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mom teaching a childConsidering the way we react to our finances, it should be safe to say that we find money concepts quite confusing. Either that or we just do not have the discipline to put what we know into practice. But while financial education is not enough to keep consumers from money problems, you need to understand that it will give you the tools and knowledge to keep it from happening. While the key is really to implement what you have learned from your financial literacy lessons, you still have to acknowledge that you need to have the education first.

We often hear a lot of people say that they made a lot of financial mistakes because of ignorance. They were unaware of the real consequences of their decisions until it was too late. If you can relate to this because of a personal experience, then you should know that boosting your financial education can help improve your case. And while you are at it, you should start educating your kids about it as well.

Truth be told, if you find money concepts confusing, then you can expect that your kids will feel the same way. Not only that, since they are mostly dependent on you financially, you can expect that implementation will be tough for them as well. But while it can be a challenge for parents, that does not mean it is not possible to teach your kids the lessons that they need to learn.

According to a study published on FinancialEducatorsCouncil.org, there are three areas that will impact the way a person handles their finances. One of them is the recognition of the first step. The other two is the motivation to learn and the knowledge of the subject.

Of the three, the recognition of the first step is the most intriguing. You would not think that the first step is important. But if you think about it, if you do not know the first step to take towards making a financial decision, how can you hope to make the right one?

This makes early financial literacy all the more important.

5 money lessons that young children can understand

As a parent, you are expected to give them their first lesson. According to the same study mentioned above, 65% of their respondents believe that the people responsible for the first education of a child is the parents.

There are many money lessons your kid should know after high school but that does not mean you need to wait that long for them to learn. Even at a young age, you can start educating them about money concepts. Good news is, there are certain concepts that you can teach them that they are capable of understanding.

  1. Spend less than what you can afford. The first of the lessons that you can teach your kids involve spending only what they can afford. Just like you should be limited by your income, you should also tell them that their spending is limited by their allowance. If they only get $5 a day, they should only spend $5 or less. Encourage them to spend less so that they have money to put aside in their savings account. If they cannot afford something, they should just say no to the purchase.

  2. Save up for something that you cannot afford. In case your child wants something that their budget cannot afford, teach them that they can always save up for it. Do not buy it for them. We want to give them what they want but in the end, that will not teach them the right money concepts that will make them better financial managers. Encourage them to put aside $1 or something so that they can save up for it. Teach them to put aside a percentage of their allowance – e.g. 10%.

  3. Earn more money if you want to increase your savings. To help them save up for the purchase they want to make, offer to pay them for chores that they usually do not do. For instance, if washing dishes is not part of their chores, ask them to do it for a week and pay them a dollar or something for it. That should give them the value of a hard earned money.

  4. Credit should not be the first option to pay for something. Teach your kids that credit, while can sometimes help, should not be the first option to pay for a purchase that they cannot afford. If they can save up for it, they should just wait before buying the product. In case they see you use your credit card for purchases, you have to explain to them how you pay it off.

  5. Know the needs from the wants. The last of the money concepts that you should teach your kids is the difference between the needs and wants. Have them make a list of what they wish to have. Then, you can identify together what is a want and what is a need. Let them know that buying  a toy does not have to be expensive if there is an economical version. Also, teach them that just because a playmate has something, they have to get it too. Tell them that skipping lunch in school is not healthy if that is their way to buy a toy. Instead, teach them how they can spend less but not to skip lunch entirely. Or teach them that they can earn extra money.

These are the money concepts that you can teach your kids. By relating them to things and purchases that they want to have, your kids will be more interested in learning the lessons you are trying to impart to them.

2 reasons why our country’s future will benefit from financially literate kids

While you may think that your efforts to make your kids more financially literate is not important, you need to think again. Just like the value and morals you are imparting to them can affect the future society in general, the same is true for the money concepts you will teach them.

If you think about, most of the deadly financial mistakes are really caused by our ignorance. When you raise your kids to be aware of the consequences of their financial decisions, it will not only benefit their own personal finances, it will also benefit the country’s future.

There are two reasons why the lack of financial literacy of your kids will help everyone in the long run.

Debt will not be as destructive.

According to an article published on TIME.com, the people who do not have a high level of financial literacy is more prone to make the wrong decisions. They borrow more money and they end up accumulating less wealth. But those who are financially literate will be more likely to plan for their retirement and acquire more wealth in the process.

When people become smart about their debts, not only will their personal finance be safe, they will also help the government. You see, people who want to have a low interest loan are usually backed by the government. When they default on the payments, the government will have to shoulder some form of insurance on that loan to keep the lender from losing too much money. If the consumer is financially literate in the first place, the government backed loans will not have to take up too much money in the federal budget. The government will not be wasting time to bail consumers out of a credit pit that is actually a personal mistake.

Financial opportunities will be recognized and grabbed.

Another benefit of learning the vital money concepts in a nationwide level is that people will start to recognize the good financial opportunities that come their way. And since they are knowledgeable about it, they will be more courageous to take a risk. This empowerment will help consumers rise up the income ladder and make something for themselves. They will have the knowledge that will help them pursue their dreams. Again, it will abstain the government from having to support low income households. At the very least, the people they will have to support will be lessened.

Some of the concepts may seem farfetched but it really is hard to see the finish line if you are still at the beginning of the race. You have to just trust that learning the right money concepts is the first step towards a successful financial future.

worried womanIt seems that Americans will never run out of financial worries. There will always be something to worry about: the bills, your job security, the minimum wage, the rising healthcare costs and now, insufficient savings funds.

According to PovertyUSA.org there are more than 46 million Americans who are currently living in poverty in the country. The website explains that this number of people, and more, are having trouble meeting even the basic necessities of food, healthcare and childcare.

Getting them out of that financial situation will be tough but you have to realize that it all boils down to one thing – we need to do something about the insufficient funds in every household.

This is where financial literacy will come into play. Although financial education is not enough to keep you from money problems, it will give you the insight and tools that will have to be implemented to improve your situation. The only way that you can keep yourself from financial worries is when you understand what exactly you need to do to keep yourself from falling into another crisis.

Survey reveals why Americans should still worry about money

The 2014 Consumer Financial Literacy Survey done by Harris Poll for the National Foundation for Credit Counseling (NFCC) gives us some foundation on what we should do exactly. According to this study, 1 out of 5 Americans are currently worried about their finances because of two things: insufficient emergency and retirement funds. Although we have gone through a lot of difficulties in the past, we still have to yet to prioritize saving up for the funds that will keep us sustained when another crisis comes around.

It is tough to survive a crisis without an emergency fund and it is tougher to live out your retirement without money either. You know that you need to come up with a plan to solve your problems with insufficient funds. That will help keep your financial worries from ruining your everyday life.

Thankfully, the Financial Literacy Survey published on NFCC.org revealed some statistics that points out the reason why 16% of Americans are most worried about insufficient funds. Here are the key findings in the report.

Only 39% of Americans use a budget to track their spending.

Budgeting is the key to save money despite your limited resources. If you use a budget, you can see the expenses that can be cut back on to make way for more savings. That will help you set aside the money to grow your funds.

Only 32% of are saving for retirement.

This is a direct statistic that answers the question why people are worried about their retirement fund. If you are worried about it, just save up for it. Use a budget as suggested previously.

34% still carry some credit card debt every month.

The initial fear of credit card debt is now gone. Apparently, people have begun to take on this type of debt once more. The high interest rate is robbing you of money that could have been going into your saving funds. More than 35 million consumers carry over $2,500 balance to the next month. If you have to use your card, make sure you can pay for it in full when the billing arrives. That will keep the interest rate from taking your money. When you carry over an amount each month, that can add to your monthly card payments.

These three statistics simply tells why Americans have financial worries about their funds. First is they lack a budget to help organize their finances. The second is they do not put savings high in their priority list. The third is they are letting their money go to waste because of interest fees that could have been avoided if they only learned how to manage their money properly.

Tips to grow your savings and thus avoid money concerns

The obvious solution to relieve your financial worries about insufficient funds is to just put aside some money to increase your savings. We don’t have to dwell on the reasons why you need both a emergency fund and a retirement fund. They are both important because they can protect you during times when you are most vulnerable. It will keep you from both debt and money stress.

Of course, that is easier said than done. There are sacrifices that you need to make along the way in order to implement the strategies to save money. Here are some of our suggestions.

  • Create a realistic budget and stick to it. When you have a budget, you are made aware of the money that comes in every month. A budget plan will also help you decide where your limited resources should go. If you put your savings high on your budget list, that will help you meet your target every month.

  • Change your spending habits. Obviously, if you want to save more money, you need to start implementing better spending habits. You need to stop making purchases that you cannot afford. Or even if you can afford them, if you do not need it, you may want to pass up on the purchase and put the money in your savings instead.

  • Opt of the economical version of expenses. It is ideal that you pay for the cheapest product that will give you the best value for your money. Take note that the most expensive is not always the best product to choose. Sometimes, you are merely paying for the name of the brand. Just be careful that you are not sacrificing the full quality of your products over the price. Find the balance at all times.

  • Set up an automatic savings transfer. One way to make sure that you will save money is by setting up an automatic transfer to your savings account. That way, the only money that you will see will be post savings. Just like your taxes, you may want to do this so that you will not feel the decrease in your net income. Well, at first you will feel it but eventually, you will get used to it.

  • Downsize your expenses. In some cases, it is tough to make ends meet simply because you are living a lifestyle that you cannot afford. Lower your standards a bit. Live in a smaller home, get rid of your second car and cancel some of your subscriptions. There are so many areas in your budget that you can cut back on to help you boost your savings.

  • Review your tax breaks. Sometimes, you do not know it but you are entitled to some tax breaks that can increase your monthly net income. You may want to check this out and anything that you find can be added to your saving funds.

You have to realize that your financial worries can be addressed when you have financial security. Once you feel secure, you will feel that the stress will mostly just go out the window. You do not have to think about the unexpected because of the security that you have set up around your money. Saving for the rainy day and your retirement is a clear solution only because of the financial cushion that it will provide. It is also because it can keep you from the need to acquire debt and thus wasting more money on interest payments.

Remember that in growing your savings, the amount of money that you can afford to put aside matters. However, do not be discouraged if you can only put side a small amount because you still have debt obligations. A small amount is better than nothing. Just be consistent in putting money in your savings. That way, you will not be left with nothing when you need it the most.

woman wearing a credit card and carrying shopping bagsIf you want to break bad spending habits, you need to understand what is causing you to act that way in the first place. That will allow you to really correct the habit that is causing you some form of financial difficulty.

Living in a consumerist society like in America, correcting bad spending habits is easier said than done. That is why you need to find out things like the philosophy behind your spending style. If it turns out that your style is defective by itself, then you know the root cause of your problem. You can choose to change the way you spend so you can develop better purchasing habits.

There is an interesting article on the HuffingtonPost.com that is written by an 18 year old teenager who grew up in Pakistan. According to the author, Shanzeh Khurram, The American Dream is “always a bit materialistic.” She said that she sees the nation buying a lot of unnecessary purchases. It started with a home and a car – which are necessities. Now, it has grown to include an iPhone, designer items and other expensive stuff that are extravagant.

The acquisition of these things have become a need simply because Americans are trying to live up to a lifestyle that they cannot afford. It is a lifestyle that society itself have set. While buying things in a consumerist society is deemed normal, it is oftentimes destructive – especially when consumers start to borrow money just to buy these products.

Explaining the different styles of spending: things vs experiences

The spending style of consumers are categorized into two: materialism and experientialism. These two will define what influences you to spend your money. On one side, you are influenced by the product that you will pay for. On the other side, your spending is influenced by the experience that you will get from the product.

Let us try to define and explain further what both of them mean based on the Merriam-Webster.com definition.

Materialism

Based on the online dictionary, this is “a way of thinking that gives too much importance to material possessions.” The philosophy explains that consumers buy things just for the sake of owning them. This is actually what consumerism wants. Those who practice this type of spending style think that they need to get the most expensive and the most flashy of the products in the market. They get satisfaction from the more expensive items because they associate value with the price tag.

This is the mentality that will breed habits that will make you a financial failure. If you continue with this way of thinking, you will end up with a lot of possessions that cost a lot, but you will get tired of easily. Before long, what you thought was valuable just ends up as junk and clutter in your home.

Experientialism

According to the online dictionary definition, this is “a philosophical theory that experience is the source of all knowledge.” If materialism gives importance to the thing being bought, experientialism gives importance to the experience that goes along with it – rather than the product itself. Simply put, you buy things so you can enjoy it and derive a meaningful experience from it.

This is how people can break free from the grip of consumerism. Since you are concentrated on the experience that is associated with a product, the price and the brand will not matter to you. You will not be compelled to buy designer products and sometimes, the cheaper products will suffice for you to feel satisfied.

Comparing the two, you know that the latter, experientialism, is the better spending style simply because you can opt to spend less and still feel good about your purchase. Between a $200 and a $50 pair of jeans, you have no problems paying for the latter because you are after the use of the product and not the price. A materialistic person will choose the more expensive item because they will feel that it is the more valuable of the two. By choosing to value the experience more than the value you can make smarter spending choices that will keep you from overspending.

Between the two, what spending style can you identify yourself with?

What purchasing behavior will make you happier?

If you want to be a financial success, you may want to choose the right spending style that will lead you there. As much as you want to put your finances in order, you want to make sure that you will end up happy too. Restricting yourself from spending is not how you will find financial happiness. You need to understand how you can utilize your spending so it will give you the most satisfaction.

A lot studies have been done to compare what gives the consumer a higher happiness level – materialism or experientialism. In one study, authored by Leaf Van Boven for the University of Colorado and published on Colorado.edu, it is revealed that the latter make people happier because of three factors.

“Experiences are more open to positive reinterpretations.”

Material things are tangible and something that you can never alter. The more you look at it, the more it becomes ordinary to you. When you are basing your satisfaction on experiences, this is purely a mental recollection. In most cases, what we remember is intensified by the emotions associated with it. So when an experience makes you feel happy, your recollection of that will intensify and thus making the memory all the more satisfactory.

“Experiences are less prone to disadvantageous comparisons.”

Since your eyes are focused on the experience, you will hardly find that the lower price of a product will bring your satisfaction level down when it is compared to a higher priced item. Your experience, being secure in your mind, is protected from any comparison. In fact, given the first factor that we have discussed, you can assume that our mind is powerful enough to make our experience seem superior to any other comparison.

“Experiences are more likely to foster successful social relationships.”

In most cases, experiences are shared with other people. That is what boosts the happiness level of people when they prefer experientialism. Although material things can be shared, it is the experience that is brought about by that sharing that makes a huge difference. It is what makes the spending style all the more pleasant.

Think about it. When you buy stuff, you will get bored with it eventually. But when you store the experience associated with it, your memory of the product will only get better as you recall it again and again.

In the end, you know that it is a win-win situation if you choose to change your mindset to experientialism. It may be tough in the consumerist society that we live in but you know that it is the better choice. The key is to focus on the life experiences that you will get from every purchase.

Whenever you are faced with a spending decision, think about what experience this will give you and how you can share it with your peers. It allows you to go beyond the question of “what will this product bring to my life?” It can also make you ask the second question of “how can I achieve the same experience but for a lesser price?” Materialism will only focus on the first while experientialism will proceed to ask the next question.

woman hammering a dollar signHave you ever wondered how you can rise from a low income household? If you come from one, you probably understand the sentiment. Nobody wants to remain poor all their lives. They want to get out of the stressful cycle of living from paycheck to paycheck. But you have to understand that the circumstances surrounding the life of poor families make it tougher to achieve financial success.

This is a problem because the number of people in poverty is just too many. According to the statistics consolidated by FeedingAmerica.org, there were 46.5 million people in poverty back in 2012. Of that number, 16.1 million are 18 years and below. 3.9 million are aged 65 years and above. Based on the Supplemental Poverty Measure, the actual count of people in poverty is 49.7 million – which is 3 million more than the official measure.

We all want these people to have a fighting chance to enjoy the economic opportunities that the country is offering. But that is easier said than done.

How homes with low incomes spend their money

When you are living in poverty, your spending choices are different from the middle class and the rich families. According to the data gathered by NPR.org the top three expenses per income bracket are as follows:

  • Poor families that earn $15,000 to $19,999 a year, the top three expenses are housing (29.2% at $4,380 – $5,839), transportation and gas (20.4% at $3,060 – $4,079), and utilities (11.1% at $1,665 – $2,219).

  • Middle class families that earn $50,000 to $69,999 a year, the top three expenses are housing (26.7% at 13,350 – $18,689), transportation and gas (21.3% at $10,650 – $14,909), and retirement (9.6% at $4,800 – $6,719).

  • Rich families that earn $150,000 or more a year, the top three expenses are housing (27.5% at $41,250), retirement (15.9% at $23,850), and transportation and gas (15.5% at $23,250).

Take note that the order of importance for the top three expenses vary with each income bracket. For those living in a low income household, they spend more on housing, transportation and utilities. The middle class and rich households earn higher incomes so they do not have to spend that much percentage on utilities. It gives them more room to invest in their retirement.

This gives us a clear picture of what the poor people are up against. It is safe to assume that they want to invest in their retirement but they have no choice because they have to pay for utilities first. But it can also be seen that the transportation and gas are unnecessary expenses considering the limited income that they have. Instead of spending on the car, they should have invested in a retirement plan. Or the average low income household should have increased their savings.

The poor remains poor because they cannot save

Although the low income is what put households under the poverty line, it is their lack of savings that make them stay there. As we can see from the list of expenses above, the amount allotted for each necessity is already small as it is. You can expect that anything extra that they have will go to their usual monthly expenses – not in their savings.

But this is where those living in a low income household is wrong. You need to pay attention to your savings and prioritize it because that is what can help them improve their financial situation.

You may be wondering – why isolate saving? Why not smart spending or budgeting? Here are three reasons why you need to make sure that you prioritize saving money over the other financial habits.

  • It protects you in times of emergencies. When something happens, you have some money put aside to finance it. You can pay for medical treatments, a busted A/C unit and other important unexpected costs that you will encounter. It will keep you from the unnecessary stress that comes with trying to make ends meet and finance that emergency expense.

  • It keeps you from debt. In connection with the first, your savings will also protect you from debt. That means any emergency that is not saved up for previously can only be financed through a loan. In most cases, people who live in a low income household does not have a bank account or any credit history that will give them access to low interest rate loans. Their usual option are high interest payday loans. This will keep them in debt for a long time. Building up a savings fund can keep this from happening.

  • It gives them extra money to invest. The first two reasons are meant to protect the low income household from slipping further into poverty. This last reason, investing, will help them rise out of it. By saving money to invest, they can put it somewhere it can grow. It can be to finance their education that will make them eligible to receive a higher income. Or it can be to start a small business that can increase their monthly earnings.

These three reasons can help any low income household achieve the financial breakthrough that they have been wanting to reach.

It may be difficult to do this but it all boils down to how you react to you spending. If you lower your transportation costs, for instance, you can set aside some money to serve as your financial cushion. It will give you the breathing space that will allow you to grab opportunities that can grow your personal net worth.

The formula is quite simple. You track your spending so you can save money to live a better life.

Mindsets that will get you out of poverty

An article published on MarketPlace.org tells us some interesting stories about people who have to make tough choices because they come from low income households. For one family who had to live on a one income household, they have to constantly worry about the rent and the bills. For a single mother, she had to work hard to afford a home for all the children. Even if that means having them live in temporary homes while she finds work to help support all of them. She had to learn how to cut the hair of her kids on her own – just to make ends meets.

These tough choices of people in poverty are also brought about by certain mindsets that are keeping them resigned to their situation. Just like debt elimination requires a change in mindset, the same is true for those who want to get out of a low income household. Given that thought, here are some mindsets that you need to have in order to improve your financial situation.

  • A saving, no matter how small is still relevant. Some people are discouraged from saving because they can only put aside a small amount. Regardless of how small it is, you should save. It will grow in time as long as you commit to it.

  • Getting financial help is sometimes necessary. In most cases, people can manage their own finances but if you know that you are not one of them, just get professional help. There are financial planners who can help you pro bono.

  • A budget plan goes side by side with implementation. No matter how perfect your budget plan is, you have to follow through with implementation. Otherwise, your budget will be useless.

  • An increase in income should mean you can save more – not spend more. If you get an increase, do not be too quick to upgrade your lifestyle. Always prioritize your savings so you have room to grow your net worth.

  • Most growth comes with a risk. We are talking about investments here. You need to get out of your comfort zone and risk a portion of your money in order for it to grow.

Getting out of a low income household is tough but it is not impossible. Just make sure that you avoid the habits that will make you a financial failure. Also, do not think that you need to wait for an opportunity to pass by. Sometimes, you may have to create that opportunity for yourself.

writing a budgetWe all know that you need budgeting worksheets to get your finances in order. That had been proven when the recession happened. We realized just how vulnerable we were without any budget strategy in our lives. That was sort of a wake up call that we need to get our finances in order so we can enjoy our income more.

If you want to look back on how we spent leading up to the economic crash, we found some interesting statistics that were compiled on Shopaholicsanonymous.org. It revealed just how awful we were as spenders in general. One of the statistics lifted from a 2008 Journal of Consumer Research revealed that over 25 million Americans are compulsive shoppers. Not only that, the high credit card debt of consumers is usually caused by unnecessary purchases.

The website also gave us the solution that will help with overspending and that is budgeting and saving. The data showed on the site went as far as to mention that we need professional psychological assistance. But if you do not want to pay for professional help, a budget strategy will do just fine.

What to do when you have failed your budget momentarily

While a lot of people have started creating and implementing a budget plan in their lives, some people have found it hard to stick to it.  We have a lot of people starting to change their financial lives through budgeting but there are cases wherein they falter and sometimes, that leads to the total abandonment of the budget strategy.

You see, no matter how effective you are in creating a foolproof budget plan, there are moments when you will really falter. Don’t beat up yourself too much over it because you do not want to discourage yourself to the point wherein you will give up budgeting altogether.

It is great to have a budget because it allows you to take control of your life. When you realize that you have been diverting off of the plan, that can be quite disconcerting in some way. For other people, that can lead to the complete meltdown of their budget. While that reaction is normal, you need to know that there is a way to get back on track.

Here are three tips that we have for you in case you blew up your budget plan.

  • Get over it. First and foremost, you need to stop berating yourself. You are not perfect and even if you try your hardest with a budget plan, there are cases when you will make a mistake. Just get over it and move forward. Instead of scolding yourself, why not find out why you diverted from your budget in the first place? Look into your spending habits for the past few months and try to see what you did wrong.

  • Get your groove back. Once you have identified what went wrong, you can start easing yourself back into your old groove. Take it slowly if you must. Or you can just jump back in. The latter is preferred but it is all up to you. The important thing is to get back on track again. It is tempting to throw away your budget but that will make things worse. Review your bills and see which of them had to be set aside because of the momentary diversion in your budget strategy. Pay everything and get your financial obligations back on track. If you have to borrow from your savings or emergency fund, then do it.

  • Get back any money that you lost. When you divert from your budget plan, that usually means you overspent somewhere. If you really want to, you can get that money back. It is not necessary but if you were working on a financial goal, then you can opt to earn more or cut back on your spending. That way, you can completely get back what you lost when you faltered in your budget strategy.

Possible reasons why you got sidetracked in budgeting

Controlling your finances through a budget is a great way to keep yourself from a financial crisis. But you have to understand that there are instances when your budget can really fail. It is important for you to identify these so you can try to avoid them.

Here are 4 ways that you can be led away from your budget strategy.

  • You forgot to input a budget entry. One of the reasons for you to miss your budget plan is when you forgot to input certain entries that you need to spend on. It can be that wedding of a friend or a birthday gift that you have to purchase. If you keep letting this happen, it can add up and you could end up having a huge deficit in your budget.

  • You had an emergency situation. Another budget buster is an emergency that you did not prepare for beforehand. These emergencies are usually something that you need to spend on. So if you are not prepared for them, you may have to sacrifice some of the usual entries in your budget plan.

  • You overspent on your credit purchases. Using your credit card can be a quick way to divert from your budget. An article from USAToday.com revealed some findings from a National Center for Policy Analysis (NCPA) survey. According to this survey, retired individuals are racking up a huge amount of credit card debt and it is usually on unnecessary purchases. These include miscellaneous entertainment purchases. If you have to use your credit card, you need to make sure that this is a part of your budget. Do not give in to compulsive buying habits.

  • You just needed a break. The last reason why your budget strategy failed is because you decided to divert from it. This happens when you have set up a budget that is too strict or rigid. You need to make sure your budget is realistic enough and will not make you feel miserable about your finances.

How to keep yourself from falling off track your budget plan again

In case you want to keep yourself from having a problem sticking to your budget, there are some things that you can do to avoid that. We have 4 suggestions for you.

  • Always review your budget. First of all, make sure you review your budget from time to time. You may have made the perfect budget once but our priorities and spending change over time. That mean you have to constantly review and change your budget to make sure that it still applies in your life.

  • Have an emergency fund. In case the unexpected happens, do not let it ruin your usual monthly budget. Put aside some money for that expense and do it before it happens. That way, you do not have to divert from your plan to accommodate the expense.

  • Monitor your credit purchases carefully. It is alright to use credit for your purchases but make sure that it is incorporated in your budget. That way, you will not be in danger of overspending.

  • Budget for breaks every now and then. It is also important to budget for rewards are entertainment purchases. According to an article from DailyFinance.com, one of the triggers of overspending is boredom. You need to put some fun in your life to keep yourself from feeling to bored with your routine.

In the end, it is important that you do not get discouraged by mistakes that you have made on your budget strategy. People can slip from time to time and the important thing is how you recover and learn from your error.