(The following is an abbreviated transcription from a video Linda & I recorded. Please excuse any typos or errors.)
For most people, budgeting is a scary word.
If you feel that way about budgeting, you might be doing one of these five things wrong (or maybe all of them).
When you’re doing any one of these things, it’s just going to make budgeting really difficult and not a lot of fun for you.
We’re going to talk about what these things are and hopefully how to fix it so that you can actually enjoy budgeting and get a ton of benefit from it.
And, if you hate budgeting (or scared of it), just know you are not alone.
Linda actually hated budgeting before I got her on board. I am convinced from all the people, the readers, the podcast listeners, everybody else over the last 10 years who we’ve talked to, the reason so many people hate budgeting is that they’re doing it the wrong way.
Using The Right Tool For The Job
So I do a lot of work around the house and I have often found myself in a position where I’m really far away from the workbench, or really far away from the garage, and I have something else going on and I need to hammer this nail in. And so I’ll try to grab something. I’m like, “What is around that I can kind of hammer this nail in?” Do you want to know what? Nothing works good at hammering a nail in except for a hammer.
And so this is what it’s like for so many people when they’re budgeting using the wrong tools, the wrong methods. Well, of course it’s not working well. And of course it isn’t fun. And of course you hate it because they’re doing it the wrong way.
But when you use a tool the right way, it is actually a lot of fun. And it gets the job done a whole lot quicker and easier.
Linda and I discussed the 5 budgeting things you may be doing wrong, and you can watch our discussion here (or read the transcript below):
Bob: All right. And if you haven’t grabbed our free budget worksheet, definitely pick that up first. That’ll be a good starter, good primer for you to get up and running with your budget.
1. You Aren’t Actually Budgeting
Bob: Number one is that you aren’t actually budgeting. So this is a funny thing. A lot of people think that their budgeting when they’re just tracking their money and they’re using Mint or some app to see where their money went.
Linda: So tell us what the difference is.
Bob: So tracking your money and knowing where it went is a good first step. That is an important part, but it’s not budgeting. Budgeting is actually telling your money where you want it to go and actually having a plan in place to make sure that it goes where you want it to go.
2. You Aren’t Budgeting For Fun Things
Linda: Yep. Okay. So number two is not budgeting for fun things. So there are big things that we need to budget for, right? Like a house payment and savings, you know?
Bob: Groceries. We need to eat.
Linda: But you have to budget for things that are fun. Things that fill your soul.
Bob: And if you don’t, you’re not going to last, right.
Bob: Could we have ever done this without doing that?
Linda: No. No. So we really enjoy going out to eat. I mean, it is peach season in Tennessee right now and-
Bob: And our grocery budget has expanded to pull in the dozens upon dozens of peaches nearby.
Linda: Yeah. Or another good example is like going out for donuts on Saturday morning. Anything that you just really enjoy doing that has to be part of your budget because then it’s like, “Oh, well I have money to spend on this.” And you pretty much have to spend it. Right?
Bob: Yeah. And so while doing this might slow down your progress towards paying off your debt or retirement savings or something like that because you think, well, I don’t want to do any fun stuff. I just want to do the essentials so I can pay off my debt as soon as possible. And it’s like, you can maybe make that work and sustain that for a little bit. But for most people it’s worth reducing that just a little bit to have a little bit more fun in your budget.
Bob: If you’re going to enjoy the budget, and if you’re going to stick with it for years and years to come. So it’s a better move in the long run for most people to just make sure that there’s stuff allocated for fun stuff.
3. You Are Trying To Do It Solo
Bob: Number three, if you’re married and you’re trying to do it solo-
Linda: It’s a bad idea.
Bob: And I do know for most of you, this isn’t by choice. You have a spouse who just isn’t interested, but there are things you can do to kind of sweeten the deal for your spouse and to try to get them interested in the whole budgeting concept. And we go into this in detail in a real money method course, but there’s a couple tips that we can kind of share. Like how did I get you on board? Like what helped?
Linda: The thing that helped me was things that I got freaked out about were in the budget. So when we had car problems, there was money sitting in the budget so there was not that freak out moment for me of like, where the heck are we going to get this money?
Linda: It was just sitting there. So another one was the rewards. When we hit a milestone, we would do some celebrating.
Linda: It was small for us, but it can be whatever you want it to be. You know? And then the other thing was budgeting for things that I needed, that I wanted and that I needed in my life. So yeah. It not being perfect, but actually us sticking with it was huge.
Bob: Good enough to get us both on board.
Bob: Yeah. So bottom line, if you have a spouse, who’s not on board, it’s just more difficult. Now, if you can’t get them on board, you still need to move forward. It’s still beneficial that you’re at least trying and attempting and doing the best that you can in those circumstances. And I think some of the best advice here is just to be asking God and to be praying about how you guys can both get on the same page.
4. You Don’t Have A Reason Why You Are Budgeting
Bob: All right. Number four is that you need a reason why you are budgeting. You know, as humans, we are just hardwired for significance and meaning, and we need to have a reason why we’re doing everything that we’re doing.
Linda: So one of my first introductions into budgeting was pre-Bob if you can believe it. My brother came over and helped me set up a really simple budget so that I could save for my first car. And that gave me so much incentives because I was like, “I really want a car. I have got to get to the place where I can have a down payment, but also be able to pay for it each month.”
Bob: And the budget was what was going to help you get there.
Linda: Exactly. So I knew that that’s why I was doing it. And I stuck to it because I had this goal out in front of me. So having a reason why was a huge part in me sticking to it.
5. You Are Using A Method That Isn’t Holding You Accountable
Bob: Yeah. All right. Number five is that you’re using a budgeting method of some sort that isn’t actually holding you accountable. So over the last 10 plus years, I’ve been looking at budgeting stuff left and right, budgeting apps, budgeting spreadsheets, budgeting software.
As a financial blogger, I’ve been reviewing all this stuff. I’ve been testing all this stuff out. And the one common problem that I’ve seen over and over again is so many of these tools they might be fancy, have all these bells and whistles, look really shiny, but they don’t actually hold you accountable to the budget. And so without that accountability, most people just fall off the wagon and fail.
Bob: But I’ll give you a tip. There are two different ways that you can create a budget and actually have that accountability. So the first one is the cash envelope system.
Linda: Which we all know.
Bob: So we all know this, you put the cash in the envelopes, then you spend it. And when it’s gone, it’s gone.
Linda: This is what our parents did. Right?
Bob: Our parents, our grandparents were all doing this and this method and it actually works and actually holds you accountable. But the problem for most of us is that we don’t want to use paper cash on every purchase that we made.
Our Real Money Method
Bob: And so being able to have the convenience of a debit or credit card is what most people in the 21st century want. And so the other way to do this and have accountability is with a Real Money Method.
This is a system that we developed that basically allows you to use your bank account to budget. And it’s a system that creates real accountability for you. And as a result, most people who have failed with other software in the past are finding a lot of success with this. So if sticking with a budget or staying accountable to it is something you’ve struggled with in the past, we’ll have the link to it up above or down in the direction below, and you can check it out.
All right. So now it’s your turn. Let us know down in the comments what you’d add to this list or maybe where you’re guilty and where you’re going to begin making some changes and hit the like button to let us know if you liked it. And if you haven’t gotten a free budgeting spreadsheet yet, definitely check that out.
One thing that is difficult is when prices keep increasing and out income doesn’t. How do you budget for groceries one month and then the prices are above your budget.
There is no easy way Ludell unfortunately. Our most recent run in with this was newborn expenses. We needed to supplement with baby formula and it cut into our grocery budget. What that meant was that we had to cut other areas in order to make things work. It’s not a fun answer, nor the one that anyone wants to hear, but when one side goes up the other must go down. Now for some that means shopping at a cheaper grocery store, for some buying cheaper items, and for some buying fewer of the things they want but don’t need.
It was great and useful. Thank
Kerry Laughlin says
Thanks for this information ! Yes, the cash envelope system is how everyone paid bills in our grandparents time but my husband’s Grandmother used it for savings too. She split her pay into her bill envelopes, her cigarette money and her next “Goal: Go To Florida” on the envelope.
Thanks for the advice!
Ridzi Arora says
Thank you for sharing this information! This is really very helpful.