- Be realistic – The time you spend creating a budget is good use of your time. Too often people make the mistake of not being realistic about their household budget. If you spend $500 a month buying groceries then budgeting $250 a month isn’t very realistic. Keep a journal of your expenses for a full month, and then when you make your budget it will be very realistic.
- Know the difference between necessity and luxury – Just because you want, it doesn’t mean you need it. Knowing the difference can really save you a lot of money. Too much of the money we spend are on things we ‘like’ and ‘want’. When you are creating your budget, you need to set aside the luxury items to handle your necessities.
- Keep in control of your money – If you earned your money, you should have control over how you spend it. When you give up that control, you can put yourself at risk. Serious illness, divorce, or death can all put you at risk. If you know your family’s finances, debts, investments, and savings you are much more likely to be able to come through a negative situation. If you are single, you should know what your financial consultant is up to with your money.
- Never bet on your next bonus – Until you actually have the money in your bank account it is never a guarantee. For example, your bonus isn’t yours until you have it in the bank so don’t spend it until you have it.
- Think before you act – Consumer spending decisions are 95 percent emotions and 5 percent by the numbers. It is important to make your decisions based on your need and not on your want. If you get a loan you might not have the flexibility you need to in an emergency.
Good financial health is important so give it the attention it deserves.