Revamping Your Budget for 2024? Don’t Make These 6 Common Mistakes
Written by
Cindy Lamothe
Edited by
Amber Barkley
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One of the best things you can do for yourself financially is to constantly be updating your financial goals. And a big part of that involves revamping your budget each year to reflect your current objectives. It’s easy, however, to unknowingly make some budgeting blunders along the way.
“It’s super important to steer clear of some common traps to keep your finances on track,” said Ashley Vincent, real estate investor and owner of Home Investors.
“One biggie is forgetting to factor in any changes to your income,” she explained. “If you’ve got more or less money coming in, but your budget stays the same, it’s like driving blindfolded — you’re risking a financial crash.”
Another no-no, according to Vincent, is consistently spending more dough than you’re bringing in. “You’ll end up draining your savings or piling on debt. It’s all about living within your means and making sure your budget reflects what you’re actually earning.”
Here are some more common missteps you’ll want to steer clear of in 2024.
Not Accounting for Food Inflation
“One of the top budgeting mistakes I tend to see people making is failing to account for things like food inflation,” said David Kemmerer, CEO of CoinLedger. “Especially if you’re redoing your budget for the new year, it’s important to factor in the rising cost of living, including groceries.”
He said this can help you avoid constantly overspending on your grocery budget and can help keep your other financial goals more in balance and realistic for the year.
Splurging Before the Cash Is in Hand
“You know a bonus is on its way, so you start planning all the ways you’ll treat yourself,” said Tom Bruzek, land buying specialist at Selling Land Fast.
But pumping up your spending before that money is in your account can lead to trouble, he explained. “It’s better to play it safe and stick to your regular budget until you’ve got the cash in hand.”
Failing To Plan for Retirement
“People often make mistakes while budgeting, especially when they think of retirement, which leads to financial insecurity in the later years,” said Michael Benoit, certified finance expert and founder of ContractorBond. “For instance, they think that their current retirement plan is bulletproof and does not require any additional tweaking.”
“My advice is to carefully evaluate the inflation rate rise and the actual cost of living with changing times, determine how much you need to save for retirement, and make the necessary adjustments in your budget accordingly, including setting up an emergency fund,” he said.
Bruzek agreed that these kinds of long-term goals are something you don’t want to take lightly when budgeting.
“The age-old dilemma. It’s tempting to focus on the here and now, but don’t forget about your bigger financial dreams,” he said. “Whether it’s saving for retirement, buying a home or your kids’ education, keeping those long-term goals in mind helps you make smarter choices with your money.”
Relying Solely on Credit
“I have noticed that people often overlook the importance of maintaining a good credit score and end up relying solely on credit to make purchases they cannot afford,” said Benoit.
He explained that this ultimately leads to financial instability and accumulating high-interest debt, which can quickly spiral out of control. “My advice is to always have a backup plan in case of emergencies, and avoid over-reliance on credit, such as credit cards or personal loans.”
Ignoring Debt Payments
“I always recommend my clients avoid ignoring debt payments in their budget, as high-interest debt quickly accumulates and becomes unmanageable,” said Benoit. “I suggest prioritizing paying off debt and making a plan to tackle it systematically, like an emergency fund that covers three to six months of expenses.”
Guessing What Your Expenses Will Be
One common mistake people make, according to Andrei Vasilescu, co-founder and CEO of DontPayFull, is relying too heavily on estimates.
“Estimating your expenses can lead to overspending or under budgeting, causing financial stress,” he said.
Instead, he recommends tracking your actual expenses and adjusting your budget accordingly.
Liz Hutz, owner of Cash Home Buyers Georgia, agreed that guessing instead of keeping tabs is a big no-no.
“It’s easy to just ballpark your expenses, but trust me, it’s way better to actually keep track of where every dollar goes,” she said. “That way, you’re not left scratching your head, wondering why there’s always less money than you thought.”
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