One of the main reasons why many people are reluctant to commit to a personal budget is that they seem to be unable to make it work in an effective manner, but in most cases the difficulties lie in making some of the following mistakes, according to the "The Balance" website specializing in financial consulting. :
1- Estimate the costs
When we are preparing a budget for the first time, we may not know exactly how much should be allocated in different spending categories. One of the common examples is the allocation of 200 dirhams per month for grocery expenses, while the average amount in the past months was about 500 dirhams. This procedure may increase the pressure on the budget and confuse it for the following months, in which case it is better for us to be objective, taking into consideration the successive reduction of expenses in the following months based on the real needs.
2- Track spending
For people who do not follow spending according to the set categories, the budget will not benefit them. If they do not know what they spent, they cannot know when they have reached the maximum and allowed within the budget conditions that can work well only if the spending is carefully tracked. This information and data would know the person how and how to spend. For expenditures, even if they are small, failure to monitor them may make the budget deficit. Therefore, only the correct information about the spending allows adjustment, and helps the budget to save and avoid debt.
3- Missing categories
A common mistake is that some people forget to include or ignore certain categories in the budget, such as gifts, vehicle maintenance, annual bills, and more. In this framework, a budget for annual expenditures can be established by dividing the amount they pay by 12 months, and neutralizing these funds aside every month, as experiences indicate that after a few months have passed to work on the budget, individuals should be able at this stage to determine the expenses that they may miss .
4- Emergency allocations
The emergency fund protects and supports the budget in order to work always in the optimal way, as sometimes we have to pay costs for unexpected purchases, or urgent medical cases, or in the case of unstable monthly income, or sudden damage to the house and others, so the absence of this fund is one of Common mistakes that keep people away from their financial plans, it enhances the ability to avoid resorting to debt in order to cover emergency financial matters. Some may resort to using the amount allocated to this fund to cover entertainment and non-essential expenses, and this is a mistake, because the primary goal of the fund is the unexpected expenses.
5- Classification of needs
Another mistake people make is the method of classifying some groups according to needs. For example, food is considered a need, unlike eating abroad, and away from the money allocated for entertainment, it is difficult to know the classification of the money that was spent within the budget conditions, and in this The framework The income should also be specified precisely including the salary, whether monthly or weekly, and any other income that the individual may receive from the additional work.
6- No budget
The biggest mistake in preparing a budget is that none of it is ever present, since if an individual does not have a budget, it is likely that he lives in a crisis and gets lost in his financial life, and therefore it is necessary to take the time to prepare one as soon as possible. Preparing and committing to a tight budget is the first step to saving and achieving financial stability. Setting a spending plan and constantly reviewing it will enable individuals to control their needs and requirements.
• Some people forget to include certain categories in the budget or ignore them, such as gifts.