We all have some habit that, sometimes, can “wreak havoc” on our family budget. And in some situations, we don’t even realize that we may be spending what we shouldn’t, causing the money not to arrive until the end of the month.
The situation becomes even more worrying at a time when we are pressured by inflation . Thus, small precautions and some changes in habits can make all the difference in managing your personal finances.
One of the reasons for “mismanagement” of your money is ignorance or lack of information. Taking wrong decisions has consequences on your personal accounts, which are sometimes poorly evaluated or even neglected. When this happens, instead of saving we are wasting money.
So, if you are having financial difficulties, you should assess the origin of the problem. If the cause is in our habits, we should try to identify them and change our behavior. Next, we indicate some tips so you can avoid some mistakes and thus make better financial decisions.
10 habits you should avoid when managing your family budget
Don’t look at prices
Before buying, you should always look at the prices , assess whether you really need the good or service and also check that that amount will not be needed for other more important expenses.
Not knowing where to spend money can compromise your family budget
If you don’t pay attention to expenses, your money disappears without realizing it. How many people reach the end of the month with no money? In reality, that’s what happens when we don’t keep track of what we spend and where we spend it . That is, we have no idea what we can spend and often end up spending money on superfluous things, reflecting the lack of control over expenses.
In short, you must make a monthly budget with income and expenses by category .
The first step is to define a maximum limit for each item of expenses taking into account your income. The basic rule is: expenses must always be less than your income . Only then, you can have your personal finances balanced. Otherwise, either you default or you have to resort to your savings, which is not desirable.
Save only when there is money
Another common mistake is to save only if you have some money left. When you budget, you should allocate a portion of your income to your savings (pay yourself).
That is, after seeing what you can really spend, register your expenses by category according to the limits you have established for each one of them.
Buy “everything without thinking about your family budget
Buying everything that appears in front of you just because you like it or it looks good on you can ruin your bills. For example, he stops by a clothing store and buys a piece that he thinks is very beautiful, but in reality he doesn’t even need it. Consider carefully, if you don’t need it, you shouldn’t even buy it.
In other words, so-called “ impulse purchases ” almost always backfire. This is where the role of the family budget comes in. If you are aware of what you can spend, you will think twice before buying . In fact, if you have a record of your expenses and an idea of what you can spend, you will probably avoid many wrong decisions.
buy on credit
When you buy something with a card, the tendency is not to be aware of the amount you are spending. What gets worse when buying with a credit card . This is because, in these cases, you are not saving anything, you are just postponing the payment . That is, in practice, you are adding expenses to the following month. In some cases, if you have not chosen the option at the end of the month, that is, paying 100% of the outstanding balance, you are adding interest to the capital that you have to pay . That is, more expenses for you.
Don’t forget that credit cards have high interest rates on the amount you remain owed for the next month.
On the other hand, some Bank sets the maximum rates for new credit cards every three months. However, these rates are only valid for cards that are issued in that quarter, so yours may even have a higher rate. Therefore, you should always check on your statement what interest rate you are paying for the amount you still have to pay.
Therefore, always try to pay in cash . This is because, when you pay with cash, you are more aware of what you are spending.
Do not amortize credits
In the first place, whenever possible, try to amortize your credits . That is, whenever you reduce the amount owed, you are also reducing the amount of interest payable. Also, note that the interest rate you pay for a loan, as a rule, is higher than that you receive for any financial application.
Maintaining some “vices” ruins the family budget
There are vices that bring little or no advantage. For example, smoking, constantly eating out or going out frequently are habits that consume a lot of money. These “little things”, added together, can prove to be a significant portion of your family budget.
You don’t even need to completely eliminate these habits, if reducing them is already a great help for your bills. Your wallet thanks you (and your health too).
Not reviewing your insurance annually
Insurance also represents a good slice of your family budget. Therefore, you should review your insurance, preferably every year. In other words, do your research and see if you can’t pay less for the conditions you already have. If necessary, consider switching insurance companies.
Not considering an emergency financial reserve in your family budget
Another essential rule is to always have a financial reserve to face any emergency . Best practice is to set aside the equivalent of six months or a year of fixed expenses . This allows you to have a financial break in case you have any unforeseen events in your life and/or a drop in income.
As the name implies, this reserve serves to deal with emergencies . Therefore, you may need extra cash for unexpected expenses such as:
- A breakdown in the car;
- A health problem;
- A broken appliance.
In short, if you have a financial reserve, ultimately use it. Rather than resorting to personal credit or using a credit card. But if you do, try to replenish the amount you spent as quickly as possible.
Go to the supermarket without a list
Also the supermarket is synonymous with a lot of expense. But, in terms of management, the results can be more complicated if you don’t have a list of what you need. That is, if you go to the supermarket without a shopping list, you almost always end up buying more than necessary.
So, plan your meals and always make a list of what you need before you go shopping.