by Katerina Nikolas

Created on: September 02, 2010

For centuries people have had to budget their money to live from week to week. It is still second nature to people across the world that have lived through frugal times and in less materialistic societies than America. Knowing the value of the cash in your pocket and paying the necessary expenses first is key to survival in many countries, where the credit epidemic never struck. However many Americans have lost the basic skill of budgeting by utilising borrowing to obtain things they could not otherwise afford, and failed to grasp the importance of living within ones means.

There are so many pros to budgeting and the only con appears to those used to spending beyond their means, as budgeting equates with less spontaneous spending and ease of gratification. Yet there can be far more satisfaction in saving up for the things you want and being able to pay for a purchase in cash without the anxiety which borrowing and paying interest brings.

When you live on a budget it does not mean living in deprivation, but rather frees up more of your disposable income to be used wisely, as opposed to servicing debt. Whilst a mortgage is an inevitable debt for those who aspire to own their own home, it can still be reduced quickly by the use of sensible budgeting and thus save thousands of dollars in the long run. Any money saved through wise budgeting can be utilized for emergency savings which in turn alleviates the stress of wondering what would happen in the case of a sudden illness or bout of unemployment, and provides the security of a financial cushion. Budgeting also allows for saving for the things which bring pleasure such as vacations.

Those who are new to the concept of budgeting by necessity rather than second nature can struggle with the concept and suffer from feeling the change in their lifestyle. It can appear hard to suddenly curtail the practice of eating out in favor of cooking at home, but once it is accepted the benefits can be appreciated. They can feel deprived when no longer able to just scoop up the latest fashion or designer shoes, but in time will perhaps realize the label wasn’t worth the price after all, as they learn to appreciate the actual value of money.

Old practices such as bartering can be revived to ease the cash flow and satisfaction attained from obtaining the best deal by shopping round. The biggest bonus of wise budgeting is the chance to live totally debt free, which many will appreciate the security of after suffering the financial jolt the economy has brought. Some will never be happy being curtailed by a budget which curbs their spending powers, but those who adapt to it will begin to do it as second nature and thus only obtain the benefits.

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