When I counsel people, a dreaded moment comes when I have to tell them that they needs to get on a budget. I’ve heard every reaction you can imagine, from “Aren’t budgets for poor people?” to “Is my case really that bad?”. I’ve even had a woman break down and start sobbing at the prospect of having to “limit” her spending (true story). Dropping the b-bomb just makes people uneasy. That’s why I’ve taken to calling budgets “spending plans”, which softens the blow considerably.
So why do we think of budgets as handcuffs?
I can’t argue that a budget doesn’t create guidelines. It does create boundaries, but so does a pile of debt. A budget you control. Debt controls you. When your spending is overboard, you are voluntarily handing control of your life to other people. You are willfully entering into a contract to work for Discover or Visa or American Express or Mastercard until that debt is paid off. Is that Frappuccino really worth it?
The limits a budget imposes are voluntary, self-imposed limits. You are making the decisions. If you’ve gotten yourself in over your head financially, then you know that once you are in this situation, you have no control. You have a lot of limits, but no say in how things play out in your life. It is scary, depressing and very stressful. A budget is a tool to undo such a mess. The limits it imposes are good limits. Embrace them.
We’ve been trained to see instant gratification as a healthy thing. We see something and we want it now. This is the main reason that we overspend and have piles of debt. We have lost the ability to postpone our gratification until we have saved enough to pay cash for what we want. The kicker is that what we buy doesn’t usually make us happy anyway. Oh, it might give us a high for a couple of hours, days or weeks, but in the end we are right back where we started only with one more creditor calling us.
It can work to make these decisions purely on intuition–indeed, many people do just that. But unless your intuition is keenly attuned (like Larry Burkett attuned) and your resources are abundant relative to your desires, you can do better with a budget. Creating the right budget is an iterative process. Nobody knows the future, and even people who have a firm grasp of their values will find boundary cases that pose hard choices. So, don’t expect your first budget to be perfect.
When you first start following a budget, you’ll probably find yourself exceeding certain budget categories. That can happen for two different reasons: Maybe it’s transient urges that lead to overspending, or maybe it’s the budget that does not reflect your true values. In the latter case, adjust the budget. In the former, use the budget to help you put the money where it gives you the most joy.
Once you’ve lived with a budget for a while–once you’ve found the rough spots and smoothed them down–it will be a source of considerable tranquility. You can be confident that, in your spending, you’re living your life according to your values.