Finances are one of the most important and stressful parts of anyone’s life. They will dictate your ability to provide safety and security for yourself and your family. In addition to safety and security, they also have a major impact on your mental and physical health. Finances are one of the least focussed on subjects in our current education system and often must be learned from family or self-help/educational resources. It can be frustrating and hard to not only find good information about finances but also to find the motivation to get your finances in order because of subconscious beliefs you have about money.
In this article, we’ll look at 3 ways a budget can help you live a better and happier life. Hopefully, it will not only educate you on why you should become financially fit but also motivate you to keep a budget and improve your mental health along the way… So let’s look at the 3 ways that a budget will help you live a better life:
- A Budget Will Help You Live Within Your Means
- A Budget Will Help You Understand The Path to Getting What You Want
- A Budget Will Help You Have Better Relationships
Use these 3 reasons as motivating factors to improve your financial fitness, create a budget, improve your relationships, and get more of what you want out of life. First though let’s define what a budget is and its purpose for a government, business, or individual…
What is a budget?
A budget is an assessment of your potential income and expenditure for a given period of time.
What is the purpose of a budget?
To help greatly increase the chances of success for any financial undertaking, and to help plan for, track and improve your financial situation. It should help you gain perspective on long-term financial goals and keep your decision-making in line with your long-term goals.
1. A Budget Will Help You Live Within Your Means
A budget will help your life in many ways but the first is to help you live within your means. Many Americans live paycheck to paycheck… in fact, this Forbes article states that 78% of American workers live paycheck to paycheck. Meaning many workers likely aren’t keeping any sort of realistic budget of their living costs and expenses, nor are they doing anything to try to change their financial situation. For some, it feels impossible to change your financial situation and for many, it’s likely going to take a level of discipline that you haven’t experienced before.
Discipline is another aspect of education that has been glossed over by the educational system… In a society where we get instant gratification with so many types of interactions, it’s easy to get conditioned to expect quick results from the efforts we put forth. In reality, to be good at anything, to develop real expertise or real results, it takes effort over time. Discipline is just that, effort over time. It’s consistency and the ability to make the same decisions over a long period of time that help an individual become great at any type of subject matter.
So looking at discipline with finances means creating a budget in which you live within your means… Many people live by the assumption that if they can just keep with the lifestyle of people they spend time with or people that they idolize, that they’ll get what they want. But in fact, if you look at the statistic of 78% of people living from paycheck to paycheck you can logically assume that 3 out of 4 people you meet in everyday life likely aren’t living the life that they look like they are. Many are often in the same situation of living above their means and living paycheck to paycheck… A budget will not only help you live within your means, it can also help you start saving money and become a part of that 22% who have financial reserves to withstand more than 1 month of missed income.
Creating a budget and living within your means is one of the most important decisions you can make in your life… It may not be as glamorous as going out every weekend or always having the newest gadgets, but you’ll feel more confident and secure in your ability to provide for yourself and your family. You’ll be able to start making decisions that allow you to escape financial stress like purchasing assets that generate income, and you’ll be able to educate your kids about the right way to manage their finances, thus disrupting a generational cycle of painful decision making…
2. A Budget Will Help You Understand The Path to Getting What You Want
A budget will not only help you live within your means but also help you get what you want. Many people are used to making decisions with a short-sighted mentality… “I’m hungry and tired, so I’ll order takeout or delivery again tonight,” or “I’ve got enough money in my account for the new iPhone today, so I’ll just buy it and deal with the consequences tomorrow.” This is the type of mentality that leads many people to struggle much more in life than they have to. It leads to mental and emotional stress and often leads us to avoid the most important aspects of life, like budgeting.
For many the story goes something like this, “I don’t make enough money to even keep a budget, so why try?” or “I’ll never make enough to afford what I truly want, so I’ll just keep living my life the way it’s going.”
Well, anything in life that’s truly worth it takes a lot of time and effort to create. This is why 70% of people who receive a large amount of money, like the lottery, are broke within a few years… Because they didn’t earn the money, it was given to them… And as they say, “easy come, easy go.”
A budget will help you understand the path to true financial success and freedom because it will give you implementable tactics and steps towards your goals. You’ll understand how much money you earn and where to spend it. As Ramit Sethi says, you don’t have to do the standard “cut back on coffee” method of budgeting… Budgeting doesn’t have to be a chokehold on the things you want in life, it’s supposed to be an eye-opening experience that shows you the capabilities of your current earnings and how to use them to get what you want in life.
It can even show you that you’re not making the amount of money that you’d need to live the life that you want, therefore giving you motivation and fuel to pursue a raise, a different workplace, or getting the education you need to start your own business or change careers. Money will never buy you happiness, but it can allow you the freedom to pursue your dream life and that can make a person truly satisfied with their situation in life.
Use a budget to help you see how many opportunities you have in life, use it to help you manage your spending, and use it to motivate you to learn new skills to improve your earning potential and accomplish your dreams…
3. A Budget Will Help You Have Better Relationships
When you improve your relationship with money, your other relationships have a much larger chance of success as well. At the bottom of Maslow’s hierarchy of needs, is our physiological needs, the need for food, water, shelter, health, and other physiological needs. Next is our need for safety and third is our need for love and belonging. All three of these needs are intertwined with our relationship to money.
If we’re not able to provide for our physiological needs, it’s very likely for people to be reactive and angry. When you’re reactive and angry, it’s hard to maintain good and healthy relationships, even with those we love.
Do you know someone who is obviously stressed by money and is unable to get out of the cycle of stressful living? They get up, rush around the house to take care of themselves and their family, go to work and work long hours(and likely aren’t paid very well), get off work and attend to other needs for themselves and their families and then go to bed, just to do it all over again? Maybe that’s you?
Likely that person is fulfilling the first of Maslow’s hierarchy of needs but it’s not likely that they’re going much past that. In order to live a healthy life with successful relationships, we need to feel safe and secure in our condition of living. When you create a budget, live within your means, and are pursuing a better financial future with conviction while using a budget, you’re able to walk through life with confidence and self-worth. When you have confidence in yourself and self-worth, people will look to you for leadership and security for themselves. In turn, giving you a place of belonging and helping fulfill one of the most important steps in that hierarchy of needs.
This is why a budget can help you create better relationships and have a more fulfilling life. It can help you understand your financial situation and create actionable steps to improve it for yourself and those around you, helping you achieve a feeling of belonging and community.
A budget is a crucial part of success financially, emotionally, mentally, and physiologically… Nobody likes to spend time around people who are constantly stressed out. It ends up taking a toll on the people you interact with and makes you less desirable to spend time around. By taking the time to plan out and implement a budget, you’ll show yourself and those around you that you’re restructuring your value system to one that prioritizes the wellbeing of yourself and others. This will help you in countless ways including, living within your means, helping to understand how to get what you want, and improving the relationships with those around you.
If you take anything from this, it’s that by looking at your financial future and piecing together a step by step plan to attain the type of future that you want, you can completely change the trajectory of your life… all it takes is putting aside some time to create a budget and the discipline to implement and stick to it over time. Do it today and take the chance of completely changing the trajectory of your life and the life of your family.