Here are some common mistakes people make when making a monthly budget:
1. Not listing ALL expenses. Most people are good at projecting items they need (rent, groceries, etc), however they usually miss those items that they have on auto-pay. Remember, when making a budget, list EVERYTHING out. This even includes recurring monthly payments such as Netflix, etc.
If you’re having trouble doing this, think of it this way: Imagine that you were moving banks and needed to close out your primary account. Which expenses would you need to move over to the new account? Make a detailed list of every single recurring expense that comes out of your account and include that in your budget. It may be tedious at first, but it’s worth it in the long run.
2. Not allocating money to an emergency fund. When making your budget, you should have some leftover money after your needs/wants. If you don’t, you either need to get a second job or cut down on your “wants” category drastically. Anything leftover should remain in your bank account as an emergency fund buffer. Our recommendation is to keep a $1,000 emergency fund buffer in your account in case something unexpected happens.
3. Forgetting about Sadaqah (charity). We’ve written about this extensively in our eBook (which you can pick up on our website), however even an amount as little as $5 can make a difference. If you’re unsure about how to do this at first, keep a $5 bill in your car and give it to someone when you see them in need.