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How Healthy Budgeting Can Lead to Permanent Positive Change

By Martha Michael

Holiday Budgeting

With rising inflation, gas prices, and a volatile stock market, American families are headed into the holidays without the confidence and security of the past. Santa’s toy bag might be a bit lighter this season, and if there’s little economic improvement, many people may be cutting back in the new year.

Whether you live in the Gilded Age or the Great Depression, a closer look at your spending habits is a way to maintain control over your resources and contribute to your overall well-being.

Getting the Lay of the Land

The average American household spends $61,334 per year, according to ValuePenguin by LendingTree, an online resource providing consumer spending data. With an average annual income of $84,352 it means a total of 82 percent of a family’s after-tax income goes to the main four categories of spending: housing, transportation, taxes, and food.

Housing is the greatest expense for nearly every American. The average cost of shelter is $1,050 per month and includes:

  • Mortgage payment
  • Mortgage interest
  • Property taxes
  • Maintenance
  • Repairs
  • Insurance

Another $734 is spent on household supplies and utilities, including everything from heat and electricity to furniture and equipment.

After making a decision about where to live, most people have little control over these ongoing bills, but your expendable income is where there’s room for change. Whether you’re a fast food regular or prefer to show off your cooking chops at home, eating in or out is more expensive than it used to be, says an article in Forbes. Grocery costs are 13 percent higher than a year ago and dining out has risen by 8.5 percent.

Whether or not a tighter grocery bill will make up for the additional price at the pump for gas remains to be seen, but it’s easy to see that giving up some guilty pleasures for a while can help you rob Peter to pay Paul. If you walk past your coffee pot and swing through the drive-through for a venti caffe mocha instead, you’re probably spending about $15 more per week than you need to -- and double that number if you add a breakfast sandwich to your order.

Money Matters and Your Physical Well-Being

Carving out time to look at your finances will make it easier to stay in the black, which reduces the amount of stress you’re facing. While stress is a natural process -- your body’s response to challenges -- it’s wise to manage its effects, and your spending can play a part in that.

An article in Everyday Health says that creating and following a budget can offer benefits that maximize your well-being. Stress incites the release of hormones to elevate the glucose in your blood and raise your heart rate and blood pressure. Emotional adversity can be triggered by financial stress and set these physical responses into motion.

There are benefits to taking control of your finances.

Fewer symptoms of stress - A balanced plan that predicts a comfortable future is a great tool for peace of mind. When you feel your finances are under control, you typically experience less anxiety, which minimizes the stress response that can cause:

  • High blood pressure
  • Muscle tension
  • Stomachaches
  • Breathing problems

Boosted immunity - When pressures mount, your body responds by moving into survival mode, taking your energy away from key functions such as your immune system. Without strong immunities you can’t fight chronic disease and your digestion slows down.

Fully funded healthcare - Medical problems are the root cause for many bankruptcies and marriage dissolutions, and rising costs require people to work longer and harder than ever before. A customized budget is the structure that allows enough resources to handle the physical challenges that occur.

Better self-care - Like setting boundaries, adhering to a budget means saying no at times. You become less overextended -- both financially and emotionally -- and by setting and meeting your goals and responsibilities you also gain a boost in confidence. By giving your dollars a job to do, it takes the burden off yourself, resulting in greater relaxation.

Practical Advice for Healthy Budgeting

When you sit down with a financial planner, they often begin by instructing you to record every purchase you make for a period of time. It provides a window into where your money is going, which unveils whether or not your spending is lined up with your values.

An article on the website of Western Governors University offers practical tips to gain control of your paychecks:

  • Pay off credit cards
  • Pay off loans
  • Boost your economic potential
  • Create an emergency fund
  • Make a will
  • Organize your financial records

A big part of creating a budget involves communication, according to an article by Ramsey Solutions. By customizing your approach, you feel less restricted and more like an advocate in establishing a future with more freedom and security.

Ramsey has the following tips for household members who want to put their heads together and begin the process of creating a personal budget.

  • Select a method that works for you
  • Discuss your current situation
  • Determine your priorities
  • Communicate with the kids
  • Create your goals as a family
  • Track your progress
  • Meet regularly
  • Adjust your budget when needed

You don’t need to know the difference between the GDP and the CPI to gain control of your money matters. The simple process of creating a budget will tell you if your earnings in the ‘80s were the high point or the best is yet to come.

Taking an honest look at where you are financially is a simple way to offset physical setbacks you can’t control, and by reining in your holiday spending you may find that Peace on Earth resonates with you more than ever this year.

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