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Tag Archives: how to budget

The Payment Trap

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In my country there is a very “clever” system to teach you that you can have what you want now and pay for it later –  Splitting your purchase into payments.

This is not only harmful in planning and keeping to your budget on a monthly basis but it also nourishes the need for immediate gratification.

Instead of learning to save for what it is you wish to buy, it teaches you to buy now and think later about how you’re going to pay for it.

For example instead of saving an x amount each month for something you want to buy (TV, computer, speakers, vacation, shoes, etc…) and then having the option of paying for it in cash which more often than not usually gives you bargaining power or some sort of discount, you go out and purchase your item and pay for it in payments. While this might not seem like the most tragic thing you can do it can be very hard to keep track of what you actually spend a month on certain categories. Most often I find people forget how many payments they actually have and just keep adding to them.

For me this issue really comes home when after the credit bill is paid, I start the month with hundreds if not thousands of $ already “spent” on the card (in payments) and if I add to that all my regular purchases and expenses it adds up to quite more than I budgeted for.

There are some cases where you have no choice but to pay in payments, mostly in cases of emergency. Which is why it’s always a great idea to have an emergency fund.

Unfortunately for me I am still in the first steps of covering and eliminating debt so more on the savings and emergency funds tips to come in the future (hopefully near).

Are you guilty of splitting payments? How do you battle the urge to spend money in hopes of ‘making up for it’ in the future?

Family Budgeting: Addiction and Rehabilitation

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When it comes to budgeting your household finances the hardest thing to overcome is the initial step of admitting there is a problem. Many of us know we spend “a lot” on various purchases such as food, clothing, utilities, cell phones, etc. but to actually sit down and calculate the cold hard truth can be too much to bear for many.

It is my hope that my story will inspire you to make that change and start taking control of your finances and future.

The first challenge to conquer is the act of gathering information. This is the point where you must gather all your bills from the last six-twelve months. The list is long but it is essential to get a realistic view of what you’ve been up to and how to plan ahead. You could be one of the lucky ones that has them all filed up by month, I was like that but I never knew where to start or what to do with this information.

The bills you will require are listed in the form under the downloads section. ( You can download the PDF form in my box widget to help you record all the information needed in order to build an initial budget). There are many categories and sub categories which are relevant not each month, but throughout the year, which we need to take account of so we can plan for and be aware of.

The second challenge is to begin writing down, be it in a notebook, or excel, everything you spend, each and every day, and I do mean each and every day. It is very easy to forget and if you don’t do it, you WILL forget, trust me, I have and so will you.

Once you have all your bills in front of you, sort them by month. Write down how much you paid each month and do this for six months back. Calculate the average and then you will have your average monthly budget.

Congratulations, you have completed the first step on your road to financial recovery. Your next step will follow shortly so stay tuned.