One of the most feared and dreaded words in the English language: budgeting. No one likes to do a budget, and even fewer people actually put pen to paper or finger to phone to actually do a budget. There are a lot of reasons for this, but they can all basically stem down to the fact that most people think of a budget as restrictive, confining, and prohibitive.
Psychologist and Certified Financial Planner, Brad Klontz puts it best. “I think the entire concept of budgeting is flawed. Your emotional brain responds to the word budget the same way it responds to the word diet. The connotation is deprivation, suffering, agony, depression.”
A budget should not be thought of in that manner. A budget, although seemingly restrictive at times, should be thought of as freedom to spend. The dollars are simply accounted for before the month begins. Here is a little bit about the psychology of budgeting. My hope is that if you understand how to better think of a budget, you will be more likely to actually complete them on a regular basis and become more fiscally fit.
“Budget” is Not a Four-Letter Word
A budget is not a restriction of your spending. A budget is permission to spend.
A budget can help you allocate your money to what is most important to you. If that means that you like to eat out five days per week, that’s okay. Just budget for it. (But seriously though, that is a lot of eating out.)
Speaking of eating. A budget is kind of like a diet. Both words have negative connotations. Both words make us think of pain. But at the same time, both words are synonymous with being healthy.
A budget will help you allocate your money for your needs and wants so that you can begin to save money and not spend frivolously. Likewise, a diet will help you cut down on the amount of fat and empty calories that you eat so that you can lose weight, lower your blood pressure, and fit into those pants that have been in the back of your closet for three years.
A better word for a budget might be a “spending plan”. The same is true for a diet. A better word for a diet might be an “eating plan”. Don’t think of budgeting and dieting like you will never get to eat your favorite food or touch an ice cream sandwich ever again. Just think of it as a plan to spend your money and a plan to eat.
You can still spend your money on things that are not necessary, just plan for it. And you can also eat birthday cake (and secretly take 11 shots of fireball) at your nephew’s birthday party. Just plan for it.
When to Cheat
Most diet programs (that actually work) call for one or two cheat meals per week. This means that although we are eating relatively healthy throughout the week, we can have a meal or two where we get to eat pizza and drink a beer. Although these meals are the exception to regular healthy eating, they are important because they give us a chance to take a breath and have some fun. We don’t have to feel guilty about ordering Chinese food or having Five-Guys.
The same is true with budgeting. Just because we are on a budget, doesn’t mean that we can’t spend money on things that we like. We just have to plan for it just like we would for a cheat meal. If you want to go to a concert next month, even though you are on a budget, you should! Just plan for it and set the money aside to go.
This leads me to the next point.
Don’t Beat Yourself Up When (not if) You Mess Up
This will happen. I guarantee it. In fact, I have been budgeting for years and I am yet to have a budget that has worked out exactly as planned.
If you go to that concert and you have set aside money for the tickets but forgot to set aside money for travel, drinks, parking, etc. and you will spend money even though that was not accounted for. That’s okay! You’re human! I’ve done it several times. It happens. Just try to cut back on another area of your budget to make up the difference. If you can’t then just try to do better next month. And next time a concert rolls around that you want to go to, just make sure to plan for those expenses then.
The same is true with eating. Have you ever been trying to lose weight and be healthier but then you see lasagna? Oh yeah. It has happened more times than I would like to recall. Sometimes you overeat. It just means that you have to eat a little less during the next meal. Or when you see lasagna next time, try not to eat the whole pan this time.
Seriously. Don’t beat yourself up when you make mistakes. It happens to all of us. I have overspent and had buyers remorse so many times. I have also struggled with my weight and eating habits off and on for most of my adult life as well. So I know the struggle. It’s real.
Tweak Your Plan
If you find yourself spending money that is outside of your budget then tweak your plan. If you are trying to pay off debt and have a family of 5, you should not be budgeting $300/month for groceries. I have seen people do this many times. If you budget $300 for groceries and then realize that you are spending $800 on groceries, then change your budget to $800. Keep looking for ways to cut back your spending but at the same time be realistic.
The same is true with your food intake. If you are finding that one cheat meal just isn’t enough and you want to strangle your coworkers because you’re constantly hangry, then add another cheat meal. The same is true if you only want to consume 1500 calories/day and you find yourself lethargic, short, and irritable. If this happens, then try adding another 500 calories per day. It will probably help you (and those around you) out a lot.
Final Thoughts
It doesn’t matter how much you work out, if your diet is bad, you will not be able to keep the weight off.
The same is true with budgeting. If you do not budget, it doesn’t matter how much money you earn, you will eventually go broke.
A budget and diet are super important to the adulting process. Both dieting and budgeting are kind of like being chased by a bear. Even though you may work out a lot and earn a ton of money, if you don’t diet and budget the bear will eventually catch you.
If you want to learn more about budgeting, how to put together a budget, what budgeting apps to use, etc., check out my other budgeting articles.
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