Mississippi Money: Throw Away Your Budget
Look, I am probably the last person you expected to hear this from, but if you have made a budget before, you can probably throw it out now. Why? You ask. Isn’t a budget the beating heart of any financial security? Isn’t a budget the starting and finishing point for any financial plan? Yes, yes it is, but I am here to tell you there is a better way.
Financial advisors, myself included, start with a budget. A budget is a guide for your spending. You can have as much or as little detail as you want, but at a minimum, your budget will include your income and how much you manage to save out of that. Expense categories in-between can cover taxes withheld, rent payments, gas, dining out, gifts and anything else you spend on. You can get so detailed that at the beginning of the month you can tell yourself exactly when and where you will be spending money. You can be so casual with it that you can just eyeball your bank statement and push a few extra dollars to a savings account every now and then.
Budgeting can feel like a restriction on your spending, so what if you could approach it a different way? Budgeting can be a tedious process of guessing and checking what a reasonable amount to spend on the things you need and value.
Instead of telling yourself what you can’t spend on or when you need to stop spending, give yourself permission to spend – but only on the things that truly matter to you.
Be more mindful of your spending. Every time you pull out your credit card, ask yourself if you really need to make that purchase. Ask yourself if that purchase is aligned with your goals and values. Ask yourself if that purchase will make you happier or better off.
I love the data of tracking my spending, but I find that evaluating my decisions in light of what I love and value, I spend less money more meaningfully. Instead of chastising yourself for overspending in some category, you can be proactive in making sure that your money was spent on what mattered.
Budgeting and tracking your spending is still a great way to get your spending in check. Tracking spending is still necessary if you have more questions about where your money is going. If you have not made a budget recently, make one, it is still a useful tool and practice. If you have stuck with a budget fairly well, or don’t have a problem overspending, try spending mindfully, intentionally and appreciatively. This way, all that matters of your budget is that you managed to save, and you have the peace of mind knowing that what was spent was spent well.
By Ryder Taff