by Michelle Jones
Many people make sincere attempts to set up a household budget and get themselves together financially, but too often these attempts fail. At BetterBudgeting.com, we've been teaching our readers how to get started with budgeting AND how to get back on track since 2001. Here's a look at some of the budget busters we all need to be careful with.
1. Living on Two Incomes
When a family starts out they often have two incomes and will set up their household budget based on that combined total. But as soon as the first financial crisis hits and one of those incomes is reduced or even wiped out, everything can fall apart. The solution; couples should make every effort to live on one income, or less. Use the second income for savings and extras, many of which will be needed for the additional job.
2. Not Enough Money in Savings for Emergencies
Great news! Since we began our work in 2001 families are doing much better about putting more money in savings and this is fantastic. However, there are still many of you out there who haven’t even opened an account yet. So, when your next paycheck arrives, just GET IT STARTED! Even if it's only $5.00, $10.00 or $25.00 a month, before you know it you'll have a savings account.
3. Spending More Money than You Really Need To
Many consumers are spending more money than necessary (and if they didn't, even more companies would be going out of business), but so many more consumers do not have the extra funds for carefree spending. There are several methods you can use to help control spending. If you see this is a problem area for you then make yourself a few rules and stick to them. These rules might include "I won’t buy anything that isn’t on sale, at least 50% off," or, "I won’t buy anything the first time I see it, I’ll wait for at least 48 hours, or a week, to see if the 'need' passes," or even better, "I won’t buy anything that isn’t on my 'need' list!" That one is my personal favorite and works very well.
Families and friends can also help keep each other on track; "I won’t buy anything that (his/her name) doesn’t agree is the right decision." This can cut out a lot of extra spending and works best if it goes both ways.
4. Not Keeping Track of the Extra Money You Do Spend
This is always a huge eye opener for students in our Better Budgeting Class. It may be the biggest step you will take in keeping your finances under control. For at least 30 days, write down everything you spend money on. Then, keep doing it as often as needed; every month, once a quarter, or even the entire year if you need to. Once you get better control of your spending you should be able to ease off, but if you find yourself overspending your budget in the future just start recording your expenses monthly again; until you get back on track. It may seem trivial, or overwhelming, but it really does work.
5. Putting Too Many Purchases on Credit
This is easy to do if you’re not paying your credit card bill(s) in full each month. A few purchases can easily add up to hundreds – or thousands – of dollars. Keep track of your purchases when using credit, just as you would when using your checking account or cash. And if you're not doing this already, work towards paying your bills off in full each month, as soon as you can. It may take you many months or even years to get there, but you can do it!
6. Giving Money Away When You Can’t Afford It
This subject is difficult to discuss because the final decision should truly be left up to the individual – each person ultimately must do what he/she feels is the right thing to do, at any given time. Personally, I believe generosity is one of the most wonderful traits we have as human beings, and that it is better to err on the side of being too-generous than on the side of not being generous enough. However, if you are giving money away that you really cannot afford (or have current debts that you cannot pay), you might want to consider either adjusting your giving or increasing your income so you can continue to be so generous. Maybe you can donate material items that you can do without or donate your TIME which can often be just as valuable as money, if not more.
7. Buying People Gifts When You Can’t Afford It
This budget buster concerns birthday and holiday gifts we purchase for friends and family all throughout the year. If gift giving is putting a strain on your budget or keeping you in debt, consider scaling back this year, or as often as you need to. When we were growing up, not that long ago... cake, ice cream and time spent with family and friends was special enough. And it still can be for our children today, we just have to show them how it's done. At BetterBudgeting.com, we share many frugal gift ideas and recipes for all occasions. Remember, it's not the amount of money you spend, it's the thoughtfulness of your gift that matters the most.
8. Accumulating Too Many Monthly Bills
It may not seem like much, but $20 here, $15 there, and another handful of monthly expenses everywhere can add up to one big mess. Just as keeping track of your monthly spending will benefit your budget, keeping your monthly bills in line will help tremendously. That’s why working with a household budget is so important; your monthly income should ideally cover your expenses and provide a surplus for savings. And if it doesn't, you can either increase your income, cut back on your expenses, or better yet, try to do both.
9. Not Earning Enough Money
If you feel you’re not earning enough money for the work you do, you might consider asking for a raise or promotion, or, looking for a better job. If these options are not available to you at this time, work on improving your skills and value to your employer so they will be soon. Taking on a temporary second job might help as well, just don’t create a schedule that you can’t handle. And if you're thinking about starting your own business, pick something you really love to do and be ready to work hard.
10. And Maybe Our Worst Budget Buster of All… Not Creating a Budget in the First Place
"Never put off till tomorrow what you can do today." – proverb
Don't let another day go by without gaining control of your finances. It's just money, you CAN handle it, and we're here to help!
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Copyright © 2003-2015 by Michelle Jones. All rights reserved.