Not everyone is good budgeter and we should be able to evaluate our performance in this field. By assessing our ability, we should have a clue at what our budgeting skill are currently performing. However, these are signs that we are actually perfuming well in budgeting.
- We pay bills on time: Good budgeters are able to make priorities and they can avoid late payment fees, which could drain our finances. When we are not able pay on time, we should know how this could happen. There are times when we need to juggle debts just pay the bills and this could give is a low grade in budgeting. In many cases, people have enough money to pay their bills, but they are unable to assign priorities. If we don’t make bills high priority, then we may need to incur reminder notices and fees. In general, we should pay bills immediately as they arrive.
- We avoid becoming emotional spender: It could be rather difficult to quantify emotional spender, but we may need to consider whether all the products we purchased before are really needed. Needs and wants are two different motivators. In some cases, we could have plenty of trinkets around our house that we bought on a whim. In some cases, we go to the stores and behave like a robot and automatically take things from the shelves. In this case, emotional spending is a direct opposite to the rational spending. Human are unique animals, they make emotional decisions, whether they need it or not. Many advertising messages tap into our emotional side, instead of our rational side. Emotional spending can be a rather interesting subject and we could come across this situation when parents can’t say no their kids.
- We have enough assets and savings: We should ask ourselves how much money we are worth right now. It’s not only about the value of our house and how much money in our bank account, but they should also be subtracted with our debts. Many people fail to determine how much they are worth right now. We should create our own detailed financial statements to determine our worth. This allows us to see how much we are worth this month or this year, compared to last month or last year. This should give us an idea, what assets we should increase and what debts we need to reduce.
- We know how much money we spend each month: We should know how much we spend each year, so we won’t be confused if our bank balance runs low. We should know where each cent is going to make sure that we have very good budget. If we spend more than we earn each month, this poor finance habit could catch up with us eventually. In general, people who spend less than they earn and are able to save money each month will eventually will have very healthy financial situation. We should determine how we could achieve this financial condition.