Home      Intro      Education Series      Advanced Topics      Blog      Giving Back     Services

Overcoming the Budget Blues

I recently taught a class about budgeting.  When I mention the word budget, most of the class rolled their eyes.  Budget might as well have been a four letter word.  Many people have a negative connotation about budgeting. Some of the reasons and beliefs for this negative thinking are:

  • There is never enough money
  • I do not know how to do a budget
  • I do not have the time to do a budget
  • I can do a budget for a few months, then something happens (unexpected expense) so why try
  • I do not want to know that I am spending more than I am earning

So if you have these budget blues, what can you do about it?

1) Reframe the Term Budget

As mentioned above, people think of a budget as a four letter word.  Many think a budget is about what they can not spend.  Rather, a budget is a plan of what you can spend.  A budget is meant to change unconscious decisions on where you spend your money into conscious decisions.  Instead of letting money slip through your fingers for example by making frivolous purchases (e.g. purchases that you never use), it is about making purchases designed to bring you more happiness (see Do Not Give Up Your Latte).  The key is to stop thinking about a budget from a term that limits your spending to a term that creates your prosperity.  So in reality a budget is a Prosperity Plan or Spending Plan. 

Budget is designed for you to start taking control of your money instead of money controlling you.  If you feel powerless about what you can not afford because of the economy, then a budget is the first step in regaining control of your finances.  You can continue to blame the economy for your issues or you can take action by creating a budget in order to start controlling the portion of your life that you have control over (what you spend).

Some people find reframing how they view money useful as well.  Some people have a negative belief about money that it is bad or can lead to greed and/or corruption.  Yet, if you think of money as a piece of paper (an IOU) used to barter with, then a budget is more of what I can do (e.g., work) in exchange for what I want.

2) Move Through Your Fear

One reason for not doing a budget is due to fear which can include not wanting to see if you are spending more than you are earning.  The key to fear is to understand that fear will always be there.  It is what we do with fear that is the key.  As F.D.R. said,

There is nothing to fear except fear itself.

So, if you fear your budget, recognize that you have fear and move through your fear anyways.  If you let fear stop you from moving forward, then fear will win.  Thus, as F.D.R. said, the only reason to fear is if fear stops you.  By doing a budget, the facts of what you have spent will not change, just how you look at the situation will change.    Fear can only stop you from changing your future for the better by avoiding a budget.

3) Let Go of Resistance

Resistance is the excuses for avoiding a budget such as saying I do not have time to do a budget or I do not know how to do a budget.  In reality, everyone knows the basics of a budget (e.g., a list of income and expenses).  People though may not know all the tricks in doing a budget which is why we have books and internet for resources to help (for more information see Budgeting Basics).  So the information is there, it is more of a question of willingness to find and use this information.

Many people would rather work a few extra hours of overtime to pay their bills than take a few hours to do a budget in order to save money so they do not need to work extra hours.  Sometimes doing a budget will provide more money than what you can earn by working a few extra hours.  So why do people have an easier time working than doing a budget?  Resistance.

The key is to know that the outcome will benefit you and will not harm you because you earn what you earn and have spent what you have spent.  A budget helps you by taking control of your spending by making spending decisions more conscious.  I have had students tell me that by doing a budget they have found that they are holding on to their money better because money is not disappearing out of their wallet anymore.  Thus, there is nothing to lose and so much to gain.

4) Set a Goal

Part of resistance is being worried about what the outcome will be.  Setting a goal of what you want the outcome will be will make it easier to move forward towards your goal instead of resisting.  The important parts of goals are:

Have it be realistic (if you do not believe that the outcome is achievable, then you will not make it happen)

Have it be simple (do not have too many goals that stretch you too thin; concentrate your energy on a few specific goals at a time)

Have it be meaningful (what is it that you really want and why is it important)

Goals should give you a clear picture of what life will be like when you accomplish it.  For example, a goal to be a millionaire is very popular today.  Yet, it is important to find out why you really want to be a millionaire.  Is it to be debt-free from the rest of your life or is it to give you more peace of mind?  Is it to be able to travel and spend time with the grandchildren in retirement?  If so, have a clear picture of what it will be like (e.g., sitting out on the beach or playing with your grandchildren).  Thus, you have a clear picture of what you want which will help you overcome the wanting to quit work when you are working overtime to put the extra money into savings to achieve your goal.

5) Differentiate Between Need & Want

During the first budgeting class that I thought, I had student say that she had listed all of her expenses yet there was nothing there to cut (she ad no wants only needs listed).  In addition, her expenses were $100 more per month than her income.  I simply asked her to review her budget again to make sure all her expenses were really needs.  Needless to say within 15 minutes she was able to identify $500 of wants that she could cut.  Part of this was her resistance in not wanting to take control of her budget.  The other part is that people tend to confuse needs and wants.  In reality, we need only the basic food, shelter, clothing and few other items.  Yet, food, shelter and clothing are both needs and wants.  The need part is the basics such as rice and beans for food, a basic one room apartment (shelter) and a sweatshirt and pants (clothing).  Everything above this is a want.  It is not bad to have wants or to spend money on wants.  Yet, you can not prioritize your wants (to figure out which ones you want the most) if you are classifying your wants as needs.

It is also important to identify your true wants that you get from material objects.  For example, a student said that she really wanted to buy her granddaughter a matching dress (to her dress) for the times when they go out for the day together.  Yet, in looking at the true want, it was spending the day with her granddaughter while the dress was something that she thought she needed to.  She found out she could have her want (time with granddaughter) without needing to buy her a new dress each time.

6) Practice Gratitude

In the first step, I discussed reframing how you look at a budget.  Gratitude is one way of doing this.  Be grateful for what you have instead of being disappointed for things you can not afford.  So each week (or each day) make a list of things that you are grateful for.  In doing this list, get past the material objects and get down to the reasons why you are grateful.   For example, you may be grateful for your house because it provides a sense of safety, security, peacefulness.  I emphasis this because you may lose your house in a fire or for other reasons (like a hurricane).  Yet, safety, security and peacefulness can be attained through other means other than specific possessions.  If you lose the house, it may seem like the end of the world, unless you know that safety, security and peacefulness can be obtained via other means.

7) Monitor

One reason why people do not follow through with a budget is due to focusing on negative outcomes more than positive outcomes.   It is easy to focus on the negatives in life (e.g., not having enough to money to pay the bills, rising gas prices, etc.) and it is typical to overlook the successes such as saving money from not eating out as much.  Reviewing your budget from time to time (e.g., monthly) can give you clarity on what areas you are improving on and on what areas you still need improvement.  It also is an easy way to see all the things that you were able to afford (things to be grateful for).

8) Leave a Little Extra Room

In doing a budget, it is inevitable to forget or to underestimate an item.  For me, I forgot to add a line item for books and toys for our newborn son to our 2006 budget.  For others, it may be forgetting to increase their property taxes for a recently passed tax levy or to having more repair bills than anticipated.  Having a little extra room in the budget can ease these issues (up to a point).  So when an extra required item comes up that was not in the budget, there is a little left over money to pay for it.  If unexpected items do not occur, then there is more money for savings, something that many can benefit from.  When unexpected items pops up and there is no room in the budget, then a person will need to choose to:

  • Do without (which may not be an option especially for gas prices and taxes)
  • Cut savings (if there is any)
  • Cut back somewhere else
  • Incur debt

Either way, it will probably lead to the budget blues unless you have a little extra room in the budget just for these circumstances.  However, many budgets are so tight, the littlest hiccup will disrupt the whole delicate balance that people try to maintain while living on the edge.


Topic Menu

The material on this website is provided for educational purposes only.  We make no guarantees regarding the accuracy, completeness, or applicability of any material presented on this website.  This website is not a substitute for individual financial or counseling advice.  You should seek the advice of a professional regarding your particular situation.  My Financial Awareness is not responsible for any losses, damages or claims that may result from your financial decisions.

Copyright © 2008 by My Financial Awareness, L.L.C.
E-mail questions and comments to pete @ myfinancialawareness.com