The hard part is often not making a budget, it is sticking to it. It is easy to think, "Oh, I'll just put some money away next paycheck," or, "I'll figure out how to afford this later!" Unfortunately, once you start breaking the rules, you're on a fast track to getting right back into debt.
What are the five biggest rules to follow when attempting to manage your money? Here are 5 of the most important money management rules that could help you stay on track and out of debt.
1. Think about the future. When are you thinking of spending big money on something, ask yourself what you will think of that purchase in a week. How about a month? A year? 10 years? Impulsive purchase decisions often leave us with buyer's remorse—and a whole new group of bills to accompany it.
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2. Don't spend too much of your income on your home and its expenses. Buying a house that you can't really afford is setting yourself up for failure. Your mortgage, taxes, insurance, and other home expenses should only add up to 29% or less of your gross monthly income.
3. Don't stretch yourself to thin with your car payment. Your car payment should be 15% or less of your net monthly income.
4. Keep an emergency fund. You should have at least 3 months worth of living expenses in a savings account. To stay on the safe side, you could save half a year worth of living expenses. With this rocky economic climate, it is better to be safe than sorry.
5. Don't forget fun. It is important to have a little extra money in your budget for entertainment or leisure. Going to see a movie, taking a trip to the amusement park, or doing a little shopping can be a great way to keep your family healthy and happy. On that note, if you are choosing between an experience or buying something material, go with the former. Studies have proved that experience makes us happier.
It is hard for most families to follow these rules perfectly but they are a good starting point. It is hard to judge where you are at with your own budget if you aren't sure where you are supposed to be. Your life after bankruptcy can really only be a success if you avoid getting right back into debt. Your St. Louis bankruptcy lawyer is more than willing to help protect you from debt but that doesn't mean he or she wants to see you back in the office with the same problem mere months later.
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