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We all slip up financially now and then. But, some mistakes, more than others, can really put a dent in our progress to achieving our money goals.
As Financial Literacy Month continues, our blog this week aims to break down some of the most common mistakes people face when it comes to setting and sticking to their budgets.
Here are the most common blunders we see time and time again, along with tips to set things right.
1) "I never have any money left over to add to savings"
If you often find yourself falling short of adding any money to your savings, or continuously dipping into your savings as the month progresses, you likely need a switch-up with your payday routine.
Instead of saving what is left after spending, only spend what is left after saving. Pay yourself first and allocate money to your savings as soon as you're paid and only once all of the essentials like rent, bills, debt repayments etc. are taken care of.
2) "I can't seem to make much progress on my financial goals"
Breaking down your goals into actionable steps has been proven to drastically increase the chances of you achieving whatever it is you’ve set out to do.
Setting realistic mini-goals for you to meet along the way to your big money goals will not only help build some momentum but will also make the bigger goals (like getting out of debt), feel less daunting.
And don't forget to celebrate your small wins to keep the momentum going!
3) "I always seem to go over budget"
If you often struggle to stick to your budget in the first place, you may be underestimating your expenses and living beyond your means.
To overcome a budget feeling too restrictive, it's important to adjust our budget to our lifestyle needs and start with a simple method like the 50/30/20 approach. This method involves allocating 50% of your income to your needs such as rent, bills, and food, 20% to savings, and 30% to wants such as entertainment, hobbies, and shopping. It is also important to be realistic about what you can afford and set aside some "fun money" in your budget to help you indulge in things you love without going overboard.
To make budgeting simpler, you can use a budgeting app like ImageNPay. With our app, you can monitor your transactions in real-time and dedicate your prepaid card solely to a shopping fund!
Bonus tip: Turn on notifications from your banking or budgeting apps to get instant alerts and breakdowns of your spending. With ImageNPay, we'll always alert you when you're down to your last £3 to keep your spending in check.
4) "I just can't resist falling back on my credit card"
Depending on credit cards to get by until the next payday - or worse, to cover essentials like rent for the upcoming month - is a dangerous game that becomes even harder to stop playing. The best way to end this co-dependent relationship with credit is to remove the temptation altogether. You can start by removing pre-filled credit card information from websites, apps, and your phone, and also from Apple Wallet/Google Pay.
If you can't cut up that card for good, start by reducing your spending limits bit by bit and consider switching to a prepaid card like ImageNPay to help manage your spending. As you can only spend what's on the card, there's no risk of overspending, no interest fees, and no racking up further debt!
5) "My emotions always seem to influence my spending"
If you often feel the urge to treat yourself on special occasions or go shopping when you're stressed or bored, you may be susceptible to shopping under the influence of your emotions. While this can be difficult to avoid, the best way to cope with these impulses is to seek support from a friend when you're feeling the urge and adopt healthier coping mechanisms to deal with strong emotions, such as meditation or exercise.
Another way to overcome this is to delay gratification and wait at least 24-48 hours before making the purchase. By doing so, you will likely lose the urge to buy the item and may even change your mind about its necessity!
Do you struggle to gain control of your spending? The ImageNPay app can help.
With your very own digital prepaid card, you can set spending limits, personalise your card, and monitor transactions for peace of mind that you'll NEVER overspend again!
To find out more and download ImageNPay today on iOS and Android, just tap the button below!
