How Can Budgeting Affect One's Personal Life?
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Disagreements about household finances is a source of friction among many couples. This can begin early on in a marriage when couples spend too much on expensive gifts for one another, go on pricey vacations, or purchase a home they can't really afford at that time. The end result can be a large debt burden, which can cause arguments about money and resentment toward the spouse who was responsible for the bulk of the spending -- even if the intention was to make the other person happy. Having a budget in place prevents out-of-control spending and lessens the likelihood of arguments. Diane Nissen, a budget advisor and money coach at the Alexandrite Group, advises, "It's important for both partners to agree on how money will be spent and how much will be saved. One thing a budget should include is money for each partner to spend without having to report back to the other partner. A little anonymity can go a long way in keeping both people happy."
Financial problems cause stress, which in severe cases can cause health problems. A poll conducted by the Associated Press and AOL revealed that people who reported high levels of stress over debt were also more likely to report a wide variety of medical issues, including headaches, digestive problems, depression and lower back pain. Fortunately, a way to cope with this stress is through budgeting. Levar Haffoney, principal of Fayohne Advisors LLC in New York City, explains why: "Budgeting reduces stress by allowing you to gain control of your personal finances. It enables you to manage your income/expense ratio more efficiently. This gives you a better perspective on where you can limit or decrease your spending. This decreases your anxiety about your finances and allows you to concentrate on increasing your income, hobbies and spending time with your family."
Increased optimism about the future and a more positive attitude are by-products of effective financial management. Research by TIAA-CREF Institute shows that people who develop a solid plan for their finances -- a budget -- report more confidence about their financial situations. Your budget helps you track your progress toward your savings goals, showing you that you really can reach your objectives. The progress you see can be inspiring. For example, the progress you make in building your daughter's college fund can inspire her to continue to work hard in school. She will know that her dream of attending college can be a reality, and you will have the confidence that the money will be there when it comes time for her to enroll.
Improved Quality of Life
A benefit of managing your finances well -- and budgeting is a great tool to accomplish this -- is that you will never feel trapped from having too much debt, with too much of your monthly income going toward payments -- and especially interest. Budgeting allows people to avoid getting into this debt trap in the first place. In addition, as you learn to save and invest and watch your financial nest egg grow over the years, peace of mind and feelings of security will become more important goals than "things" \-- the pursuit of material goods as a means of achieving self-worth. Budgeting helps you reassess what's truly important, enhancing your overall quality of life.