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You’re here because you hate budgeting. Well, I also hate budgeting. AND I will tell you that budgets don't work.
WHAT! Everyone is budgeting. And having their monthly financial meeting with themselves. You're telling me it doesn't even work!
NOPE.
It doesn't work to MANAGE your money.
A budget is a plan. There's nothing in that plan that ensures you'll follow it.
And today, I'm talking about why budgets don't work and what you can do to put a system in place to manage your money so you STICK to your budget.
What a Budget Is
When we all think about budgeting, my guess is we’re thinking about the line-item budgets, those that ask you to decide how much you WILL spend on clothes and lattes and groceries this month. And it synchs up to a larger spreadsheet that calculates that for the year.
And each month, you’re supposed to have a “monthly budget meeting” with yourself where you go through all your receipts and see if you over or underspent in any one category.
And if, one month, you spent MORE on groceries than you were supposed to, you have to like move money from one place to another to make sure you don’t go broke.
And your clothing budget is listed monthly at $100 but honestly you only buy clothes three times a year, so every time you want to buy clothes you have to go into the budget and see how much you have left for the clothing money. And maybe your kid just hit size 7 and you need to buy clothes pronto but there’s no money left… so you have to move money from the other account.
When a line-item budget DOES work
This kind of budgeting doesn’t make any sense to me as a person living a life.
It DOES make sense to me as a school principal where I manage a very large, multi-million dollar budget to run three campuses and serve 1100 kids.
In an organization of that size moving money around makes sense. It’s also funded in many different ways so some expenses have to be paid from particular revenues. So if I get a grant I have to track the spending for that particular grant, or federal program, or whatever.
And the size of that budget means that tracking it each month keeps us generally on track, but we only buy what we need and those needs are pretty finite in a school’s life. The budget helps us make choices, like can we afford this big curriculum change this year.
This kind of budget is NOT meant for everyone.
Why budgets don't work
Personally, this kind of budget drives me nuts.
It makes a plan, and has NOTHING inside of it to KEEP you on track.
You basically have to use your memory or a general penny-pinching attitude to stay within your budget. Who on earth can remember that you only have $400 left in your clothing budget? So you spend a lot of time checking.
For me, and those of you like me, this constant checking feels exhausting. And what do we do? We just avoid it.
So month after month, you “meeting” with yourself is “whelp. I overspent.”
A line item budget is good when you need to divvy up your money and want to see where it all COULD go.
I don't know one woman that can't make a plan.
The problem is sticking to that plan, and a line-item budget isn't gonna help.
Like, let’s make a plan for where all my money will go this year.
Problem is, that’s not most of what we WANT a budget to do.
RELATED: What to do when you hate budgeting
Most of us aren’t like “ok I need a 400 line item budget to determine how to divvy up this money? I just will not survive if I don’t determine I should spend $1k for clothes this year and then divvy it up by month.”
If your problem is overspending, you’re not going to solve it by saying where you THINK your money should go.
Most of us have a very simple budget system we use for our daily/weekly spending, and that system is “check my account to see if I can afford it.”
Lack motivation? Just getting your head right about the TOPIC of money can help you overcome and take charge!
What a line item budget cannot do
A line item budget isn’t going to help you spend less, isn’t going to MAKE SURE that 1k goes to clothing and not, say, rent.
It does nothing to actually put the money where it should go.
It’s just a plan.
I don’t know one woman that couldn’t make that plan without a lijne item budget. I’m 47 with a child and a mortgage and I only have 10 bills and 10 kinds of things I spend cash on.
I do not need this spreadsheet to add that all up.
What I DO NEED?
A system that puts the money where it needs to go AFTER the plan.
I need a way to move the money around and ensure I’m meeting my goals and paying down my debt.
Budgets don't work to manage your money
So when you tell yourself “I hate budgeting” here are the reasons:
-it doesn’t work to adjust your spending.
-it makes you rely on your memory
-you have to be involved in running it all month long
-it does nothing to help you meet your goals except tell you that it’s possible
And I can do that. IT IS POSSIBLE!
You don't need a line item budget to tell you that you can afford your life and pay your bills.
You need to find a system that helps you move the money to where it needs to go.
I can teach you how to make a system that doesn’t require all the work but:
-helps you meet your goals faster
-doesn’t let you overspend
-begins with good financial decisions
-doesn’t involve much work at all except for on the set up
-makes you the boss of your money instead of the other way around
If you're interested in this kind of a system, check out all the other posts at The Bossy House.
Out of all the different ways to manage your money, I think The Bossy House System is the best way... at least for me! Download the templates below to help you on your journey!
Get this set of financial planning templates to get started on your budget journey!