There are so many budgeting mistakes that may be costing you big time. We fail to make the connection that these budgeting mistakes are the very reasons why our budgets fail in the first place. Most of us hear the word “budget” and run for the hills. Negative connotations come to mind like deprivation, restriction, or that budgets are only for broke people. Is this you? Do you feel like you’re the only one that can’t get this right?
Before we begin listing the budgeting mistakes, let me tell you how I learned about them. Back at the end of 2016, my hubby and I realized that we had over $72,000 of consumer debt alone (school loans, credit cards, car loan payments, and other miscellaneous debt). Facing that much debt with the looming reality that we would soon be a one-income family scared us to death.
By sticking to an old fashioned monthly budget for two and a half years, we finally became debt-free in July 2019. Even now that we’re debt-free, our monthly budget is our financial pact to each other. Our financial future doesn’t scare us anymore and the budget helps us stay on track. We’re reaching financial goals that we never thought possible before. In the past, we made mistakes that not only cost us money but also our time and my sanity. So, here’s Part 1 of the top budgeting mistakes that may be costing you.

Two Major Underlying Causes for Budget Mistakes
There are several reasons why most budgets fail, but there are two major underlying causes. The first underlying reason is you. Yes, I said it, and I’m not sorry about it because, you see, I used to be exactly like you. I had so many budgeting misconceptions and limiting beliefs that stopped me from making a budget in the first place. I’ll be talking about those in this blog post, Part 1 of budgeting mistakes that are costing you.
The other underlying cause for most budget mistakes starts with how we implement it. I’ll discuss this in another blog, Part 2 of budgeting mistakes that are costing you.
Budgeting Mistakes: Underlying Cause is You

1. Failing to understand and acknowledge why you’re budgeting in the first place
Starting with the real root cause of why you’re budgeting is the most important step. Are you trying to get out of debt? Do you want to build a strong financial future for you and your family? Are you saving for a down payment on a house, vacation, or wedding? Are you living paycheck to paycheck?
Not understanding and acknowledging why you’re budgeting in the first place is the #1 budgeting mistake I see most people make. When things go haywire, which they will, you will need to have a “dig down deep in your gut” reason for budgeting. If not, it’s easy to throw in the towel at the first sign of trouble.
My hubby and I started budgeting because we wanted to be debt-free. When the going got tough, we held on to the goal of becoming debt-free to overpower all of the times we wanted to give up.
SOLUTION: Take the time to write the reasons why you started budgeting. Be honest with yourself. It doesn’t have to match the common reasons why most people start budgeting. It just has to be compelling enough that you will weather the storm when it hits. Write down the answers to the questions below, so you can refer to it when you want to give up.
- How does not having a budget make you feel?
- How will you/do you feel when you have a budget?
- What are your financial goals? (In one year, five years, and ten years?)
- Why are you starting/continuing to budget?
- What do you hope to accomplish with your budget?
Get your free printable, so you can write down the answers to these questions today.
2. Failing to start a budget
Some fail before they have even begun. The second most common budgeting mistake is not budgeting in the first place. Even if you’re not living paycheck to paycheck, have money left over each month, or save like crazy, you still may be failing with money and not even know it.
The budget shines a spotlight on your spending habits. Are they aligned with your long-term goals? When you fall into this budgeting mistake, you may not be using your income to its best advantage.
SOLUTION: Write down your financial goals. Are you spending, saving, paying down debt, and investing enough to make those financial goals a reality in the future? Be honest with yourself. You’re only cheating yourself if you don’t answer honestly.
A budget is merely a spending plan that makes your financial goals a reality. Even if you think you’re good with your money, your budget will solidify your actions and intentions. Failing to start one can be costing you more than you think.
3. Thinking you’re not smart enough or organized enough to start a budget
Do you think that budgeting is too hard? Find yourself thinking, “But, I’m not good at math and finance terms are confusing. I’m not really organized. I don’t like to track things, and I don’t have the time to bother with it.”
This is the third most common budgeting mistake I hear. Math or organization skills are not the real cause. It’s really a lack of self-confidence to figure it out.
SOLUTION: Write down three major goals that you’ve accomplished that you first thought were insurmountable. How did you stay on track? What skills did you have to learn?
Read this list over and over. Acknowledge the fact that you have conquered other challenging ordeals and survived. I bet you were scared, apprehensive, and didn’t know all of the facts, but you dove in anyways, figuring it out as you went along. You were organized enough to make these goals a reality. Treat budgeting the same way. It only takes basic math skills, a calculator, and the willingness to put in the work.
4. Thinking you make too much or too little money to need a budget
Thinking that you don’t have enough money to budget is the very reason why you need one. Budgeting helps you face your reality at a specific point in time, but it doesn’t have to stay this way.
You won’t know how to improve your situation without a budget. Do you need to make more money or cut back expenses? Can you sell anything to pay off a small debt? Think of your budget as a crystal ball conjuring up new possibilities rather than feeling stuck in your current situation.
Maybe you’re on the other side of the fence thinking you make too much money to warrant a budget. Budgeting is for broke people after all. This is another budgeting mistake that is definitely costing you. This limiting belief may be more detrimental than thinking you don’t have enough money. But you’re probably wondering why. Doesn’t having surplus money cancel out the very reason why you need to budget?
Again, a budget is merely a spending plan. It doesn’t matter how much you make. A budget tells your money where it needs to go. Just because you have money left over at the month doesn’t necessarily mean that you’re using it in the best way possible. Are you saving enough for emergencies or retirement? Are you paying more in interest than what you’re saving? Are you carelessly spending money that could be better served elsewhere?
SOLUTION: Banish the limiting belief that you need a budget based on what you make. It aligns your financial goals with what you have on hand. It doesn’t matter if you have a small or a large pile of cash. Learning how to budget with a small pile will make budgeting with a large pile that much easier.

5. I pay my bills on time. I don’t need to budget.
Just because you’re never late paying a bill doesn’t mean that you’re financially stable. I used this excuse for years. I grew up in a household where creditors were always calling the house. Taking out another personal loan or opening up another credit card was the solution in my household.
When I started handling my own finances, I promised myself that I would always pay my bills on time. For the most part, it worked. For the longest time, I didn’t have a large amount of debt. I paid all of my bills on time and I had a great credit score, but I ignored the fact that I was living paycheck to paycheck.
SOLUTION: Understand your current situation and how it corresponds to your financial goals. If I had faced my situation and started budgeting, I would have realized that I was teetering off the edge, hanging off the cliff in the first place.
Paying your bills on time doesn’t mean that you’re financially savvy. It just means that you know how to handle one part of being financially responsible.
6. Treating your budget like a punishment
Treating your budget like a punishment is the biggest pet peeve of mine. We hear so many people griping that they have to be on a budget.
This budgeting mistake is flawed from the get-go. I can understand why most people may feel this way. After all, most of us start budgeting because we know something is wrong with our finances. We hope that the budget will help us get a handle on our finances, and pinpoint where we may be going wrong.
We treat our budgets like a “cure-all”, the medicine we have to reluctantly swallow that will magically erase all of our bad financial habits. Instead of positively looking forward to budgeting, we treat it like a punishment for all of our financial mistakes.
SOLUTION: Banish the limiting belief that budgeting is a punishment. In reality, budgets are just simple spending plans, the end products of your financial spending patterns. It won’t instantly change your actions or force you to be financially prudent. The fact that you’re not budgeting is just one of the signs and symptoms that you may not have a handle on your finances.
You would be surprised at how many families budget even though they are financially secure. These families treat budgeting as a non-negotiable monthly habit and the reason for their financial security.
I used to view my budget as a punishment too. Feeling ashamed that I had to put my family on a monthly budget was quickly kicked to the curb when I started viewing the budget as a positive thing that opened up so many possibilities.
7. Failing to take budgeting seriously.
I leave you on this note because I see so many people giving up on budgeting because they don’t take their finances seriously. Just because you have money in the bank, haven’t bounced a check, or make six figures doesn’t necessarily mean you’re good with money. Are you saving for retirement? Do you have a plan of where you want to be financially in five, ten, or even twenty years?
Believe me, when I say, no one else will create your to-do list and check the boxes off other than yourself. Take responsibility for your future. You don’t want to be the majority of Americans not prepared for retirement.
SOLUTION: Budgeting is not just for broke people who need to get a handle on their money. Take it seriously and you’ll be shocked at how fast you will see financial progress. Budgeting is merely a spending plan. It brings clarity to your finances and aligns your goals with your financial plan.
Don’t risk your family’s financial security by winging it and hoping for the best. You wouldn’t pack up your family and jet set to your dream vacation without planning it. In the least, you have to ensure that your family has a safe place to stay and enough money to pay for food.
Why treat your life the same way? Budgeting takes all of those “what-ifs” out of the equation. You’ll be prepared for all of those lofty dreams you have in store – buying or paying off your house, sending your kids to college debt-free, or retiring with enough money to do whatever you want. You’ll also be prepared for all life’s curveballs you can’t anticipate.
Final Thoughts on Budgeting Mistakes that May Be Costing You
Budgets are personal statements of your financial goals and dreams. They are merely spending plans. Budgets fail mainly due to the limiting beliefs that hold us back. Acknowledging these mistakes and applying the solutions will set you up for success.
Please share your struggles with budgeting. If you have struggled through any of these common mistakes, please comment below and share your advice and experience.
