Posts Tagged ‘household budget plan’

Three Basics Your Household Budget Plan Can Never Succeed Without

It is easy to create a household budget plan, but it is difficult to succeed with it if you do not follow certain basics while creating it. Budgeting is all about knowing where your money is coming from and where it is going. The idea is to shut all those holes your hard-earned money is leaking from. But, your success will depend on how practical you are with your strategies and how consistently you work on it. Following are the three basics that you must always follow in this regard.

Always Spend Less Than What You Earn

It is common sense. But, isn’t common sense something that is very uncommon? It is quite obvious that when you spend more than you earn, you will push you towards financial crisis and will eventually end up getting trapped into a never-ending cycle of debts. Whatever strategies you have for your household budget plan, it is very important for you to make sure that they are very practical (something you can afford to do) and that your total monthly expenses are not more than the amount of money you earn every month. In other words, you must learn to live within your means, which is an easy thing to say in theory but very difficult to implement in real life considering the instant gratification society we live in. You can still succeed if you work hard on changing your spending habit wisely. If you do not have money in your bank, do not go for a vacation. The loans to fund your vacation are available easily, but you may find it very difficult to pay them off with the kind of limited income you have. It does not however mean that you should cut out all the fun from your life; it is just that you must choose your entertainment options wisely, something that requires less money and promises more fun. Avoid reckless spending. Avoid impulse buying. And, in order to implement all these things successfully, you will need a strong dose of discipline and self-determination.

Set Money Aside For A Rainy Day

If your household budget plan has no room for emergency savings, just one illness or a couple of jobless months can push you toward financial ruin. Creating an emergency fund is the most crucial part of budgeting. Without it, your financial life can never be smooth for long. You must plan your savings in a way that should accumulate so much money in your savings bank account that you can easily meet at least 3-6 months of living expenses even if you have lost your job, suffering from illness, or facing any other such problems. If you do not have this emergency fund with you, in times of financial crisis, you will end up acquiring debts. And, if you do not them off in time, you will soon lose control of your finances and it will become very difficult for you to get things back on track. If you are working in a high turnover industry or are self-employed, you must have at least twelve months of savings always available so that you can efficiently meet any financial emergency as and when it comes.

Always Pay Off Your Monthly Credit Card Balances In Full

If you are just making the minimum monthly payments on your credit card, you will never be able to succeed with your household budget plan. Because of the high rate of interest credit cards charge, the outstanding balance grows very fast and soon it becomes unmanageable. You will end up paying hundreds of dollars extra in the form of interest charges only. It is waste of your hard-earned money, which you can easily avoid by getting into the habit of paying off your credit card balances in full every month.

Overall, if you follow the above three basics thoroughly and create a household budget plan accordingly, you will definitely be able to have a smooth financial life. Whether money controls you or you control money makes all the difference when it comes to budgeting.

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