Monday 15 July 2024

4 Common Budgeting Mistakes

We may spend less than we earn, but we could make mistakes that could cause poor financial situation in the end.

  1. We don’t know what our spouse is doing right now: Many families have joint bank account and all incomes are delivered to it. Eventually, our partner could get into financial trouble and this cause severe family-wide problem without our knowledge. For example, our spouse could open a new credit card without notifying us. When the card is connected with our joint account, our spouse could run up debts in our names. An excuse in court that we didn’t know what our spouse was doing won’t hold up. If we have joint account, we are both responsible. Marriage should be seen as an airplane with two wings and a plane can’t fly with one wing clipped. Everyone should have a proper understanding what others are doing and this will protect the whole family as a unit. Right now, we should determine how many credit cards our spouse has and how much is their balances. We are not doing this because we accuse our spouse of wrongdoing, but we need to be open for discussion. This is the only way we could understand our true wealth.
  2. We don’t have alternate source of income: According to studies, it is found that many families would be broke in less than 6 weeks after their primary income stops. This is obviously an alarming situation. We should ask ourselves the same question and find out whether our money will run out if our income stops immediately. We could think that we are 100 percent safe because we work for the government or we consider ourselves too valuable for the company. While this might be true, we should also consider the possibility how long our family would survive if our money stops suddenly. In general, no one has guaranteed financial situation, even those with a million of dollars in their bank account. New technologies could make our highly regarded skill obsolete or we could recklessly look for loans.
  3. We don’t have enough insurance coverage: Having no proper insurance coverage is akin to inviting troubles. There are cases when the whole family is affected by house fires and debilitating sickness. We should know what sort of insurance coverage we have and what will happen if our house burnt down or if we have serious sickness.
  4. We often have disagreement about money: One strong clue that we have budget problem is that we often fight about money with our spouse. This could happen if the family don’t have heaps of money to splurge on fancy lunch. If we have little money in the bank account, significant amount of debt and overdue bills, then we are likely to fight with one another. Many marriages end because we lack enough money for various necessities. In this case, we should avoid becoming a statistic and it is important to immediately remind our spouse if he/she can’t manage money properly.