Family budget sounds like a mathematical thing, but according to a finance expert, every American household should think of budget focusing on behaviors and actions.
The finance expert, Andrea Han, shared in an article at the Daily Orange that thinking of budget being the math-heavy chore is a common misconception that causes ineffective outcomes.
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Family budget and debts in an American household
According to Han, the easiest way to see how behavior affects a budget is through credit card debts. She said that the average American household carried 6,849 US dollars of credit card debt last year. This kind of debt, according to Han, is the easiest debt to owe, and it accumulates based on someone's actions.
Credit card debts affect a budget because the high-interest rates snowball every year. However, Han believes that it is unavoidable.
How to handle the family budget?
Managing the budget is the first step in attaining financial freedom. According to financial experts, the understanding of the concepts of income and expense is essential.
Here are some of the steps that every American household can follow:
Set a goal
When starting with a budget, becoming conscious of the spending habits and aligning this with the income should be the goal. According to Han, the question should be, "Is your income able to cover your expenses?"
When setting the goal, it should not end as goals but should also be attained after some time.
Know what are the needs and wants of the family
In an American household, part of putting up a budget identifies the needs and the wants.
Wants and needs are two very different things. Wants are things that could be put off if there are not enough funds to cover it. On the other hand, needs are things that should be addressed immediately.
Act on your goal
A family budget will remain a concept in an American household unless acted or put into action.
It is not enough that you have listed the expenses and income and identified the wants and needs. Part of understanding the budget is also ensuring that what was written is done. Again, what has been planned should be put into action.
In a family, this step will require a lot of discipline from parents and understanding from children.
However, with the thought that this will be a way to attain financial freedom, it is not impossible to do.
