Budgets are wonderful tools. You can’t expect to get your spending under control without them. But there all kinds of ways you can design a budget that will hurt your finances – and your lifestyle – more than it will help. Here are two:
1. The too-tight budget. You’re getting your finances in order and you’re really motivated. That’s great. You may be inclined to bear down, make a really tight budget and put everything you possibly can towards building savings or paying down debt. That’s not so great. Giving yourself no wiggle room in your budget means that you’ll bust it with even the smallest purchases, like a cup of coffee. The psychological toll that comes with living on such a tight budget makes it more likely that you’ll scrap the entire plan in frustration, than that you’ll stick to your budget and meet your financial goals. Solution: build in some extra room in that budget.
2. The unrealistic budget. Think you might get a raise soon? Planning on cutting a costly habit – and the cost that goes with it? These are great things, but until you’ve actually quit or gotten that raise, don’t build them into your budget. Budget for reality, period. Unrealistic budgeting will kill your budget in no time.

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