This theory applies a simple principle that is to bind your expenditures within your
income and then to have a check on all the inflow and outflow of cash so that in long term you can avoid many complications like a bad credit report, low credit score, charge offs unpaid loans, bankruptcy and debt consolidation. To avoid all these things the minor principles are outline here with some basic requirements for each part of your expenditure.
1.Prevent Zealous Expenditures
For maintaining a balance in financial matters it is very important to avoid some luxurious expenditure in life. Remember that it doesnt ask to cut off basic requirements. Some luxuries like replacing your car with the new model after every month or so, and buying some things that are really not required. So, before buying anything always asks from you, is it really required? Is its cost in your budget limits? Is this any luxury item that can replace some vital part of your shopping etc? Similarly buying some expensive gifts for your friends or spending much on them may also be cause of your over-whelming and uncontrolled budget.
2.Have a check on the Money Flow
This requires a strict calculation about the incomes of all the family members and a combined bill of all of them. You must ask for regular account updates and an extra information letter or call from Credit Card Company if your account is going into debt portion. This will help you in restricting your expenditure to a certain point and not to get into a dwelling well of loans and debts.
3.Regular Payment of Bills
This is an important point in keeping your financial status up to the mark. It includes certain special steps like. Dont allow your bills yo pile up of the necessities of lie. Every month or so payment wont hamper you to an amount that becomes unpayable for you. Similarly, shopping for all the grocery of 2 months will upset your budget and spending more in one month lead you to a negative cash flow. This will also cause you to spend more than you earn.
4.Saving Money
For accomplishing this task you need to be wise enough to plan a whole budget according to your resources and requirements in such a way that instead of going into debt, at the end of month youll having some money in your pocket. This is the definite measure to avoid any kind of negative financial situation and debt consolidation in your life.