Budgeting involves developing a plan for how to spend one’s money. It allows one to establish in advance whether there will be enough money for the activities. An individual is also able to prioritize the spending by concentrating on the most important things. However, most people face budgeting problems and end up spending their money on the things that are not very important. They focus on luxuries and eventually accumulate debts. Saving money should be the top priority for all families to avoid future financial problems. People should know what to do with money, how to save it, and how to consume it well.
People have various wants that manipulate them into bad spending habits. They tend to cling on to expensive lifestyles by purchasing luxuries. Building wealth is important, but one may wonder why most people still find themselves under a mountain of debt or end up retiring broke and unhappy (Vohwinkle, n. d.). It all starts from household items like vacuums, fittings, and other electronics. People focus on less important things, like pets, which are expensive. It would not be a wonder finding such people on vacations where they spend extravagantly. These are among the habits that lead to serious budgeting problems.
Some people spend money on excessive lifestyles just to show off and make sure that they establish a class of their own so that people can envy them. They relish their morning muffins and hot drinks from Starbucks. Their luxury cars provide them comfort and security as they transport them to work, school, or during other activities (Gladwell, n. d.). A big mistake that people make when they have a huge salary is to buy a lavish car. There are many expenses that come along with cars. For instance, one has to pay for insurance services, fuel, and maintenance services as well. It is likely that people with large incomes own expensive homes. The cost of maintaining such households is quite high. They use dry cleaning services adding up to their expenses. The mode of entertainment is also profligate, ranging from elegant beaches to nice parks. Such habits make it very hard to save money, and people are not able to manage their incomes.
Spending on the new market comers is also a major cause of budgeting problems that people face. They justify that they need to have the newest in fashion and decoration. The consumer culture that people live in is frequently blasted with marketing and promotion messages that are wisely designed to make people spend money. They do not care if a person has the money or not. People fear being left behind, and they opt to buy things that make their lives better. In reality, it is probable to get by or survive with something that is not the newest and the best. The fact that most people want to look good should not make them overstretch their budget. They should concentrate on living a comfortable life (Nwokolo, 2014).
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Access to technology has made life much easier. It has also affected meaningfully personal assets and spending habits. Technology has transformed the way people do their shopping. With just a few clicks of the mouse, one can get any product delivered to him or her. It can greatly increase the desire to buy things that one may not be requiring. Devices like smartphones have a great effect on how people spend their money. Smartphones are transportable, and there is the internet access; it is possible to download things like songs or event documents for a fee. It is normal to desire new appliances that have the newest technology. After all, today’s hottest technology is inefficacious if compared to what will come out tomorrow (Mason, n. d.). One should thus take time before making hasty decisions, especially if it has an impact on his or her budget. Food consumed outside also accounts for a great proportion of budgeting problems. These are fast foods, traditional eateries, and mobile food retailers. When it comes to saving money, all practices count, even the small ones. One needs to make choices on purchasing healthy foodstuffs for the household use and also minimize the frequent dinner meals consumed outside (Libing, Xu, & Ruiquan, 2014). Expenses based on food can be hard to control. Some parents also tend to engage their children in upcoming and very expensive hobbies. For instance, car racing and mountain bike racing cost a lot of money to establish. Parents end up using too much money in the bid to please their children. In the end, such habits affect the allocated budget negatively.
Saving money is an important aspect of people’s lives. It is vital to set aside an amount that can be used for a crisis cushion to avoid borrowing money. Also, if one intends to retire someday, it is vital to have savings or investments that will replace the income that one will no longer earn from the job. Therefore, saving is important, since no one can predict the future. There are various ways that can assist in saving. People should practice the habit of buying commodities at the lower price rather than at the high price (Castro, 2015). In the market, there are various items sold at different prices, but their level of satisfaction is the same. Also, it is important for individuals to set financial goals that will enable them to be in charge of their money and life. The goals can be short-term or long-term, but they all need to be attainable, precise, and realistic (Mcdermott, 2015). To accomplish the goals, activities such as opening a saving account and joining saving groups in the workplaces are of great help. Keeping track of how one spends money is crucial. A person should know whether he or she is spending more than the income. Keeping such a record helps an individual spend less on luxuries and impulse buys. The analyzed record of expenditure should assist in drawing up a new budget. Sticking to the budget and keeping track of the level of expenditure are some of the best ways to save money. All members of the family should be responsible to ensure that money is well spent. Sharing such a responsibility helps encourage each other to save a bit more. The set budget should be regularly reviewed, since life is unpredictable (Rabiu, Goni, Alhaji, & Aliyu, 2015). An individual may get a pay rise, which means he or she can save more. Thinking before purchasing something expensive is necessary. The research shows that people tend to make healthier decisions when they have ample time to think about it (Rabiu et al., 2015). People who live with their future aims, investments, and contentment at the forefront of their thoughts are likely to live enhanced lives in comparison with the rest of consumers swamped in material things.
More happiness can be derived from experiences as compared to just saving money. The psychology research has shown that experiences bring people more contentment than possessions do (Oppland, n. d.). Experiences tend to make individuals contented because they are less likely to measure the value of their experiences by comparing them to those of others. Experiences are greater portions of people than physical properties. Solid things remain distinct from a person in contrast to experiences that are the part and parcel of the person. Collective involvements also tend to link people more to other societies than mutual consumption. One may feel more connected to a person he or she took a vacation with than somebody who bought an expensive item. Therefore, spending money on experiences may be useful (Oppland, n. d.).
Spending more on things that enrich people’s life not only makes them happy but also helps amend the businesses that surround them by shedding the needed positive image and light on the world. For instance, education is expensive, but it is the most important investment one can make in life. It is one of the requirements considered for most professional jobs. Advanced education is mandatory for jobs in the rapidly growing fields. It is directly tied to the lifelong earning potentiality of a person. Education also assists in the monetary management for a financially healthy family. The research shows that the moderate income for families headed by a person with a college degree is two times higher than the average income for families headed by a high school graduate (Santos, 2014). Learning new things also increases the quality of life. Education increases happiness levels, decreases stress, and provides a sense of self-fulfillment (Santos, 2014). Charity works are other ways people can spend the money. It is a way of giving back to the society, and it can have a great impact on people’s lives. Charity is an expensive way of spending, but it has a positive outcome.
In conclusion, a spending plan allows one to determine in advance whether there is enough money to do things that are important. Budgeting enables an individual to create a spending strategy for his or her money. It helps one keep off the debts or work for a way out for those in debts. The planned budget should also be regularly monitored to identify wasteful expenditures and quickly adapt when financial situations change. Therefore, it is important for every individual to draw a budget. It helps in long-term financial planning (Rabiu et al., 2015). Realistic assumptions about the annual income and expense and plans for long-term financial goals, like starting a business, can also be made early without interfering with anything. A sense of financial clarity is thus very important for the development of society.