We aren’t born with the natural ability to manage money, it is a learned skill. Good money management is about commitment and true desire to want to live within your means and avoid bad debt. Learning new money management skills has no age-limit. However, the best place to begin is at home. Teach your kids about fiscal responsibility while they’re young, and prior to college. Because each individual has their own needs and circumstances, balancing budgets and building a saving plan can mean something different to each person.
Typically, good money management is a combination of behaviors:
- Setting reasonable budgets
- Prioritizing needs over wants
- Saving for short-term emergencies
- Making legitimate plans to become debt-free
- Having honest evaluations regarding spending
- Starting a savings account and saving for the long-term
- Seeking help when debt becomes out of your control
Setting budgets is placed first in order, and for good reason. If done on a regular basis, the process of recording money coming in and money going out, forces a constant evaluation and allows the possibility for goals to be met. We recommend creating a monthly budget for your household. If you don’t have one, contact Debt Advisorsfor a “free budget worksheet template. One of the biggest mistakes that can happen when creating a budget is to make the budget so tight, that it’s nearly impossible to maintain. Remember that budgets should be realistic and includes financial goals which are attainable.
Live within means.Here is an example: Taking out student loans equal to your expected annual income may not be all that bad, but throw in a few credit cards and the story changes.Simply stated, “living within your means” is having a plan, making good financial choices, budgeting and planning based upon how much income you have. We should all aim to become good stewards of our money. The holiday season is an especially difficult time to do this. Although most people say that the holidays are about spending time with family and friends, many also overspendon gifts. Credit cards make the problem of overspending even more tempting. Money alone isn’t the solution, nor is it the answer for living within our means because over-spending can be a potential issue for anyone, at any income level. (From the less fortunate, to a millionaire athlete…anyone can make money mistakes.) Take control of your finances and find peace of mind, even during the holidays.
What do you do when you have more debt than income? Sometimes, even while putting forth our best efforts, bad things can happen in life. In a short time, having more debt than income can potentially lead to a desperate financial situation. There is a difference between good debt and bad debt.Given time, resources and goals, there’s almost always a solutionfor every debt issue. The key is not to procrastinate because the longer you wait to make and execute a plan, the more that debt is going to grow.
If you find yourself overloaded with debt, consider Chapter 7 or Chapter 13 bankruptcy. Regain control over your finances and even rebuild credit. Contact Debt Advisors Law Offices for a free, no-obligation consultation today.