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Got a Dollar? Budget Basics That Families Never Use Correctly

Budgeting is an important step for anyone who wants to have a nest egg to rely on in times of need; yet, people often live well beyond their means. It is a situation that begs the question of how long this sort of financial mismanagement can go on before financial distress becomes overwhelming. In general, the answer to that question is not as long as you might think as you watch your finances start to spiral out of control. The following are basic budgeting practices that virtually no one these days performs correctly that could make a huge difference in how you handle your money.

Managing Your Bank Account

Before the days of computers, the idea of writing checks and figuring your balance was a tedious task. Today, people simply trust that their electronic bank account properly reflects what is happening to their money. As a consequence, if a person wants to know what their balance is, they simply pull up their electronic account. However, if there are mistakes in the accounting process done by their bank—especially those very tiny mistakes that tend to go unnoticed–most people would never know they have occurred. Alternatively, if they end up having less money than they thought in their account, the reasons why might escape them. Keeping regular written records that account for every penny spent, though it is rarely done with any real degree of accuracy today, is one of the only sure fire ways to know what is truly happening with the money in your bank account and to ensure that you will not over extend your account.

Properly Budgeting to Reduce Multiple Debts

It is not until you have multiple creditors beating down your door that you wish you had checked into that opportunity of earning an online finance master’s degree or something else comparable. Fortunately, reducing multiple debts and regaining control of your financial situation is easy to do with a proper pay off and budgeting strategy that almost no one pauses to consider. Since multiple debts that all require being paid towards each month demand you to divide your income to accommodate them all, it is smart to identify which of these debts is the smallest. If you strive hardest to pay the smallest debts off first, this budgeting strategy will relieve the debt crunch much faster by eliminating some of your monthly payment obligations. It will also free up more money to pay off other debts as you get rid of the smaller ones first.

Budgeting is a lost art in our modern society. By learning to reclaim more of your money from month to month, you will find that it is easier to keep your head above water and retain more money in your pocket. For this reason, it never hurts to go back and review the basics of budgeting to improve how you handle your finances from day to day.

Tim Esterdahl

Tim Esterdahl is the editor of IFCS blog. He is a married father of three and enjoys golf in his spare time.

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