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Budgeting is the first step we take in our financial endeavours that allow us to reach our financial goals and remain debt-free. A budget doesn’t mean spend less but it also means spend smartly. For a domestic budget to actually work for you, you need to ensure that it is in alignment with your financial profile, habits and requirements. 

If your budget is not working for you or if you are beginning to create your domestic budget then be mindful of these mistakes that most people make. Here are 9 mistakes to watch out for:

1. The domestic budget is not realistic

Reaching your financial goals is a journey and budgeting is the way. However, it is not a quick journey and creating a domestic budget will not change your spending habits or financial portfolio overnight. It is very crucial that you are realistic with your expectations otherwise you will be disappointed and find it very hard to stick to your self-imposed spending limits. 

If you earn 50,000 INR, you won’t magically start saving 35,000 INR just because you have a budget. The important thing is to have discipline and keep a track of your spending in order to curb your unnecessary expenditure. 

2. Inability to keep a track of all your expenses

Creating a household budget is the easier task but maintaining it is a challenge in itself. Most budgets tend to fail because people forget about the importance of tracking even the most miniscule of expenses. If you don’t have an exact picture of your outgo, you will not be able to be realistic about your expectations. 

The small and unaccounted expenses are enough to derail a good budget. It is best to have an app on your phone or maintain a diary where you write all of your expenses as soon as you make them. Even if you spend just 10 bucks, record it. You will be surprised to see what these small spends add up to eventually.

3. The domestic budget is not customized to your needs

Most of the people try to adopt an already successful budget. BIG MISTAKE! It is not necessary that what worked for others will work for you too. You have a unique personality and spending habits so your domestic budget should be adjusted to take that into account. A full-proof budget requires evaluation of the impact of these successful budgets on your financial profile. 

4. You did not set the financial goals accurately

Without a goal, you don’t know what you are working for. You may want to save up but setting up a realistic goal will help you to stay motivated to follow your spending limits. As mentioned above, setting realistic goals is important. Think about what you want to achieve from this practice, then formulate a household budget that will allow you to get closer to your goal while still allowing you to enjoy your present and leaving room for all your needs and some wants. 

5. You did You lack spending discipline 

Impulsive buyers and big spenders find it especially hard to stick to a budget because they can’t control their urges. The best way to ensure that this doesn’t happen is by automating savings. Once you have calculated how much you can save after taking into account all of your necessary expenditure, automate your saving. Once the money is deducted from your bank account as soon as your salary comes, it will be hard for you to access that money. 

6. You did not keep emergency funds

One of the biggest reasons that budgets fail is because people forget to make monetary provisions for unforeseen expenditures. If you don’t have an emergency fund and you are faced with an urgent repair of the house or a major medical expense then you would either dig into your savings and investments or worse, take out a loan. 

You should set aside some money that is equal to 3-6 months of necessary expenses before you make any investments or savings plan. Also, medical expenses are one of the biggest blows to your pocket so it is best to have medical insurance. 

7. You did You are too hard on yourself

If you have worked hard, you should be rewarded – that’s the rule. Leave some room in your budget for self-indulgences and entertainment. If you are too strict with yourself then it is more likely that you will feel demotivated and exhausted resulting in completely giving up on your budget. 

Have some dispensable income that allows you to enjoy your life while planning for the future and avoid the guilt-trip of not spending on yourself. 

8. You do not update your household budget

As you progress with your life, your income and expenses will change. You can’t stick to the same budget you had when you were a bachelor after you get married or have kids. It is also not wise to keep your investments limited even after an increase in income. 

Take out time to update your budget periodically to keep in tune with your evolving situations. 

9. Didn’t take into account annual expenses

Some people forget to take into account the major expenses that happen once a year like house renovation, purchase of a big appliance, etc. Your domestic budget will go haywire if you have to make a substantial payment at one go that wasn’t accounted for. 

The way to avoid this is by accounting for major annual expenses at the beginning of the year and saving up each month to be able to make that expense. 


There are simple things you can follow to create a successful household budget. The above list will definitely help you to make one that you can stick to in the long run. If you are realistic about your goals and leave room to reward yourself once in a while then you are good to go.