How To Budget For People Who Hate Budgeting
Budgeting. When you read that word, did you flinch, squirm or inwardly groan? If yes, you’re not alone—although the vast majority of Americans budget, people seem to really hate the process. (Maybe that’s why they pay budget analysts—people who help public or private institutions organize their finances—so well, an average $71,590 in May 2015.)
“We think of budgeting as, usually, an exercise in feeling deprived in one way or another,” says Sarah Newcomb, behavioral economist and author of Loaded: Money, Psychology, and How to Get Ahead Without Leaving Your Values Behind. “[Instead] we need to think about it is less like a diet and more like a map. So much of the way we feel about things is how we’re framing it in our minds.”
Whether you’re now budgeting reluctantly or not at all, it’s a hurdle that pays to get over. Research studies suggest there’s a strong correlation between tracking your money and overall financial health, says Newcomb. Here are a few suggestions.
Try an alternate to the “wants vs. needs” mentality.
Some say the first step to budgeting is learning to separate your wants from your needs, but Newcomb disagrees. Let’s say you’re buying a magazine — there’s a need you’re trying to meet with that purchase, like finding answers to feeling stronger or more beautiful. The magazine itself is a want, but there’s usually a deeper need motivating the action. Not acknowledging that could mean cutting expenses but ending up feeling deprived, since the need doesn’t just disappear. Coming up with a way to meet those needs without spending as much is a much more palatable solution.
“We need to know the difference between a need and a strategy for meeting that need,” says Newcomb. “You might think you need a new outfit for a first date, but no, you need to feel beautiful or to feel confident and like the best version of yourself. The new outfit is one strategy for meeting that need.” Instead, try raiding your most fashionable friend’s closet for something to wear on the big night out.
Say yes instead of no.
The way typical budgets are laid out, added income appears on one side, subtracted expenses on the other, and at the bottom is the number you’re saving. Newcomb suggests thinking of that number, whether positive or negative, as your change in net worth for that month. It could help you connect short-term, day-to-day thinking with the long-term.
If you incorporate that idea and try to make that number positive or higher, you’ll naturally need to say no to certain potential expenses. But instead of thinking about it that way, think about yourself saying yes to something else. “[Tell yourself], ‘I’m saying yes to feeling more powerful. I’m saying yes to being the person that my friends come to for financial advice,’” says Newcomb. “You’re saying yes to feeling more in control of your life, [to] not wondering if you’re going to have an overdraft fee, to knowing that if your car breaks down, it’s not a problem.”
Think about what it is you want.
Throw the word budget out entirely at first, and think about what you want the most, suggests Jesse Mecham, founder of You Need A Budget. A vacation? What kind? Where? Create a vivid picture in your mind, then go back to what’s required to make that happen, like how much you need to save a month. “Frame it as something you want to have,” he says. That could cause you to cut back naturally on things you don’t attach as much significance to. Another tip? “Deciding what jobs you want your money to do before you even start thinking about the money itself,” says Mecham. After you’ve laid them out, you can figure out how much money to assign to each of those jobs.
Know it’s okay to change your mind.
Let’s say six months ago you decided scuba diving was your new gig. You saved money for it, bought the gear and now — well, you’ve realized you’re not as passionate about the sport as you thought. It’s okay to change your mind — and your budget. And you don’t need a crystal ball. “You can change your budget for whatever you want, for whatever reason you want,” says Mecham, so don’t let that deter you — life happens, things change and your budget changes with them.
“It’s like a coach making halftime adjustments,” says Mecham. “They have a plan… and then as soon as they see how the [other] team is playing, they get into halftime, gather the team around and say, ‘Hey, we’ve got to change our game plan a little bit.’”
This article was originally written by Jean Chatzky for SavvyMoney®.