Not everyone follows a concrete budget plan, but even those who do can slide off track.
If you think your finances are under control then review the following statements.
If any them describe you, your budget might actually need some tightening up:
1. You don’t have any money saved
If there is one thing you need to understand about personal finance, it is that you must save money.
The sooner you start and the more you put away, the better.
However, there is never any reason not to save some of your income, even if it is a very small amount.
If you find your paycheck runs dry before your savings account receives a cent, adjust your budget to allow for consistent savings.
2. You tap into your savings often
Perhaps you do have a little money saved up, but you can’t seem to increase the amount.
Every time you make a deposit, another expense pops up and you withdraw it again.
While the effort is commendable, it’s not going to get you anywhere.
Just like relying on credit cards, constantly withdrawing savings is a sign you are spending more than you should. When this is the case, you have to slash expenses from your budget so you can grow your account.
3. You are using too much available credit
It is recommended that you use not more than 30% of your available credit.
Any more than that negatively affects your debt to credit ratio, and subsequently your credit score.
The reason is credit bureaus believe you are relying up0n credit too heavily when you use a larger percentage (and they’re probably right).
A high level of outstanding debt signifies you need to cut down on spending.
4. You are entering a new life stage
Whenever you are about to transit into a new life stage, such as college, parenthood or retirement, your finances will likely become inconsistent or unpredictable for a while.
Prepare for the change ahead of time by adjusting your budget accordingly.
5. You struggle to make rent
Spending too large a portion of your income on rent is a recipe for disaster.
When living expenses are too high, there is little left over for anything else and you in danger of losing your home if you can’t come up with the rent or mortgage.
It’s recommended that you contribute around 28-30 percent of your total income to rent or mortgage payments so your budget isn’t too heavily weighted in this area.
6. You often feel stressed about money
Even if you manage to pay for everyday expenses without much of a struggle, money issues tend to be stressful‚ a pile of bills and financial unknowns can be nerve-wracking.
In fact, financial stress is one of the leading causes of stress in Americans.
However, whether or not your stress is well-founded, simply creating a strong budget and sticking to it can help put your mind at ease.
7. You have no free time
Paying the bills on time is no good if you work three jobs to do it.
You may be concerned about your quality of life suffering if your income isn’t high enough, but the same issue presents itself when you’re overworked trying to make that unrealistic amount.
Instead, examine where your money is going and work on reducing unnecessary spending so you can actually enjoy what you have.
Have some more tips to add to this?
Please share them.