Originally printed in USA Today and The Indianapolis Star
Budgeting is easy. All you have to do is use all cash, use a smartphone app, save your receipts, keep money in 25 envelopes, use only your credit card, use only your debit card, only write checks or check your bank balance every day.
Fine. Budgeting is hard.
I don’t know when it happened, but budgeting got hard. I have my theories, and for the sake of there being a point to this week’s column, I’ll share some of them with you.
Budgeting, in itself, is inconvenient. It requires time, attention and commitment. Then, after you’ve committed your time and attention, your behavior must change to accomplish your goals. And your attention can’t be fleeting. It’s not too terribly different from a healthy nutritional lifestyle. Not only must you exercise and make healthy food choices, but then you must adopt these changes as the new normal, permanently.
All the modern solutions, usually provided via technology, revolve around convenience. The solution providers ask themselves, “How can we make the inconvenient convenient?” It’s the same methodology that was used to create diet pills and the Flowbee (the haircutting system you attach to your vacuum cleaner). I get it. We want convenience. We want omelets without breaking eggs. But we need to break eggs.
Several years ago, Mrs. Planner and I decided to sit down for a family budget meeting. Despite having utilized budgeting software throughout our marriage, we thought we needed to dig deeper into our budget. We went old school. We grabbed the previous month’s bank statement and a calculator. She read off each expenditure by name, date and who we paid, and I added up the spending in each major category.
“Why did you go to the same coffee shop 16 times last month?” she asked.
“I, uh, won’t do that again.” And I didn’t.
We try to make budgeting about the numbers, but it’s not. Budgeting is about accountability, communication (when you share finances with a significant other) and awareness. Yet all of our behavior provides us the opposite of these three factors when we seek convenience.
For instance, it’s convenient to leave a cushion or buffer in our checking accounts. It allows us to … well … not budget. If you have an extra $500 or $1,000 in your checking account at the lowest point of the month, then there’s no pressure to stay under budget. If your low balance was somewhere between $50 and $200, then you must be accountable to your actions, lest you overdraft.
It’s convenient not to talk about money with your sweetie, especially when financial stress is present. But proactive financial discussions relieve the stress, not enhance it. Reactive financial conversations almost always end poorly, because someone is always taken off-guard.
And finally there’s awareness. You can’t possibly consider yourself financially aware just because you check your checking balance all the time. I mean, if you were so darn aware, would you really need to check your balance all the time? Nope. Awareness has nothing to do with your smartphone app or online banking. Awareness is when you understand your spending habits and know how they impact your financial life. Waiting to see your spending register in your bank account is reactionary, not productive.
If you desire better results with your budget, remove the convenience. It’s too important to dismiss with the false promises of convenience. Effective budgeting becomes too hard when you try to make it too easy.
Have a question for Pete the Planner? Email him at firstname.lastname@example.org or visit www.petetheplanner.com.