Guilt is the reason I have never jumped on the budgeting bandwagon. I’m quite skilled at making myself feel bad if I deviate from a plan, so putting exact dollar amounts to spending categories gives me nothing more than anxiety – especially when I start looking up budgeting best practices.
There seems to be a general consensus in the personal finance world that X percent should be spent on housing, X percent on utilities, and preferably 0% on eating out and coffee to-go. I even tackled this topic in a blog post I wrote a few years ago. But since then, I’ve learned something about myself – I’d much rather eat out than clunk around in the kitchen, and I really enjoy my coffee splurges.
Before you start to think I just toss money out the window left and right, let me propose something outside of the rigidity of the term “budgeting,”: spending with intention. I’ve learned that Suze Orman’s idea of where my money should be going just doesn’t fit with where I place value in my life.
My car is eight years old and I’d much rather watch it deteriorate than buy something newer and nicer. I pack my lunch every day because if I’m going to spend money on a meal, I’d rather have it be an event with friends or family. I currently live in a low-cost area because a small uptick in gas doesn’t even compare to what I save on rent.
Instead of paying for what my salary dictates I can afford in these areas, I probably spend more than most on what matters to me: regular dinners out, concerts, and the ability to travel when and where I want when the opportunity arises.
These are all areas where I place value.
So if you're sick of the regular, one-size-fits-all budgeting mentality, try this.
Drop the shoulds
You should be saving. You should be spending less than you earn. You should drop all frivolous spending.
This we all know. Whether we gathered these lessons from our parents or society as a whole, these generalities should go without saying -- but they don't. When we seek information about money and finances, these "lessons" are shared over and over in different words with different examples in different venues.
Shoulds are exhausting. They aren't motivating or inspiring, or even interesting enough to listen to. They often come paired with shame -- shame that we aren't doing better, shame that we haven't made more forward progress. And shame makes you want to crawl into a hole, not think of new and creative ways to make a money management plan -- or budget -- that works for you.
So let's start by dropping the shoulds.
Consider how you like to spend your time
The top three ways I enjoy spending my time is traveling, spending time with friends and family, and going out for meals. If I could spend every day doing one or more of these things, I would be in a constant state of fulfillment. My spending should reflect that.
When I go to make a purchase, one I know is not essential, I consider where I might be pulling that money from and whether it's adding to my overall fulfillment or taking away from it. It's an either/or proposition and it's up to me to make the decision.
If I followed someone else's budgeting categories and spending limits, I would be spending more on things like transportation and housing than what actually makes me happy. And for what?
How you spend your money should always be a strong indicator of what you value. Is yours currently doing that?
Re-frame your thinking
If someone were to tell me I shouldn't eat that piece of chocolate cake because I've gained weight, it would do nothing more than make me extremely preoccupied with thoughts of that cake. The cravings would be relentless.
When we're faced with the prospect of denying ourselves what we really want, we become obsessed with it. And, unfortunately, willpower is not something we are innately born with.
So the thoughts associated with budgeting -- those focused on lack and denial of what you want -- need to be shifted into something that makes you actually feel empowered by the money management process. You are are deciding where you want your money to go so you can live the life you want. It's about cutting back on things you don't care about and funneling that money into things you actually value. What a concept, huh?
In honor of Financial Literacy Month and financial empowerment, where could you cut back in order to spend money where you want?