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Six Common Budget Busters

"If I had more money I wouldn't have to worry about anything."

"I'll never get ahead. Something always happens to ruin my budget."

If either of these statements sound familiar, you may be making one or more of the following six common mistakes that can ruin any family budget.

1. No goals or plan.
   Like a traveler who has no destination and no map, if you don't have financial goals or a plan to accomplish those goals, you won't get very far. Financial planning is very much like planning a trip. You need to know where you want to go, when you want to arrive, how you plan to get there, how much it will cost, and what you will need to make the trip.
2. No realistic idea of living expenses.
   Many people know how much their rent or mortgage and car insurance costs, but they don't know what the groceries or utilities total each month. Know what each month's expenses are so you can set aside money for them. If your income won't cover your expenses, then you need to decide how to decrease expenses or increase your income until the two numbers balance.
3. No idea of where money goes each month.
   Have you ever had $50 in your pocket on Monday and by Thursday it is gone? Can you remember what you spent it on? Frequently money slips through our fingers without our notice. If this happens to you, keep a spending log for a month to see where your money is going. Sometimes habits or patterns emerge that will surprise you. Keeping a spending log will help you uncover some of these seemingly inexpensive habits which add up to real money when you look at the whole picture. New forms for tracking expenses are available from Rutgers Cooperative Extension.
4. No regular savings.
   "Pay yourself first" is advice that we all need to take to be successful financially. We can all set aside a few dollars each month to use for our financial goals or emergencies. Those small amounts soon grow into larger amounts. You'll be surprised at how quickly a few dollars per week add up.
5. No emergency fund.
   Unexpected expenses are frequently what break the family budget. A car repair, a minor health problem, and a broken appliance are all "emergencies" we can plan for. Set aside money each month for unexpected expenses in a savings account or money market mutual fund. When you establish an emergency fund, money will be there when you need it.
6. Using credit unwisely.
   Do you buy groceries and pay with your credit card? Do you buy clothes with department store credit and take six to eight months to pay the bill? Do you pay only the minimum payment on your credit card each month? Do you have four or five credit cards and sometimes use one to pay another? If you answered yes to any of these questions, you are using credit unwisely and it's costing you money.
   Never purchase anything on credit that will be used up before you have paid for it. Food and clothing and vacations are examples of items that you could be paying for long after they have been consumed. Making minimum payments on your credit cards allows interest to add up and extends the time it will take to pay off your debt. When possible, pay credit card balances in full each month rather than carrying over a balance.