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5 Signs You Have A Bad Budget

Using a budget to put yourself on the right financial track is smart. But if you find yourself spinning wheels and not getting anywhere, it’s time to give it a second look.

Budgeting takes practice, no matter how long you’ve been at it. Even a budget that worked for you in the past may be a bad budget in your current situation.

To find out where you stand, let’s look at 5 signs you are working with a bad budget.

1. You’re Living Paycheck to Paycheck

If you live for each payday, it’s time to take a step back and figure out why. Barely scraping by each month is a red flag that something is wrong with your budget.

Look at where you can cut expenses. Are you spending too much eating out? Is that gym membership necessary? Can you find a cheaper phone plan?

If you’ve cut back to the bare minimum and still find yourself struggling, you may need to consider something bigger. Like giving up your car for public transportation or getting a roommate.

2. You Don’t Have an Emergency Fund

You never know what life is going to throw at you. That’s why it’s so important to have an emergency fund set aside to cover the unexpected.

What if you need to come up with $1000 right away? Would you struggle to do it?

If so, you need to take another look at your budget and be putting aside money for this fund monthly. Experts recommend having 3 to 6 months’ worth of expenses saved up, just in case.

3. You’re Using Your Credit Cards Too Much

If you’re having to use credit cards to cover expenses and can’t pay them off each month, you’re living beyond your means.

This is a good time to look at your budget and see where you can cut costs. Make a rule that if you can’t pay for it in cash, then you don’t need it.

4. You Use the Same Budget Each Month

While it may be easier to set up a monthly budget and follow the same plan each month, unfortunately, it doesn’t work that way. Expenses change monthly, so there’s no one size fits all budget.

Utilities change with the weather. Holidays and birthdays pop up at different times of the year. School expenses vary.

It’s a good rule of thumb to check your budget at the beginning of each month so you know what to expect.

5. You Aren’t Saving For the Future

Sure, some people like to live in the moment. But that kind of thinking won’t help you when it comes time to buy a house, send the kids to college, or retire.

If you’re paying your bills off each month, but not putting anything into savings or a retirement fund, it’s time to re-evaluate your budget. Find a way to cut costs elsewhere and stick that money into the bank monthly.

Turn Your Bad Budget into a Great One

Once you know you’re working with a bad budget, you can start turning the corner toward the budget you want and need. With some work and discipline, you’ll find yourself heading down the road toward financial freedom.

And if you need more ideas to help you save money, click here to read our money saving blog posts!