Your financial system is based on the lifestyle you choose to lead: who you want to be and what outcomes you want.  A financial system is a set of steps and principles, including roles and responsibilities and time-frame to manage your household financials.  The steps and procedures of your system are often based on your habits and less-noticed aspects of your personality.  Your tools are whatever products or systems help you live that lifestyle. Many people say they can’t “stick to a budget,” when what they really mean is they don’t want to adopt the behaviors and habits of a person who budgets.  That is, their identity for whatever reason, is one that does not want to strictly categorize expenses. Although there are a variety of tools that enable you to have flexibility within your budget, the concept of reviewing your expenses and considering how, why, and what is involved with your money management may seem tedious.  

Behavior Modification Before Budgeting

Dave Ramsey is one of the best known voices offering hope to countless people struggling with debt.  He has a popular method that uses 7 Baby Steps to become financially healthy:

1. Save $1,000 toward an emergency fund
2. Pay off all debt but your home
3. Save 3 to 6 months of expenses
4. Invest 15% of your income into retirement
5. Save for your kids college education
6. Pay off your home mortgage early
7. Build wealth and give generously

The Dave Ramsey method teaches behavior modification, not budgeting.  And that’s precisely why so many people find the method a successful system.  People look to the Ramsey method with the goal of living a debt-free lifestyle.  When they purchase materials, listen to podcasts, join Facebook groups, they are buying into a particular lifestyle based on low or zero consumer debt.  Dave Ramsey uses an approach to paying off consumer debt that won’t match conventional wisdom: he says to pay off lower interest/smaller amounts of debt first.  In fact, I have argued for the exact opposite. However, Ramsey’s approach works extremely well.  Why?  Because when you see you can accomplish paying something off it reinforces the behavior of paying off debt, and builds an identity of someone who is living a debt-free lifestyle.  When building a habit, you need to make it relatively easy to start.

Financial Behavior vs Financial Tool

If you are struggling with a budget, or a particular tool, chances are it’s not because the tool is the problem.  The problem is that the tool does not fit your lifestyle, or that you are not willing to make behavior modifications to live a lifestyle that will accommodate that tool.

My husband and I have a healthy distrust of online financial tools.  We take hacking and identity theft seriously. When we discussed finally adopting a different financial tool, our biggest behavior modification was that we would need to routinely provide our bank information to another financial system.  The problem was not the tool. The problem was our identity. Our identity was distrustful of any financial tool, system, or service that required a feed to our bank accounts. We are still deciding how much we want to rely on a system that could be hacked.  Because we are distrustful, and also enjoy a heavy dose of do-it-yourself, it is difficult for us to adopt a new tool even if that tool would help us a lot. Our lifestyle is based on who we want to be (distrustful, DIYers) and the outcomes we want (safe from hackers), and these compete with our desire to be efficient.  Our behavior is hard to change, because we aren’t sure we want to give up key parts of who we’ve also believed we are. The problem is not the online financial tool, but our behaviors.

Using Mindfulness To Ease Into Financial Behavior

If budgeting seems agonizing, you could try incorporating mindfulness into how you use your money.  I use this trick quite a bit. I often pause before making a purchase, and ask “why am I doing this?”, and the follow up question is “how does this help me now. . . and in the future?”  These questions are at the heart of a budgeting, after all. They touch on concepts of values and when incorporated into your system of financial management bring you into a habit of evaluating your purchases.  Once you develop a habit of evaluating money, it is easier to develop a habit to use a variety of financial management tools, such as a budget tool. If you want to adopt the behavior of someone who manages money, simply incorporating the habit of evaluating a purchase will help you enormously in adapting your lifestyle:  you are adopting the overlooked key to success with money.

Of course, you don’t have to use a budget.  It is just a tool. Many people save and invest without a budget, but most people do benefit from some standard review of income and expense.  If you are wondering why a particular tool is hard for you to use, consider thinking about your lifestyle – who you want to be and what outcomes you desire.  You may find a clue to what drives our behaviors that will help you get closer to a system or tool that works for you.

Photo by Zachary Domes on Unsplash

1. You can read more about system and tools: The Difference Between a Financial System and a Financial Tool
2. For my take on paying of debt, check out: Why I Wish I Hadn’t Paid Off My Educational Loan