Budget means different things to different people. To many it’s a bad word. It means constraint and limits. Something we don’t like to think about. Whether you have one or not your money still goes somewhere. A budget is simply a drill sergeant for your money. It tells your money what to do and where to go. How are you managing your money? Are all the bills getting paid on time? Does your current system work? Below are some signs that your budget may be broke.
1) You’re paying overdraft fees. If you’re paying overdraft fees, something is definitely wrong. Having your account run over is a sign that you’re overspending somewhere. An overdraft comes with additonal fees for your mistake. This is a sign that some fine tuning is needed.
2) Using credit cards to purchase everyday items. Going to your credit cards for things such as groceries and gas is a sign that things are out of balance. Unless you pay the card off at the end of every month, you are paying for these items with interest added. Not smart. If you’re regularly going to plastic because the account runs dry, it’s time for change.
3) Poor record keeping. Put simply, not writing your transactions in your checkbook can be a hazard to your financial health. It’s not uncommon for me to find 10 or more unrecorded transactions in our checkbook every month. This is very easy to do if both spouses use a debit card but only one carries the checkbook. If you have suggestions, please leave a comment on this item.
4) It’s not in writing. It’s imperative that you have your budget in writing. You need to have groupings for expenses such as insurance, housing, food, medical care, and automobile just to name a few. Not having a written budget is like going on a vacation with no road map.
In summary, a budget is a must if you want to get the most from your money. Money that doesn’t have a destination quite simply gets blown on non-essential items. If you’ve seen some of these signs in your own finances, it’s time to make some adjustments. Banks have enough money as it is. Don’t let them get their hands on anymore of yours. Be on the lookout for some solutions in my next post.