Finances are one of life’s major stresses. CNN reported that nearly 76% of Americans were living paycheck to paycheck. Lack of savings means that any unexpected financial event, no matter how small, creates stress. However, you can help yourself. You can reduce stress by budgeting and then sticking to it.
Most people find walking on hot coals is more appealing than creating a budget. Unfortunately, most people don’t create a budget until they amass huge amounts of debt or have an unexpected expense. Many succumb to the trap of believing that if their money in the checking account, there’s cash to spend. Unfortunately, many people learn the hard way, that isn’t the case as they overdraw their account. So, they end up lying awake at night wondering how to squeeze one more dollar out of their paycheck and that just isn’t productive and can make you sick. Facing the challenge, creating a budget, and sticking to it may not be fun, but it does reduce sleepless nights.
Creating the Budget
Creating a budget is easy. First, you add up all sources of income, then add all your expenses. Be honest with the expenses. Don’t neglect those trips to Starbucks or trips to the mall. Figure out how much you want to save each month. Finally, subtract the amount you want to save and the expenses from your income. If there’s any left over, that’s your discretionary spending. If not, you need to make cuts. Seeing where your money goes can be unnerving, but you see it. This can bring a sense of relief on its own.
Benefits of Budgeting – Reduce Stress by Budgeting
Living within a budget has benefits that go beyond your bank account.
1. It creates self-discipline. Once you know what you can spend on the non-essentials, you’ll start spending less. Budgeting makes you consider each purchase in terms of, “Do I really need this?” This increases cash while decreasing your stress.
2. You look for ways to save. As you create your budget, you may find that you really don’t need to go out for lunch every day. It’s nice, but you don’t need it. If you have a lot of extra debt in the form of credit card debt, you can take the money you save from those small changes and put it toward credit cards. As you reduce debt, you gain a sense of security and continue to look for ways to become independent of the credit cards.
3. You begin to build savings. No one wants to have to live off their savings, but an accident or job loss can force you to do so. Most financial experts recommend having an emergency fund that can pay your expenses for 3 to 6 months should a crisis arise. This also creates a deterrent to impulse spending.
4. The future is brighter. Early retirement, a vacation home or European vacation all cost money. If you save money now and pay for it with cash, it will be all the sweeter.
While it lacks the glamour of a quick fix, budgeting really does create one less worry in life.