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Budgeting is a four-letter word to a lot of people, and for good reason. Budgets have gotten a bad rap for being restrictive, stressful, and hard to track. The phrase “on a budget” has such a negative connotation I often try to avoid it. 

At Hearthstone Financial Coaching, my goal is to help people live a life they truly enjoy and to do that I believe everyone should be “on a budget,” no matter how much they make.

Budgets are about freedom

First off, let’s talk about what a budget isn’t. A budget isn’t some hard-and-fast document that cannot be broken, nor is it a way of limiting yourself. Budgets are about homing in on your true goals (what I call your Hearthstones) and ignoring all the distractions along the way. 

So sure, sometimes being “on a budget” will mean you don’t order the steak, but that’s just because you’re saying yes to that awesome new TV for the next football season instead.

You need a budget to remind yourself of your true values. Without the constant reminder of what you actually want to spend your money on, you will be incessantly pulled to spend it on things you don’t care about. A budget helps to take you out of the moment and gently nudge you in the right direction.

Different Ways of Budgeting

None of this is to say you need to methodically track every single expense. You don’t have to pull out your green plastic visor like a cartoon character counting money, either (although if you want to, no judgment). 

For most people, this method of budgeting is all they’ve ever tried, and that’s why they’ve never stuck with a budget for very long. Every person has their own unique personality and relationship with their money, so every person’s budget should look a little different.

You can track every expense if you want to, or you can just try to keep general categories of expenses around a certain amount every month. You can separate meals at restaurants and groceries into two different budget items, or just budget for “food.” 

I guarantee there’s a method of budgeting that you might even come to enjoy, you just have to play around until you find it.

Tailor Your Budget to You

Too many people think they need to tailor their lifestyle to their budget. While this may be true for people in incredibly dire financial straits, it just isn’t the case for most people, within reason. You may not be taking a helicopter to the Hamptons on a Wednesday, but you can still live a life you enjoy.

Your money should work for you, and that starts with your budget. By getting clear on what matters to you and why, you can build your budget around those Hearthstones and feel as rich as the Rothschilds, right now (okay, maybe not multi-trillion dollar banking dynasty rich, but you get the idea). 

Tailoring your budget to your lifestyle will have the added benefit of making it more likely to stick. After all, if you can still splurge on those candles from T.J. Maxx every month, you’ll be a lot happier than if you try to completely lock down your spending. With a good budget in place, you’ll be able to prepare for the future while still enjoying the present.

Write It Down, Talk About It

This is key. A “budget” that exists solely in your head isn’t a budget, it’s a dream. Whether you choose to use a budgeting/personal finance app, the Notes app on your phone, or just a piece of paper, your budget needs to exist in your physical world. I recommend somewhere you’ll be able to reference it quickly and often, which is why I prefer digital to analog. Plus, spoiler alert, digital really helps with the next step.

You also need to talk about it. If you have a significant other you share finances with, they should be in on the budgeting process. If you have kids who are old enough to grasp it, you can consider talking to them about your budget as well, though feel free to keep it to general concepts. 

No matter what, keep these conversations positive. Talk about how you are budgeting to reach your goals and live a life you truly enjoy. The phrase “I/we can’t afford that” should be deleted from your vocabulary and replaced with something along the lines of “I’m choosing not to buy this so I can go on a killer road trip next summer.”

Automate It

Digital budgets, especially those inside personal finance apps, lend themselves incredibly well to automation. Automation is important so you can take yourself out of the heat of the moment because not only has the decision been made in advance, but the money has already been moved.

You should automate every aspect of your budget that you can to free up mental energy. Have a portion of each paycheck automatically go into savings or set a transfer to happen automatically on the day you get paid if you work for a smaller company that doesn’t allow you to split your paychecks. 

Your bills can also easily be automated, from rent/mortgage to internet to credit card payments. Personally, I like to set these all up to come out of my checking account as close to the first of the month as I can, so that I know the money I have from then on is for the rest of my expenses. If you can’t automate all of your bills due to risk of over-drafting, that’s perfectly fine. Start with smaller bills, and gradually add more bills to auto-pay as you get on more solid ground.

Recruit Those Close to You

Your budget could fail because of ingrained habits or social programming, but it could just as easily fail from peer pressure. If you don’t talk to your close family and friends about your new lifestyle, they won’t know. In general, people close to you want to help you in whatever way they can. Use that to your advantage. 

Don’t make this conversation super intense, and it’s okay to leave numbers out of it. In fact, if you show up with a spreadsheet, you’ve gone too far. Keep it light, and again keep it positive. You are building a new way of life for yourself where you won’t have to stress about money anymore, and negativity will only set you back.

People are still going to ask you to do things (again, these people like you), and in all likelihood, those things will cost money. Instead of constantly turning them down because “I can’t afford it,” suggest free or cheaper alternatives and remind them how excited you are for your goals. Also, just say yes every once in a while. An extra $20 on a great dinner with amazing company isn’t going to destroy your budget, I promise.

Focus On the Present As Well As the Future

Most budgets are entirely future-oriented. Sure, they’re about how you’re spending your money right now, but they don’t actually care if you enjoy the present. Slashing your fun to zero so you can not have a mortgage 13 years from now instead of 17 years from now is an admirable goal, but also a recipe for disaster if you aren’t careful.

Humans are wired to avoid pain at all costs, and a budget that doesn’t allow you to enjoy your life in the present is nothing but pain all the way down. Build at least a little bit every month into your budget just to spend on fun things, and then actually spend it. 

I always make sure I have money in my budget to pay for coffee shops (yes, I spend $4 on a latte. No, it won’t break your budget and wreck your future to do so) and my Spotify subscription. Outside of that, I budget about $50 a month in a category I just call “Fun Money,” and spend it on whatever I feel like that month.

A budget that lets you enjoy your life now is a budget you’ll stick with, and it’s better to make slightly slower progress forever than to get burned out and give up after a few weeks.

Let Your Budget Change

Using a budget from 5 years ago doesn’t make any sense. Your situation changes, costs change, and most importantly you change. Allow your budget to change alongside you. As you reach goals, set new ones. As you develop new Hearthstones and let go of old ones, allocate accordingly. 

Your budget should probably even change on a month-to-month basis to reflect where you are and what’s important to you. Don’t be afraid to tweak your budget in the middle of the month if you realize something is off.

Just as important, forgive yourself when you don’t stay on budget. It happens. Evaluate where you went wrong, determine if your budget or your spending is the thing that needs to change, and then fix it. 

Conclusion

I hope you’ve discovered at least a couple areas where your thoughts on budgeting could use a little updating. Setting and sticking to a budget shouldn’t be stressful. Your budget is your roadmap to achieving your goals and living a life you enjoy.

Not sure where to begin? Tried before and always came up a little short? Schedule a consultation today and let’s talk about it.