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Top 10 Budget Busters

Michelle Jones -- Know how to gain control of your budget before, during, and after a financial disaster strikes.

Many people make sincere attempts to set up a household budget and get themselves together financially, but too often these attempts fail. And for those with the most difficult financial circumstances, it may take several attempts to finally create a plan that works.

We've talked a lot about how to get started with budgeting (and back on track), but let's look at some of the budget busters that may be throwing us off track in the first place.

1. Living on Two Incomes

When a couple first starts out, they often have two incomes and will set up their household budget based on that combined total. But as soon as the first financial crisis hits and one of those incomes is reduced or even wiped out, everything can fall apart.

The solution: couples should make every effort to live on one income. Use the second income for savings and extras, many of which will be needed due to the additional job.

2. Not Enough Money in Savings -- for Emergencies

This should be obvious to everyone, and recent financial reports reveal that we're finally starting to set more and more money aside in savings accounts. Congratulations! However, there are still many of you out there who haven't even opened an account yet. So, when your next paycheck arrives, just DO it!

3. Spending More Money than You Really Need To

Ouch. I know that one hurts. The fact is, many of us are still spending too much money, even though we know better!

There are lots of things you can do to control spending. If it's a constant problem for you, then make yourself some rules and stick to them. Some of your rules might include: "I won't buy anything that isn't on sale -- at least 40% off," or "I won't buy anything the first time I see it. Instead I'll wait for at least 48 hours -- or a week -- to see if the 'need' passes," or even better, "I won't buy anything that isn't on my 'need' list!"

And families can keep each other on track -- "I won't buy anything that (name of family member) doesn't agree we should buy." That one will cut out a lot of extra spending, and remember, it goes both ways!

4. Not Keeping Track of the Extra Money You Do Spend

If you haven't tried this yet it may be the biggest step you will take in keeping your finances under control. For 30 days, write down everything you spend money on, and keep doing it as often as needed; every month, once a quarter, and then down to once a year if you're staying within your budget.

If you get off track, start recording your expenses every month again. Keep a small notebook in your purse or car, and log every purchase, every day. It may seem trivial, but it works.

5. Putting Too Many Purchases on Credit

Boy, is this easy to do if you're not paying your bill in full each month. A few purchases can easily add up to hundreds -- or thousands -- of dollars. Keep track of your purchases when using credit, just as you would when using your checking account or cash.

6. Giving Money Away When You Can't Afford It

This subject is difficult to discuss because the final decision must be left up to the individual -- each person ultimately must do what he/she feels is the right thing to do, at any given time. Generosity is certainly a worthy trait, and one we should all continue to improve.

However, if you continue to give money away that you can't really afford, as Dr. Phil McGraw would say, "How's that working for you?"

If it's working, great! If it's not, consider adjusting your giving, or increasing your income so you can continue to be so generous. You can also give your time and the material items you no longer need to those who do. That can be just as valuable as money, if not more.

7. Buying People Gifts When You Can't Afford It

This area of spending is similar to #6 above, but goes a little deeper than just being generous. I'm referring mainly to the annual birthday and Christmas presents we purchase for our friends and family. If it's stretching your budget or keeping you in debt, make an effort to scale back this year, and every year.

And this includes the lavish birthday parties some parents feel they must put on for their children, even giving away "goodie bags" that value $10, $20, or even more.

When I was a kid birthday cake and ice cream was wonderful enough. It's possible, by handing out "goodie bags" to all the party attendees, we -- as a society -- are teaching the children to expect something in return whenever they give a gift. Who started this madness?

8. Accumulating Too Many Monthly Bills

It may not seem like much, but $20 here, $15 there, and another handful of monthly expenses everywhere can add up to one big mess.

Just as keeping track of your monthly spending will benefit your budget, keeping your monthly bills in line will help tremendously. That's what creating a budget does; your monthly income must cover the outgo, and if it doesn't, you cut back.

9. Not Earning Enough Money

If you feel you're not earning enough money for the work you do, you might consider asking for a raise or promotion, or, looking for a better job. If these options are not available to you at this time, work on improving your skills and value to your employer so they will be soon. Taking on a temporary second job might help as well. Just don't create a schedule that you can't handle.

10. And Maybe Our Worst Budget Buster of All. Not Creating a Budget in the First Place

"Never put off till tomorrow what you can do today." -- Proverb

Don't let another day go by without gaining control of your finances... it's just money, you CAN handle it.

Courtesy of

Michelle Jones is the editor of Subscribe to her monthly newsletter, The Money-Saving Tips Ezine, at

© 2005 Michelle Jones

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