Avoiding the Impulse
Are you aware of the importance of following a budget? If you need a little guidance to get you on the right track, here are some basic tips and suggestions. Keep in mind, that using a budget is a fundamental role in getting and keeping excellent credit. Below, you will find how to determine and “want” and a “need” and how to step aside from purchasing on impulse. Keep reading if you want to to be a budget master and obtaining a good credit score is your goal.
Your Plan of Action
The first step towards repairing your credit is to come up with a strict and solid budget. You will need to cut out all excess spending whenever possible and only spend within your means. If you could you many different ideas on how to save money, browse this article from The Simple Dollar.
Look At Your Spending Habits!
Do you consider yourself an impulse buyer? This would be someone who sees something they like and just buys it. When you purchase something out of impulse, you are setting yourself up for buyers remorse. As much as credit can save you when you are in a pinch, it can also harm you by becoming a huge burden that could ruin your life!
Ask yourself why you are considering buying this service or product. Is it because your water heater broke and you need to replace it with a new one? Or is it because it is the latest release of something that has everyone talking?
Don’t replace a product unless it is an everyday item you use and need, like a vacuum cleaner or washing machine. If it isn’t a necessity then put off your purchase and wait a few weeks to see if you still need to buy it. If you have managed without the item for that long, then you can probably continue to not have it.
Consider this, if the only reason you want to buy the latest product is because all your friends have it, then you need to figure out if all your NEEDS have been taken care of before putting money away to save up for this WANT. By the time you have enough money saved up, your desire to own the product may have changed, in which case, you have just saved yourself some money to either put it aside as an emergency fund or to use it to pay off a bill or debt.
The next time you find yourself in this situation, congratulate yourself for not making an impulsive buying decision!
Need vs Want
Your budget is made to help you spend less and save more. If you are spending more money than you make, then your budget isn’t working for you and either your lifestyle needs to change or you need to find a higher paying job to accommodate it. A budget should make your money focus on necessities and things of value to you versus on things that don’t matter.
What Is a Need?
Needs are items that are important and necessary, such as food, shelter, health, and other basic resources listed below:
Some consider other important monthly expenses like credit cards, student loans, medical, and car insurance as a need or priority in order to maintain good credit standing
What Is a Want?
Wants are the sole purpose for budgets. These are items that you would gladly spend most of your money on or on things you are saving up for. This could include but is not limited to the following:
- Eating Out
- Personal Appearance
Check out this awesome article going into more depth about “wants” and how they relate to credit.
Budgeting = Excellent Credit
Credit is not taught in school and is one of the fundamentals of our society. Most people have to learn about credit by trial and error and it should not be that way. Credit is merely a tool to use to assist you in getting some of the best financing around, better jobs, and cheaper insurance, which opens the door to many opportunities. Budgeting is the key to help get or keep you on the right path towards controlling your credit goals. When you create and follow a budget and can control your desire to purchase wants, you are one step closer to financial freedom. And when your budget is working for you, having excellent credit is possible. Not sure if you need help with budgeting? Contact us if you have any further questions!