Q: My income/expense summary is not right. What did I do wrong?
A: When your income/expense summary does not seem right (it shows you should have a lot of money left at the end of the month OR it shows you are dramatically overspending) you need to review and find the problem.
Often it is as simple as mixing up monthly and annual numbers. Just be sure that all income and expenses are recorded the same – either monthly or annually.
Another common error is “double-counting”. This can happen, for example, if you have $200/month directly deposited into your credit union account from your paycheck in order to pay your car loan. If you then list that car loan under an expense category such as “loan payments”, you have effectively counted it twice, first as an income reduction from the direct deposit and again as a payment made from your take-home pay.
Lastly, one of the most common causes of budgets being out of balance is overlooking or underestimating expenses made for travel, entertainment, spending money, and gifts. Most people do not realize how many gift-giving occasions occur throughout the year (birthdays, anniversaries, holidays, weddings, graduations, etc.) and often underestimate these costs.