Learn To Embrace The “B” Word



Learn To Embrace The "B" Word

Every survey I’ve seen shows that most of us would rather have a root canal than make and follow a budget.

Believe me, I get it.

When my sons were born, they had serious medical issues. Medical bills devastated our finances. I had to budget just to keep our heads above water. I was tracking every penny and making hard financial decisions every week. I was beside myself, wondering what would happen to our babies, to us, to me.

Fast forward to today. Both boys are doing great. A few months ago we celebrated a virtual high school graduation. We’re financially secure and the future looks much brighter.

What has this experience taught me about finances and budgeting?  I’ve learned that my budget makes sure my money works as hard for me as I worked to earn it.

I’ve also learned that a budget is a way of saying yes to yourself every day. yes to reaching your financial goals. Yes to understanding where your money goes. Yes to getting the most out of your money.

Stick with me and I’ll not only show you how to make and stick with a budget that works for you, but also how to have a healthier relationship with your money. I’ll even tell you about one of my favorite regular events: the money date. 

More on that date in Part 2, How to Have Fun Managing Your Budget.

The Budget Exercise

Managing a budget is like starting an exercise program. Just as you wouldn’t expect to go from couch potato to Olympic marathoner overnight, you won’t go from “no budget” to “track every penny” in an afternoon. In fact, tracking your pennies isn’t the point. Understanding where your money goes and managing it so you can reach your financial goals while enjoying life today is the real benefit of a budget.

Before you get started, there are three important things to keep in mind:

  • You need to create a budget that’s realistic
  • The process needs to be enjoyable
  • Budgeting isn’t natural

Let’s look at each of those key points.

Realistic budget: A budget has to balance  multiple short-term and long-term goals, such as saving for a car, investing for college and retirement. It also has to balance enjoying life today, maybe with a nice dinner or summer vacation,  while planning, saving, and investing for tomorrow.

Enjoyable process: Once you get into the rhythm of managing your budget, it should be an enjoyable process. If the task of managing your budget takes hours and makes you miserable, it’s time for a different budgeting strategy. The best way to make it enjoyable is to keep it simple, at least initially.

Budgeting isn’t natural: In other words, we aren’t born knowing how to do this. For most of us, no one taught us how to budget. The psychology of our relationship with money and financial management is complex and often not intuitive. In fact, a budget can help you change your attitudes about your finances, and help you let go of money messages that are holding you back.

Rethinking Your Relationship with Money

Money touches every part of our lives. So many people feel stress, uncertainty, or even shame about their financial situation. Or even just plain feel like they are bad at “the money thing.” Without seeking help from a coach, an accountability partner, a planner, it’s so easy to get off track. It isn’t that you’re not good at it, you just haven’t learned how yet. Give yourself the time and the space to learn how to build a great relationship with your money.

Retail therapy is called retail therapy for a reason: it makes you feel good. We use money to treat and reward ourselves. But the short-term feeling of happiness you get from buying something fun doesn’t compare with the long-term feeling of happiness you’ll have when your finances are in order and you can use them to achieve your goals. As a financial planner, I know that first hand, and I see it with my clients every day. I’ve looked at things I’ve bought and thought, “Why did I waste my money on that?” You probably have, too. I didn’t beat myself up about those purchases, but I learned how to make better decisions.

Time to Get Started

I didn’t grow up knowing how to budget, and I’ve certainly made my share of mistakes along the way. (I don’t regret for a minute, however, the money I spent on a T-Rex costume I wear to terrorize the neighborhood every Halloween. I look at it as an investment in my neighbors’ joy.)

Now that you have an understanding of how to think about budgeting and money, let’s dive into how to build a budget that works for you.