reward points or cash back without paying any interest
  • One of these 23 personal budgeting methods I’ve outlined for you.

Don’t fail at budgeting just because you choose the wrong way to actually spend your budget. Pick the app, the envelopes, or the system that works with your lifestyle (you might have to try a few out, fyi, to find the right one!).

7. Waiting too Long to Record Your Spending

This is one of the biggest budgeting mistakes.

Unless you’re the type of person who diligently saves each receipt form your variable expenses (like groceries, gas, etc.), then you should not be waiting until the end of the month to update yourself on each category of spending.

Think about it – if you wait until two days before the month ends to figure out how much you have left in your “grocery” category, then you might’ve already overspent and not known it.

At least record things every few days (here are free daily spending logs to help) – such as subtracting cash envelope spending and writing down the new total on the outside of the envelope so that you know what you’ve got left to work with.

You’ll thank yourself for doing this!

Psst: you might be curious to learn about all the spending habits out there – both good and bad ones!

8. Assuming that Each Month Looks Like Last Month

I’m going to let Dr. Tony Pennells from MindShift.money take over on this one.

“Okay, so you dug deeper and pulled up not just your utility bills but all your receipts and credit card purchases from the last month. Add it up, and you’ve completed the calculating monthly expenses task… right?

Well, only if you want to look at a single data point. To get a true feel for what an “average” month looks like, you really need to go back a whole year and size up 12 full months of your spending.

After all, your last month of spending could be average, or maybe you spent far less (or more) than what you do in a “typical” month.”

9. Not Building in a Buffer

This is one of the most common pitfalls when setting up a budget, especially if you:

  • Account for every single dollar through zero-based budgeting
  • Are living paycheck to paycheck and simply don’t have room for a buffer

In our household, I used to be notorious for cutting things razor-sharp close in our checking account (simple because I wanted to eek as much of our paychecks as possible away into our savings accounts).

Unfortunately, I had to over withdrawal a few times (and pay that awful overdraft fee) before realizing that it doesn’t pay to budget out every single dollar.

Instead, I build in a buffer to our checking account of several hundred dollars.

Psst: here's how to get one month ahead on bills.

This has saved us, several times!

10. Repeated Disregard of Your Written Budget Plan

Your budget worksheet that you fill out is just a plan.

You already know how things will turn out if you follow it to a “T” – that’s what a plan is for.

But following it perfectly, every single month, is not going to happen.

Still – I find that one common money problem comes up when you overspend on your budget one month, and then it happens again, and then you kind of just throw in the towel.

Meaning, you let those extra little expenditure opportunities take over (slowly) until one day you wake up and can’t even recognize that budget plan.

How to deal with this:

  • Stop the Cascade of Events: Miss a budget one month? Miss one category and overspend the next month? That’s fine. But stop the cascade of events. Don’t let one leaky category of spending taking over your good intentions on another. Stop the leak.
  • Tweak Your Budget: Sometimes when this happens repeatedly – overspending on your budget in various categories – it really just is a cry of help from your budget plan. Your lifestyle may have changed, or you have new realities, and you simply need to redo your budget plan. Case closed.

11. Failing to Include “Savings” as a Budget Category

Look – you might be looking to set a personal budget simply because you don’t have any more room for surprises or overspending. And you might have convinced yourself that “savings” and setting a financial goal is just out of the talks right now.

But hear me out on this one:

If you don’t build “savings” category into your budget now, then one year from now, you’ll be in the same place.

Aside from getting a new job that pays more or getting some sort of big pay increase, saving money is really the only way you’re going to build a better life for your family in the future.

And budgeting savings into your monthly budget plan? Well, that’s the only way you’ll get there.

I believe in this so much that I have tons of free resources on this blog to help you with saving money. Just start by working through my 250 money saving tips.

12. Being Too Restrictive in Spending, for Too Long

Ever heard of the elastic spending effect?

It essentially means that if you too tightly regulate spending for too long…you (or your spouse) might end up sling-shotting the other way and having spending fests that put you back at square one.

Instead, let loose with your spending a bit when you can. Don’t keep your entertainment budget “$0” for too long. Go through periods and bursts of no spending challenges (not marathons), and then allow yourselves some breathing room to enjoy spending again.  

Spending whiplash can be nasty!

13. Not Letting Your Spouse in on the Action

couple sitting down with laptop to do budgeting together

If you have a partner or spouse, then it’s critical that they be part of the budget process.

Why is that?

Well, for one, they might not know what their spending limits are. Or, they might not know when the next bills are coming out of checking (and that all of that money that looks so tempting in there is earmarked for, say, the mortgage – here are 7 free monthly bill pay checklist PDFs to help).

One way to communicate with your spouse about the budget, automatically (so that there’s less tension between the two of you about it) is through a couple’s budgeting app. There are some really great, free options out there – the ability to see what’s in your accounts and in each budget category in real time, alone, makes the setting up of one highly worth it!

Something to think about.

We’ve covered the most common budgeting mistakes – now, let’s look at a few things to shoot for when budgeting.

What are the 4 General Tips for Budgeting?

Looking for a quick rundown of 4 general budgeting tips, then check these out:

  1. Make sure your expenses + savings are less than what you earn.
  2. Try out several different budgeting systems before deciding on one.
  3. Tweak your budget after big life changes, and at least once or twice a year.
  4. Give equal input to any partners who also have to live by this budget – that way, they’ll be more likely to buy into it and use it.

You can read lots more simple budgeting tips here.

Not only do I love to read about other people’s handling of things to get the heads up, but it also makes me feel better when others are experiencing something that I am, too. So, I guess I’m here to tell you that you’re not alone, you will get better at this as you go, and you’ll definitely avoid many common budget pitfalls by listening to the advice above.

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Amanda L Grossman

Personal Finance Writer and CEO at Frugal Confessions, LLC
Amanda L. Grossman is a writer and Certified Financial Education Instructor, Plutus Foundation Grant Recipient, and founder of Frugal Confessions. Over the last 13 years, her money work has helped people with how to save money and how to manage money. She's been featured in the Wall Street Journal, Kiplinger, Washington Post, U.S. News & World Report, Business Insider, LifeHacker, Real Simple Magazine, Woman's World, Woman's Day, ABC 13 Houston, Keybank, and more. Read more here or on LinkedIn.


Monday 29th of January 2018

My biggest budget mistake is forgetting those expenses that happen once or twice a year - property tax, insurance, vet visits. I keep special "emergency funds" for those, even though they're not technically emergencies.

Lily | The Frugal Gene

Monday 29th of January 2018

Great tips for those trying to estimate their budget with variables!