Budgeting mistakes you shouldn’t make in 2021

Nicole Si
Dec 17, 2020
Budgeting mistakes you shouldn’t make in 2021

The Philippine economy suffered this year due to COVID-19 but is projected to grow up to 9% in 2021 according to the First Metro Investment Cord and the University of Asia and Pacific. With the anticipated rebound, Filipinos also look forward to better financial conditions in the year of the Ox. To do so, we have made a list to help you ensure that you’re not making the same budgeting mistakes again.

1. Budgeting based on gross income

The gross income refers to the total amount you earned for a month or a year. It is the sum of the salaries and allowances you receive from your sources of income. The gross income is different from the net income which is the actual amount of earnings after you deduct the expenses and taxes. Budgeting based on your gross income is not advisable because you still have online loans and expenses to consider before you assign the money to other things like savings, retirement, and entertainment allowance.

If you set your budget based on your net income, you won’t spend the money intended for repayments of debts. You will live according to the minimum fund you can afford each month.

2. Not tracking your expenses

Noting down where your money goes helps a lot in identifying unnecessary expenses. If you fail to track your spending, you end up paying for things you should have not purchased yet. Another good thing about tracking is your ability to assess the lifestyle you have. How often have you gone shopping online? How much did you already spend on your car accessories? Have you been frequently ordering food online? Check your list and see which habits you need to break asap.

3. Using the money you haven’t received yet

Sure thing you’re working so hard you even sometimes forget about resting and being with your loved ones. You’ve been doing this since you started working at an early age and yet you still get into bad debts. You keep on wondering about your financial condition and end up realizing that you have the habit of spending the money you haven’t received yet.

What’s wrong with it? Well, advance spending can make a negative impact on your budget. For instance, you are expecting a Php5,000 compensation from a side gig which should come after 30 days. You take out the same amount from your monthly allowance and spend dining out with your family and buying items that are not necessary. You get into thinking that spending on luxury is alright because it is an extra earning anyway. And then the sad news comes that your client can’t make the payment anytime soon because of some unexpected financial constraints. The result? You apply for a cash loan in an hour to pay off what you took out of your regular allowance. In essence, you will be paying off interests and finance charges for the money you spent in advance.


4. Not looking for ways to save

You’ve been used to working in an airconditioned room in the office and now that you’re working from home, you still want the same comfortable yet expensive setup. The problem is that you don’t realize that your employer has been paying the bills and won’t cover for your utility expenses at home.

If there is one thing which we all should learn about the pandemic, it is the ability to adjust to the given situation. Check if your monthly budget could cover the electricity bill if you use the air condition unit day and night. If not, then find other ways to regulate your home’s ventilation and save.

Finding ways to save more can be easy if you consciously check on your bills and see where have you been spending money on.

5. Owning too many credit accounts

Credit cards and 247 loans online are financial facilities that could be used to your advantage. Once availed, you can maximize their benefits to manage your cash flow and improve your finances. However, owning multiple accounts and borrowing money from numerous lenders can take a toll on your wallets. Time will come when debts will be out of control and continue to swell beyond what you can afford. Multiple debts sometimes even lead to loss of peace of mind and inability to focus on more worthwhile goals.

In 2021, minimize your debts and borrow money from loan apps only if your budget can pay for it. It takes self-control to limit your obligations and reduce financial woes. Never give in to the temptation of getting easy cash without knowing its consequences.

6. Keeping up with friends

Peer pressure has never sounded too bad as it is when it comes to finances. Your friend recently bought the newest iPhone 12 while your colleague just got himself a new car. And there you are feeling sorry for yourself so you also purchased a new gadget with your credit card and even applied for a car loan.

There is nothing wrong if you keep up with your friends unless you can’t afford their lifestyle. You can always apply for online loans Pilipinas but use the money in more profitable ways. Before getting head to head with your peers, check your finances and make sure you don’t get into unnecessary debts just to belong and get into the trend.

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Final thoughts:

Budgeting mistakes can be avoided and as we all hope for a more financially secure year ahead, it helps to evaluate our financial decisions and habits this year. Indeed, we all can beat financial constraints and emerge from the pandemic stronger. Set your financial goals early on, find motivation, and work on a strategy that leads to your success.

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