The personal budget is the holy grail of financial planning. Since this article is going to run a bit counter to some of what you’ve been taught, let me state up-front that, yes, budgets can be an incredible tool to support you in aligning your finances and goals. I use the zero-based budget method, and am a big believer that numbers are vital to getting a grasp on what you are doing.
That said.
You need more than a budget. People come to budgeting expecting a lot more out of a tool than it can possibly give them. A budget won’t tell you what makes you feel happy. A budget won’t simplify your spending. A budget won’t tell you when you can retire. A budget doesn’t make decisions for you. You make decisions for you.
A budget is a tool, not a magic wand. You bring the magic.
Your personal decision-making is vital to the budgeting process, but many women and men spend their time focused on pre-set budget categories, rather than the areas that mean the most to them. When I downloaded a budget template years ago, the first thing I did was get rid of half the categories/line items. Over the years, I’ve added a few on, but I’ve chosen to get rid of even more for our household. Our savings has consistently increased, while my financial tracking has decreased.
Why?
I honor the areas of spending that are important to me. My spouse honors what is important to him. We have some joint areas we focus on. We don’t spend on any areas after that. We use our money to focus on what we value, and what makes us feel incredible. Our personalities and interests bring the magic to financial management, not the budget.
A great deal of frustration would be saved, if we stopped looking to a budget to do work that only we can do. You have not only the right, but the responsibility, to put your money on the areas that matter the most to you. Here’s the problem. Most people treat a budget like a diet, rather than a practice. A diet may have a place in your life, but few people will want to spend their life on a diet, and most people won’t make it past week three. The reason is that they haven’t done the pre-work of figuring out the main areas that make a difference to them, and focusing just on those areas first in developing a budget. If you aren’t honest with yourself in what you really value, you risk creating a budget according to someone else’s priorities, and develop a plan that you will never adhere to.
If you are crystal clear on the picture of what makes you feel incredible, budgeting will become a reflection of that. A budget is a tool to support the decision-making you’ve made previously. No template can figure that out for you. Only your personal decision-making will enable you to align your values and money habits.
The budget is the tool. You bring the magic. Time to start using it.
Interested in more support in developing personal decision-making to getting your money habits in line with what matters most to you? You can check out more information about my programs and coaching at The Value & Invest Academy. You can always send me a message directly here.
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