HOW BUDGETING AFFECTS YOUR DAILY LIFE
Every days of our life, many things happen that affects our daily life such activities and tasks that we need to do. How we spend our money of course is one of the things that could affects on our daily life. When we talks about money, we need to have a plan on how we are spending our money effectively. Plan on how we are spending money called Budget. The process of creating a plan on how to spend the money called Budgeting.
Budgeting allows us to determine about our money situation in advance whether we will have enough money to spend on activities or to buy something that we need. If we do not have a plan on how to spend our money, we might overspend our money. Budgeting is not only focuses on something that we need to do when we are short on cash. In this article, we will discuss about how budgeting affects on our daily life.
First of all, from budgeting we put us in control of our own money. Creating a budget is a path that guided us on how should we spend and save our own money. We are able to view our budgets as a path from losing control over what we can spend on our money and we can spend our money. When we create a plan on how we are going to spend our own money, we get to decide on how or when we will spend the money that we earn or that we have in our savings. There is an English term that said “Give each dollar a job? Or we can say that each of our money serves a purpose. The spending plan that we create, helps us to assign the money of our income a purpose for our daily life. With budgeting, we control our own money and not our money that controls us which helps us to decide if we want to sacrifice short term spending like buying coffee every day in exchange for a long term goals like buying a new car or go travelling.
Second thing that would happen after budgeting, we will find that budgeting is one of a solution to overspending. When we have a spending plan, we get a clear vision of how much money that we have earned every month. Then, we can determine on how we are going to spend the money. Before start budgeting we will simply use our own money, when we overspending our money we will have a thought that we have an income that seems a problem that did not fit on how we are spending money that we made every month. Sometimes, we are going to face debt problem in the process to fit on how we are spending our money. In reality, we just did not realize that we already overspending our money in each month. When we create a budget or spending plan, we will have a view where our money goes every month and we can determine the amount of money we need to spend on anything that is needed or necessary and we can avoid on spending too much than we are supposed to.
Third, budgeting keeps us focused on our own financial goals. Everyone must already determine their financial goals, for example we plan to buy a car for the next three years. What we have to is create a spending plan on our income to reach our goal. We set each month how many Malaysian ringgits we need to save each month and continue over the saving for next months to reach our goals in times. This will improve our spending pattern which budgeting helps us to prioritize our spending in certain area and reach our goals. Simply put, budgeting enables us to manage our income or expense ratio more efficiently. Budgeting helps us to avoid spending on unnecessarily items or services that we do not really need in the mean times on reaching our financial goals. If we are working with limited resources, budgeting makes it easier to reach our goals.
Next point, budgeting makes us aware what is going on with our own money. With budgeting, we will have a clear view on the money movement on how the money being spent or where the money is going to. Budgeting helps us avoid from wondering at the end of the month where our money went.
In addition, budgeting helps us organize our spending and savings. By separating our money into categories of expenditures and savings, a spending plan helps us aware which category of expenditure takes which portion of our money. In that way, it is easy for us to make adjustments on how we are going to spend our money.
Moreover, budgeting makes us to decide in advance how our own money will work for us. Budget plan that we create enables us to know what we can afford, enables us to take advantage of buying or investing opportunities, and plan on how we are going to reduce our debt. Budgeting also can tells us what is important or our needs based on how we categorize the money in hands, how our money are going to work for us and see how close we are to reach our financial goals.
Furthermore, budgeting enables us to save for expected and unexpected costs. Budgeting allows us to plan to set aside money for emergency costs. Other than that, it helps us with provided information as a reference for organizing our bills, receipts, and statements. When our money transactions are organized, we will save time effort for time to pay taxes or creditors references.
Next, Budgeting helps us determine whether we can take debt and how much of the debt we can afford. Taking debt is not necessarily a bad thing if the debt is really necessary needed at the certain time within the range that we can afford. Budgeting shows us on how much debt load we can realistically take without being stressed or it will affect our life quality. Budgeting actually being a big favors to us, it provides us with an early signal or warning for potential problems that might occur. From the provided information, we are able to make adjustments to our plan before any problems appears.
Budgeting also enables us to communicate with our partner or family about money and it helps us to prevent arguments with the others. For some people, we did share our money with others such as our spouse, family, or anyone. A budget can helps us communicate how we use the money as a group. The budget helps to prevents overspending money and reduce the arguments that might occur on the decisions of money management. This promotes teamwork on working for common financial goals and prevents conflict on how money the money is used. For example, in the early year of couple marriage, they could spend too much money on gifts, or buying a home that they can’t really afford at that time. At the end they can face a burden of debt, which can cause an argument about who should be responsible on the spending. Creating a budget that suit according to our lifestyle with our spouse will avoid conflicts and resolve personal differences on how our money is spent. Budgeting teaches family members spending responsibility and accountability.
Budgeting helps us to have a peace of mind. When we are in control over on our money, we will have a feeling that we have peace on mind to reach our financial goals. Before budgeting, we may feel worried at certain things about money to satisfy our daily basis. This feeling may gone when we have a spending plan that surely determine on how our money being spent every months. In other word, budgeting also helps us to reduce stress from financial problems that occur without having a spending plan on our money. Budgeting decreases our anxiety about our finances.
Our quality of life will be improved from budgeting. If we are managing our finances really well from budgeting, we will never fall into debt trap too much. Budgeting helps us to avoid debt trap before we fall deeper on too much debt. We learn how to manage our money whether into saving or investing for our own goods in the futures. Budgeting helps to decrease the anxiety that occurs about our finances and it allows us to concentrate on our hobbies or spending time with our family. The quality of our life will surely improve when that happens.
For recommendations, who should really make a budget? Firstly, someone who did not have created a budget before. Budgeting is really one solution that has a high chance to improve our finances. When we implemented the budgeting in our life, we will experience things that we have never felt before regarding our spending method. We may notice what occasions that make our money leaks and with budgeting, it will helps us to have better control on those problem.
Secondly, for someone who can’t predict their income. This person should take budgeting as an option to make starting to point to improve your life. For example, if a person works as a promoter and his or her income depends on commission. This type of job has a risky income compared to someone who works with government who will have a steady income. Budgeting will make sure we have better money management which can be a great helps if we face a hard times in the future.
Thirdly, for someone who are going through a career change. When some people got their first job, they may face problem when earning the first salary. They may do not have plan or do not know what to do with the money. They also could not know how much money that they really earn after taxes and required expenses.
HOW BUDGETING AFFECTS YOUR DAILY LIFE