Benefits of Budget Making

Economics: Lesson 25

“How does making a budget reduce impulse buying?”

Buying and shopping is an activity everyone enjoys, whether that means actually going to a store or ordering online. It is a positive sanction, for when you go out shopping you are getting something in return, and that is the items you bought. However, shopping and impulse buying can lead to negative sanctions when you don’t plan for what you are buying. Someone who is not used to controlling their impulses is more likely to have less money to spend or even debt rather than someone who is careful with their spending. This is why a budget is a very useful tool for those who struggle with impulse buying.

The first way a budget can help reduce uncontrollable spending is by allowing a person to see the whole picture; how much they actually have and how much they spend each week or month on average. By budgeting, a person can start differentiating from necessary costs and expenses that were not necessary. Expenses such as rent, groceries, gas bills, and car payments, are all unavoidable costs that have to be paid by a certain time, and knowing exactly what those expenses are make a person set aside a specific amount of money that will be used for those costs. The same goes for expenses you want to make. After the necessities have been paid for a person can see how much money they have left to spend on those impulse purchases they desperately want to make. In this sense a budget restrains people from over spending on the impulse purchases and focus on what needs to be paid for.

A second way budgeting reduces impulse buying is that it forces a person to narrow down their list of items they want. Once a person knows they can’t buy anything else for that week or month, they make a list of all the things they really want to buy. But impulse buying often involves items you only want that moment and not something you truly have wanted for a long time. So, by the time a person is able to spend a bit of money on what ever they want, they will have forgotten or not want those items that meant nothing a few days ago. Now a person can spend their money on something they will enjoy for a long time.

The third way that budgeting reduces impulse buying is something I slightly touched on before, and that is practicing self-control when it comes to shopping. If practiced long enough it becomes a habit to not purchase what ever your heart desires at that moment, and it is a good habit that can follow a person the rest of their life. A person who starts off being an impulse buyer can end up someone with savings, a comfortable life, and yet still have a bit of money to spend on those items that makes them happy. A budget is not just a good practice it is a necessity for those who want to have complete control over their money for the rest of their life.

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