by Colby Cardin

What mistakes do you see families make with their money that could be avoided?

Part II

Plan for Emergencies
Many young families face unplanned expenses and too often use credit cards to get through. An illness, a fender bender or a miscalculated tax payment can put you in a hole and ruin months of hard financial planning. Think ahead and set up a small emergency fund you can access in case the unexpected happens.

It is recommended you keep 2-3 months salary tucked away in an accessible account like a Money Market Account, which allows you to keep your money close at hand and earn interest on your balance. You may have to start small but the money will grow each month and compounded interest will help.

Pay Yourself First
Be sure to set up a money management system that allows you to save a little money from each paycheck. Make arrangements with your bank to transfer a set amount of money each month from your checking account to a savings account. Have the transfer come as close to payday as possible so you don’t really miss the money. Count it as an expense and forget it is available.

Live Within Your Means
We often buy things we cannot afford. We buy homes, cars and “stuff” we simply aren’t in a position to buy. We do it because we can put it on credit, defer payments, etc. But eventually you have to pay. Many young families get into too much debt too quickly and find themselves unable to make monthly payments.

Personal finance expert Dave Ramsey said: “Live like no one else lives today, so you can live like no one else does tomorrow.” His point is if you defer some of your purchasing today, then you won’t be in debt tomorrow. When your friends who are living above their means today are still in debt and have creditors calling, you could be sitting on a beach drinking a fruity drink with an umbrella.

Be careful not to let your desire for “stuff” drag you into debt; be the master of what you buy.

Colby Cardin is a graduate of The University of Georgia and is a branch manager at Columbus Bank and Trust.