Most people have that friend who always seems to have more spending cash than average, despite a low paying job. One may wonder how this individual manages to keep above water in an ever inflating economy. Is he magical? Does she have a rich uncle nobody knows about? Is she secretly a stock market genius with high yielding accounts? Has he maxed out all her credit cards with cash advances or loans? While this phenomenon might seem too mystifying to be explained in realistic terms, more often than not this friend is simply a great budgeter.
Budgeting isn't necessarily self-depravation. Believe it or not, a person can have a great, rich life on a budget. With an ounce of self-evaluation and a dose of planning, a person can learn to be that friend with the extra cash, rather than the friend with the extra debt.
Without over generalizing, there are two main types of consumers: those who buy things and those who buy experiences. Most likely, your super-savvy friend is the latter. People who value life experiences over material things tend to be more budget-minded than those who value material things. One may ask why, when considering that experiences are often just as expensive as objects. The answer is simple: many experiences, such as traveling, large dinner parties with friends, or concerts, require planning. This isn't to suggest that those who love experiences never take out cash advance to finance a spontaneous trip to Europe or to purchase over-priced Radiohead tickets on eBay; however, by and large, most people plan these types of events because planning is half of the fun. The anticipation of events is what stimulates these experience minded individuals: they value the journey and the destination. And, luckily, planning is the key to maintaining a realistic budget and still having a high quality of life.
Furthermore, people who value experiences above things generally have longer-term vision. This might mean that those who do indulge in the occasional cash advance will be more inclined to pay it off quickly, as more adventures lurk on the horizon and debt might hinder these plans.
In contrast, people who like to buy things are more at risk of blowing their budgets due to the immediate availability of said objects and their impulsive habits. It is all-to-easy for a person to visit a payday lender on the way to the mall, knowing that all those shoes are just waiting to be bought. The purchase of things is often a far more impulsive act, and far more damaging to one's budget. Impulsive spending and a focus on wants over needs are the two biggest budget-busting habits. Additionally, impulsive spending is often over-spending, meaning that paying off the debts acquired in these acts is frequently incredibly difficult.
Ultimately, budgeting takes effort. It takes time and discipline. And, it takes a great deal of introspection. Budgeting requires an individual to stop and think: what makes me happy? What do I need to maintain the life-style that I desire? Why am I compelled to buy this vase when I know it will sit in my cabinet with the other six vases I simply had to have?
Questioning one's self about wants and needs and tapping into the dreaded 'why' behind each purchase is the first step to finding financial stability. Living well doesn't necessarily require a big paycheck, and it certainly shouldn't be dependent on payday loans and credit cards: living well requires planning, a little discipline, and a lot of self-awareness.