I recently wrote about making money mistakes, and now I want to talk about dealing with budgets. Not having a budget of some kind is the biggest budgeting mistake of all, and the most obvious way to fix it is to create a budget. But there are plenty of other mistakes and all of them have a pretty simple fix.

Here are what I see as the seven worst mistakes in budgeting.

• Using generic percentages. There is a commonly used rule of thumb that housing (rent or mortgage) should be between 25-35% of your income. Insurance should be 10-20%, food 10-15%, and the list goes on. I added up the high end of each category and came up with 120%, which means that some categories need cutting. The smart way to set up your basic budget is to track your spending for at least a few months, see how you normally spend and gauge what percentage each category represents of your total income. This will open your eyes and provide a nice snapshot of where you currently spend and how much.
• Not having a reason for your budget. If you are one of the few people who manage to keep up with expenses and saving without a plan, congratulations. For the rest of us, a budget will keep us on track. The reason for having a budget can change over time, at first, it just might be to be consistent about paying bills on time. Then you can move on to paying down debt and saving for an emergency fund.
• Not having a cushion. An emergency fund is one kind of cushion and should exist for those unexpected things like car trouble or home repairs. I also think having a small cushion in your monthly budget is wise. I tend to round my income down and my expenses up when I fill in my spreadsheet each month. That way I have a little wiggle room for error.
• Ignoring fun. Having a very restrictive budget with no fun built in is no fun at all. Some months it might just be a small indulgence like a movie out, and others it might be a night out with friends. Not allowing yourself any fun makes it more likely you will give up on your budget.
• Allocating expenses by paycheck. Bill due dates rarely align with bi-weekly or twice-monthly pay schedules. So, while one check may be enough to cover your biggest expense each month, it’s smarter to look at the whole month. Ideally, according to several sources, you should be paying this month’s bills with last month’s money. Of course, that isn’t likely to be an instant change for you, but it really makes it easier to sit down and pay all your bills at once.
• Not taking into account the non-monthly bills. Haircuts, car registration, dental visits, gifts, and routine car maintenance may not happen every month, but they still need a place in your budget. For gifts, you might want to set up a separate account for your yearly gift buying. Figure out for each non-monthly expense what the yearly cost is, then divide it up monthly and add it to your cushion category or one that makes sense to you.
• Assuming your monthly bills are set in stone. There are several bills that are the same each month like cell phones, internet, cable/satellite TV, and gym memberships. But did you know that many times a better rate can be negotiated? If you want to save money on your monthly bills and put those savings toward your budget, BillCutterz is here to help. Our team of Savings Experts will take the time to call your providers and ensure you are getting the best possible rates. It only takes a few minutes to sign up and submit your bills, and if we don’t save you anything, it doesn’t cost you anything!