When you have a family and a home, cash flow is an essential part of your finances and your well-being. It is important to not only save money, but to have money keep flowing to have a handle on how much money you need to have on hand at any given time. The lack of funds is not always the result of low income or costly expenses but a lack of financial literacy and a problem with the flow of cash.
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creating a budget
Are you tired of winging it? You know, just letting your family’s financial chips fall where they may because it seems so much easier than actually thinking about your spending habits? Sadly, you are in the majority; most Americans do not properly budget their expenditures. A proper budget can bring with it a host of positives: less debt, more money for college and retirement, to name but a few. But just having a budget is not enough in and of itself: you must also avoid the common mistakes that budgeting can sometimes lead to.
If you’re ready to take the next step – to really buckle down and track where the money’s going with an eye toward righting your ship for a more secure journey into the future – you’ll want to read this list of ways the budgeting process can go wrong. Then, just do the opposite!
- Not Using Family Budgeting to Help Pay Off Debts
It’s great that you’ve decided to start budgeting and it’s even better that you’re sticking to it. You’ve discovered that getting a handle on your spending has freed up additional money every month. Now is the time to go the final step in the process by using those new-found resources to pay down whatever debts you may have. Think of it this way: you’ve stopped the bleeding, now it’s time to heal the wound. If you’ve only been paying the minimums on your credit cards, start throwing more money at them. If you’ve got a high-interest rate, long-term loan on your car, start paying more than what is required in order to shorten the loan and lessen your interest burden. Failing to pay down debt as part of your new budget is one of the biggest mistakes you can make.