Your Finances By Terry RiggWhich category do you fall in?
I have determined that financially, people fall into one of three categories.
1. Family 1 has all money they need for necessities and more and manage it very well.
2. Family 2 has all money they need for necessities and more but live payday to payday with ever increasing debt.
3. Family 3 don't have enough money for necessities.
The funny thing about three families above is that they could have exactly same income and family size. This is not to say that special circumstances has nothing to do with it, but on average most people live above their means.
Family 1 has established a workable budget. They don't pay more than they can afford for housing, transportation, utilities, etc. They also have money set aside for long and short term savings. This short term savings provides two things. First, it makes money available when car breaks down, you need a new washer or any number of unexpected expenses that crop up. Second, it prevents need to use credit cards for these items. The savings here could be hundreds of dollars. Family 1 planned.
Family 2 is still struggling to establish a budget. In many cases their house payments or rent is much more than they can afford. They don't take time to evaluate money that could be saved with little effort. Usually there is no short term savings, let alone short term. They use credit cards as if they were cash and pay hundreds of dollars in unnessary finance charges and penalities. These people find themselves with financial problems that often leads to bankruptcy. Family 2 either didn't plan or may not know how handle their finances.
Family 3 has given up on a budget. No matter what they do there isn't enough money to pay for housing and other necessities. They struggle to put food on table. Most don't qualify for credit cards, which is a good thing. In some cases this situation is self inflicted and some are due to circumstances.