Budgeting: How to be Successful at it
One of the most important things in life is learning to be organized when it comes to handling money. Having a budgeting plan is essential because it may help you prepare for emergencies, avoid being in debt, or be able to make important purchases. However, telling people to budget can be easier said than done. Budgeting can become difficult to achieve because it can be quite a challenge. Sometimes, people have no financial motivation, and this causes them to be irresponsible with their money. To be successful in budgeting, you need to think about ways you can prevent yourself from struggling financially.
As stated, budgeting is not something that can be achieved right away, therefore small steps are the best way to get started. To be successful at things, you will not see a major change in one day; it takes time. Budgeting is all about learning how to manage your money wisely, and that can be quite complicated when you are used to spending all the time. Budgeting is something that should be a priority because it prevents financial problems in the future.
One thing you could do is make a list of all your monthly expenses, then, you can start to set money aside for one of those expenses. For example, if you want to set money aside for transportation, you can start by saving twenty dollars from each paycheck you receive from your job. Something else you can do is have different jars, and each jar can be labeled for expenses, and you can decide what amount you want for each jar. You can have five different jars labeled as phone bill, electricity bill, subscription bill, internet bill, and credit card bill. Being organized in budgeting is beneficial because it allows you to keep track of your expenses and when payments are due.
The article, Mental budgeting and the malleability of decision making, explores how college students face financial difficulties. Lack of information about managing money can create issues, such as giving in to the want to buy needless discounted items or making choice excuses. The study's objective was to comprehend how choice-making and buying on-sale items are influenced by mental budgeting. In the investigation, two experiments were conducted to describe choice justification and two others to explain the reaction of discount (N (total number of participants)=169 in Indonesia and N=168 in China). The results show that when offered a good deal on a luxury item, consumers will give in to temptation and buy it. They do this action in order to avoid losing out on the opportunity to get such items for a bargain. Additionally, when given choices that match their physiological needs, people will use choice rationalization (such as eating). Therefore, everyone needs to understand the concept of mental budgeting and develop trustworthy financial plans. The failure to repay credit or loans or budget gaps are two effects of financial difficulties. This happens as a result of students' difficulties in creating sensible budgets, prioritizing their requirements, and keeping tabs on their spending. Many people have trouble controlling their finances for spending or saving due to a lack of awareness of mental budgets (Elgeka et al., 2020). For this study, two hypotheses were made. First hypothesis: When discounts are offered, people who have practiced mental budgeting will be more considerate of their spending limits. The second hypothesis holds that those who regularly budget their money will avoid choosing wants. In one of the experiments, 100 students from the University of Surabaya (Indonesia) served as the subjects; 99 participants underwent analysis because one did not finish the job. Participants had to be between the ages of 18 and 25 and be enrolled in college full-time in order to meet the selection requirements. A paper and pencil questionnaire was used to conduct the experiment. The subjects were split 50-50 in gender, with an average age of 19.95 (Standard Deviation=0.89). Adapted from Tversky and Kahneman (1981), the book and T-shirt problem example was employed for the experimental design. In two case versions, the subjects were randomly assigned. In the first scenario, students were expected to purchase inexpensive books and a luxury t-shirt. In the second scenario, they were required to purchase pricey books and inexpensive t-shirts. It was concluded that even though the reduction in price was 33.3%, this result supports the prospect theory's argument that most people are more likely to accept a discount or price reduction at a high price (expensive) than at a low price. Having realistic budgets will encourage people to care about their future spending habits (Elgeka et al., 2020).
It is ironic that the people who do not come from wealth, spend the most. Of course, there are some wealthy people who love to buy non-stop, and that is because they never have to worry about running out of money. However, even if people do not come from wealth, that does not stop them from spending a lot of money. Mostly everyone has made purchases that were unnecessary, maybe in the beginning they thought to themselves a product was really cute or amazing, but once they bought it, they ended up regretting it because they realized that it did not do any good for them, such as a person buying a facial lotion but that lotion made no significant improvement, or a person buying a notebook to write in it but then that notebook is forgotten about because that person has no motivation to write in it. The emotional responses that drive compulsive buying, such as depression, anxiety, or boredom, provide momentary pleasure and enjoyment when shopping, but are then accompanied by regret, guilt, and shame (Labito and Supramono, 2017). Lack of perseverance and urgency to buy things can distract a person from their financial goals.
Consider some alternatives for controlling your money. One thing people can do is bring a little amount of money when going out or trying to minimize time spent with their outgoing friends (Labito and Supramono, 2017). Also, you can find cheaper plans for subscriptions, such as paying an amount you can afford for a music subscription, or going with a phone plan that is within your budget; you can also turn to services that are free but have excellent results, for example, if you want to see a movie, you can search up the movie online for free, and you are going to get results, there is no need to pay to watch it. Apps like Tubi are free and have thousands of movies, but just make sure they are not fake movie streaming websites. There is no doubt that budgeting is worth it. One main reason budgeting is essential is because it teaches people valuable life skills, it can help college students prepare for their careers or help couples who want to be parents have everything they need to take care of their children.
One may assume that wealthy people do not practice budgeting, and that it should only be applied by those who are irresponsible with their money. However, even wealthy people decide to budget because they want to be prepared if there ever comes a time that they go into debt or go bankrupt. No matter how much money a person has, budgeting will benefit them incredibly.
*Edited by Samuel Jaffe
Works Cited
Elgeka, H. W. S., & Ma, J. (2020). Mental budgeting and the malleability of decision making. Psikohumaniora: Jurnal Penelitian Psikologi, 5(2), 139-154.
Labito, A. M. (2017). Can Allowance, Personal Budgeting and Self Control as Mediating Role Manage Compulsive Buying Behavior Among College Students?. International Journal of Social Sciences & Educational Studies, 4(3), 1.
