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6 Ways to Prevent Your Budget from Failing

6 Ways to Prevent Your Budget from Failing

The word “budget” has such a negative connotation in today’s society.  Individuals associate the act of budgeting with some sort of militant regimen that hinders them from having any sort of flexibility with their money.

The end result?  Failure.

Fortunately, there are a number of ways to prevent your budget from failing and make it work for you, minus the ball and chain.

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Before you create your budget, track spending for at least one month to get a better idea of where your money actually goes.  Once you’ve taken this pertinent step, consider the following tips to help you stay on track throughout the month.

1) Be as specific as possible.

Fluffy budgets are destined for failure because they do not consider all the key factors.  Big expenses are important, but it is the little things that will usually send you flying off the deep-end.  If your budget demonstrates that you can cover all your fixed expenses with a little change to spare, you may feel somewhat satisfied until you realize midway through the month that things are going down-hill because you forgot to incorporate the daily visit to the nearest fast-food joint for lunch.  Bottom line: every cent counts, so be sure to include those variable expenses down to the penny.

To help you track variable spending, it may be a good idea to incorporate the envelope system.  That way, your budget won’t stand a chance at failing.

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2) Set realistic expectations.

It never hurts to dream big, but actually making them a reality is another story.  The same rule applies to budgeting: unrealistic figures will set you up for failure each and every month.

If you know that you spend a certain amount of money each week on groceries, do not attempt to cut the number in half just for the sake of making the budget balance.  Instead, make small cuts over time to build the momentum and prevent you from getting discouraged.

3) Believe in yourself.

This may sound a bit strange, but successful budgeting has a lot to do with your attitude.  If you are pessimistic about the process and your inability to successfully commit to the plan from inception, you will probably fail miserably.  On the other hand, if you learn to view your budget as a spending plan that will help you accomplish your current and future financial goals, you will more than likely be inclined to remain on track because there is a light at the end of the tunnel.

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4) Solicit the assistance of an accountability partner.

Do not go out and ask your best buddy who agrees with everything you say and do for help.  This is actually counter-productive.  Instead, find someone to check-in with on a consistent basis who will be honest with you and hold you accountable for your spending habits each month.

Some even go the extra mile to hire a financial coach that is seasoned in budgeting and can provide extensive assistance with budgeting.

5) Prepare for the unexpected.

Wouldn’t it be great to live in a world where emergencies did not exist?  Wishful thinking.  Unexpected occurrences are inevitable, so it is important to incorporate a little padding in your budget each month to cover those moments that completely catch you off guard.  Also, stash away a little cash each month to build up that emergency fund.

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6) Cut yourself a little slack.

Let’s face it: sticking to a budget is hard work.  That is why positive reinforcement is so important.  Develop some sort of reward system for yourself that will motivate you to keep your eyes on the prize each month.

Following these tips on a consistent basis will help put your mind at ease when developing and executing your monthly spending plan.

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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