Think you’re set for life now that you follow a household budget? While managing your finances with a budget is always better than handling them without one, you may not be as financially secure as you think.
They say the truth hurts. But sometimes, it’s exactly what you need to hear to make positive changes to your finances. Keep scrolling to learn what you need to do to improve your budget.
1. Your Budget May Fail One Day
No matter how well you organize your spending, there’s always a chance something will go wrong. You’re human, after all, so you might make a mistake. You can forget to anticipate sporadic expenses, like back-to-school supplies or family birthdays, so you may come up short when they roll around.
Or you can simply hit a streak of bad luck. Your car breaks down out of the blue, a pipe in the basement bursts, and you need to see a doctor — all in the same month. If your budget fails, don’t stress out. That’s what your emergency fund is for. These savings act as a failsafe for when things go wrong.
To make sure your emergency fund is up to snuff, check out this guide. You should aim to set aside roughly 20% of your income towards savings.
2. Your Emergency Savings May Not Be Enough
Say you drain your emergency fund covering an expensive repair to your car. Now that you don’t have any savings, you’re vulnerable to any unexpected expense that comes your way. You should prioritize refilling this fund as soon as possible. But what happens if another repair or medical expense arrives before you can sock away any money?
First of all, don’t beat yourself up. Unexpected emergencies happen to the best of us — that’s why there are installment loans available online.
Installment loans are an alternative to fast payday loans. Here’s what you need to know about payday loans, but in a nutshell, these cash advances can be challenging to repay. That’s because everything is due by your next payday.
Installment loans, on the other hand, allow you to repay what you owe in several installments. This extended payment schedule might give your budget a little more breathing room.
3. You Aren’t Paying Debt Back In A Meaningful Way
A budget that covers the minimum scheduled payments on all your debts is a great first step towards financial security. In addition to keeping your accounts in good standing, you’ll also eventually pay off your debt, slowly but surely.
If you want to see your debt disappear from your budget faster, you need to revisit your budget to see how you can reduce your spending. Any money you manage to save can make bigger payments against your debt.
Cut back on takeout, reduce how many streaming services you have, and switch banks to eliminate fees — these tips and more can help you free up more cash. Even if you only free up $100, that’s $100 more you can put towards your debt.
Important Note: Always check your installment loan contract to learn about your lender’s pre-payment policy.
Some online direct lenders encourage you to make extra payments. Other online direct lenders may charge you for making any payment outside the schedule in your contract.
Subtle changes to how you pay a debt, address emergencies, and plan for the future can take your budget to the next level.
If you are interested in even more lifestyle-related articles and information from us here at Bit Rebels, then we have a lot to choose from.