The Biggest Mistake New Budgeters Make, According to Personal Finance Influencer Allison Baggerly
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T. Woods
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Daria Uhlig
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Anyone who has ever tried crash dieting knows why such extreme weight loss measures are never long-lasting. By cutting out so much food at once, you end up ravenous, which makes you more likely to overeat. Extreme budgeting is nearly the same thing. With that, you cut spending too quickly and too drastically and set yourself up for “a spending relapse.”
Such an extreme cutback is the biggest mistake a new budgeter can make, according to Allison Baggerly, the founder of Inspired Budget, an online resource designed to inspire women to confidently manage their money by teaching them to budget, pay off debt and build wealth.
As an alternative to such drastic budget-slashing, Baggerly suggested in a recent Instagram post that a new budgeter try the “step down” method. With this method, you identify the areas where you tend to overspend, then gradually scale back that spending. By weaning yourself from the expensive habit to the more frugal one, you avoid system shock that can trigger a relapse.
The University of Wyoming Extension explained how the step-down system works, using restaurant takeout orders as an example.
The “top step” in this example is buying takeout from pricey restaurants. As a step down, you might order from a less expensive establishment, or get meal kits delivered to your home. A step down from that might be to purchase prepared foods from the supermarket. The bottom step might be to cook quick meals such as omelets and bagged salads topped with your favorite pre-cooked protein.
“This method works well across all spending categories — whether it’s groceries, online shopping or dining out,” Baggerly wrote.
Planning your steps in advance and commiting the plan to paper or a spreadsheet can help you stick with it, according to the Spokane Teachers Credit Union, which teaches workshops in the step-down method.
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