What if instead of creating a budget, you just simply pre-planned your spending? I know from years of teaching a class on budgeting, most people hate the word BUDGET. To most people, the word budget might as well be a four letter word. In most of my classes, it was a difficult word for people to even say!
Even though there are ways to simplify your budget, let’s take the pressure off for our little chat in this article and just call it pre-planning our spending. Does that sound better? I thought so, let’s continue!
Why What You Call It Matters
For a lot of people, the word budget brings up bad feelings of depriving ourselves of what we really want and automatically feels negative. In my classes and my budget counseling experience, I heard people tell me so many times “your going to tell me I can’t have this….or I can’t have that ….”. That is not the purpose of a budget! A budget helps you to manage your money, not make you feel like you are depriving yourself. I think this is one of the many reasons why many people don’t create a budget or don’t stick to a budget.
Instead of creating a budget, why not pre-plan your spending?Click To TweetI’ve always told people that a budget is personal. I wasn’t there to make any decision for them about their budget or their money. All I could do is give them the tools to make their decisions. And I really meant that. No budget is successful if someone else sets it up for you and forces you to stick to it. You have to make your own decisions about what is most important to you and what you can live without so you can have what you want.
So instead of calling it a ‘budget’, I decided why don’t we just pre-plan what we do with our spending? It’s a different want to think about money and may help you get over that hurdle of the word “budget”.
Simple Ways to Pre-Plan Your Spending
How can you get to where you want to be with your money without making it feel like a chore? Pre-plan what you are going to do with your money each month!
- Set Financial Goals – What do you want your money to do for you? What are your financial goals? What will your life be like after you reach those goals? Goals can keep us motivated and help us see the big picture. Have you thought about your financial goals lately?
- Pre-Plan Your Spending – Once you have your goals, pre-plan where you are going to spend your money each month. Is your spending in line with your goals? If not, start adjusting your spending accordingly so it aligns with your goals. Only spend money you have and if you need to use cash to help you from overspending.
- Be Strategic with Your Money – Create a strategy around your spending plan. This is where the decisions come in. Instead of cutting everything out, try cutting back in areas that aren’t important to you so you can put that money towards the things you really want.
- For example, what are 5 things you can live without each time you go to the grocery store?
- Do you really care if you have name brand paper towels, toliet paper or paper plates?
- Cutting back in small amounts in several areas will add up over time.
- Be Systematic with Your Money – A system is important because it is something you do once and forget about it. Maybe your system is having money automatically taken out of your paycheck each month and put in your savings account so can start building your emergency fund. Or maybe you have a certain day of the week or month that you organize your and pay your bills. Whatever your system is, set it up and put it in place so you can reach your financial goals.
- No Goals Means All You Ever Get is Leftovers – Doesn’t that make sense? If you set financial goals, pre-plan where your money will be spent, create a strategy to get yourself there and then implement a system so you can get your finances on track. Otherwise, you can be left scrambling around each month trying to make ends meet!
Teach pre-planning skills to kids and teens so that they can practice money management while they are young. The skills will last a lifetime!
I absolutely agree with you. Most human beings are just not made for spreadsheets and knowing ahead of time what you want your money to DO for you helps you to make the best decision. It is hard to resist buying something you really want when you’re not even sure how that decision will help you in the long run!
I love this idea. Sticking to a budget sounds boring, but having a spending plan sounds so much more freeing. Pre-planning and setting goals are vital to achieving financial success. I like the idea of being strategic with money, that’s really important too.
Nice post and much along the lines we have been writing about at the MoneyPrinciple.
Budgets are what politician and big business does. They set parameters which shouldn’t be exceeded but generally are with no repercussions so they have a nasty connotation in many peoples’ minds..
Home finance is different as there are repercussions if you can’t feed your family or repair the car to get to work.:-) But perhaps you don’t need those 3 coffees at at Starbucks, you can book a vacation slightly out of season and the flat screen can wait some more months.
This is why I don’t say the word budget. It has negative connotations in my mind as well as my clients. I use the term spending plan and do as you specify. Pre-spend my monthly net income. I’ve been doing this for quite some time now and my life has been so much easier because of it.
I have an informal budget that helps me drive toward my financial goals. I really use a spending plan o a daily basis to keep us on track to our goals. It helps that I have my retirement savings automatically deducted from my paycheck.
My wife and I do this to some extent. I purchased a whiteboard calender on which we write down expenses that we know we have. That allows us to determine how much we have left over – which we take out in cash. All weekend entertainment spending is done with cash. Great perspective, Jenny!
Snap! I wrote about something very similar this week as well. I try to avoid the work budget at all costs, people stop listening as soon as you say the word. If you can break down the barriers and show people that there are ways to be good with money and still have what you want, then I think you are well on your way to success.
We started preplanning our budget last year and it is working out great. We have different savings accounts we have labelled for different costs that we know we will have throughout the year. We really like it.
I’m starting to save some cash in my ING account every week and it’s on automatic saving so I have to keep telling myself that I’m paying myself
I can’t budget very well. It doesn’t work well for me, so retirement is taken out before I ever see it. I do need to get better with some of my other savings, though.
You are right on Jenny. So many parts of our life we are told “No!” Now, we can say “Yes!” However, it needs to be planned. Great work!
If I had no emergencies come up? I’d be so incredibly wealthy that I’d throw a huge party and still have tons of money left over for frivolous things.
I always think it’s funny when the idea of planning your spending is a new idea for people. As if talking about money is some kind of foreign subject. Sadly, as you mention here, it’s more often the case that people don’t like to think about money and use defeating words like “budget.”
“Budget.” Sounds like “boring” mixed with “fidget” and “curmudgeon.”
This is what we have been doing for couple of years now. And it works! Budgets don’t rock my boat….
I’ve always done what your talking about, but didn’t think of it this way until you describe it. Your article is so true in that we have to take what we know and think about it differently so it works/fits within our life. None of these concepts are new, but it’s getting it in a way that finally ‘clicks’ for each of us! Good discussion topic!
You are right that so much of being successful is having a positive mindset. Budgeting is my weakness, but this month I have begun to track all of my expenditures. It feels great to know exactly where my money is going.