Budget Busters, Part 1

If your family struggles with making ends meet, these budget busters may be the culprit. Here's how your family can start living in the black again.

Budget busters are the large potential problem areas that can destroy a budget. Failure to control even one of these problem areas can result in financial disaster. Below we have given suggestions on how to identify potential troublesome areas before they become budget busting problems.

• Housing (38 percent of your monthly budget)
• Typically this is one of the largest budget problem areas. Many families buy or rent a house they cannot afford. Housing decisions should be based on need and financial ability, not on internal or external pressure.

• Food (12 percent of your monthly budget)
• Many families buy too much food. Others buy too little. The reduction of a family's food bill requires quantity and quality planning.

• Transportation (purchase and maintenance, 15 percent of your monthly budget)
• Often consumers are unwise when it comes both to purchasing and maintaining automobiles. Many families buy cars they cannot afford and trade them in long before their usefulness has expired.

  Other than salespeople who need new cars regularly, most Americans trade cars because they want to rather than need to. In addition, most Americans pay premium prices for repairs and general maintenance on their cars, which many times can be avoided.

• Debts (5 percent of Net Spendable Income)
• Although it would be great if family budgets restricted themselves to only 5 percent debt (credit cards, bank loans including home equity loans, and installment credit), the unfortunate norm for the typical American family far exceeds this amount.

• Insurance (5 percent of Net Spendable Income assuming an employer provides medical insurance)
• Few families understand how much and what kind of insurance is needed. Insurance should be used as a supplementary provision for the family, not for protection or for profit.

  Insurance is not designed for saving money or for retirement. So, select insurance based on God's plan for your life, not on what someone else says you need for your life.

• Recreation/Entertainment (5 percent of Net Spendable Income)
• Although Americans are a recreation-oriented society, those who are in debt should not use their creditors' money to entertain themselves or their families. The normal tendency is to escape problems, if only for a short while—even if the problems then become more acute.

  Although families need a certain amount of recreation and fun in order to maintain a healthy family atmosphere, they also must resist the urge to indulge excessively and control recreation and entertainment expenses.

• Clothing (5 percent of Net Spendable Income)
• Many families in debt sacrifice this area in their budget because of excesses in other areas. And yet, with prudent planning and buying, families can be clothed neatly without great expense.

• Medical and dental (5 percent of Net Spendable Income)
• Families need to anticipate these expenses in their budgets and set aside funds regularly to cover the expenses. Do not sacrifice family health due to lack of planning, but at the same time do not use doctors and dentists excessively. Prevention is much cheaper than treatment or correction.

• Savings (5 percent of Net Spendable Income)It is important that families establish some savings in a budget. Otherwise, the use of credit becomes a lifelong necessity and debt, a way of life. A savings plan will allow for the purchase of items with cash rather than credit, irrespective of the store.

Once you've identified these areas of your budget, how can you adjust problem areas that could become "budget busters?" Read Part 2 and find out how.