How to Stick to a Budget
If you believe budgeting is painful, then your experience of budgeting will be painful.
If you believe budgeting is liberating, then your experience of budgeting will be liberating.
The only thing that’s changing here is our value judgment of budgeting.
Consider the following value judgments:
Scenario 1:
“Budgeting is restrictive, it limits my ability to have fun, it’s too hard to consistently stick to, I don’t want to look cheap to others, etc.”
Scenario 2:
“Budgeting alleviates my concerns of spending too much money, it’s helpful to have a goal of what to spend monthly, it makes me feel more confident with money, etc.”
Budgeting doesn’t upset us, rather, it’s our judgment of budgeting that upsets us.
If you’re someone who has had a negative experience with budgeting or is money avoidant, your value judgments and beliefs around money are more likely to be negative.
How can you expect to build a new habit that you don’t enjoy?
Hint: you don’t (which is why many budgets fail)
But how can you learn to enjoy a habit that you currently have a negative belief of?
Attach a new value judgment to your existing belief.
If budgeting is currently believed to be painful, fast forward 5 years and you’ve successfully budgeted, what has this new (or freshly polished) skill provided you?
In this case, maybe that’s an additional $100k+ in savings, more confidence around your skills with money, or a greater ability to deal with unexpected expenses.
With that in mind, the new value judgment around budgeting could be that it provides more peace of mind, confidence and purpose which crystallizes into a belief.
While having a new belief to attach to budgeting is great, this really only works if the outcome of successful budgeting is more valuable than the immediacy of your current spending patterns.
Which adds a wrinkle because you feel the benefits of your bad habits immediately & the benefits of your good habits later.
How can you train yourself to experience pleasure today for actions that have a benefit only experienced in the future?
Reason and practice.
Reason because when you consider the alternative (not budgeting) projected out into the future, where could that leave someone?
The consequence of not budgeting, or not worrying about money, has a high probability of an unfavorable financial position.
And by unfavorable financial position, I mean, in debt, having little savings, the requirement of working to meet living expenses, and having little flexibility.
You’re trapped.
This isn’t to say that everyone would be worse off but I’d push back and ask, would the average person be better off?
I wouldn’t put my money on it.
With that in mind, it would be prudent to adjust behavior today to avoid a negative outcome in the future.
This works best when used in tandem with fear to create an outcome in the future that is so undesirable that you drive action in the present.
This could be becoming homeless & addicted to drugs & losing those who you care about most (my personal favorite fear driver - the more bad things you can bundle together the stronger its effect).
While this may not be the most psychologically healthy, in small doses, I think it’s helpful to drive positive change.
Practice because when you first try someone new, you’re likely not very good.
It’s only over time that you develop the skill which makes practice feel like play.
This is akin to driving a car.
When you’re first learning, you understand in theory how it works but it takes practice to figure out how to drive and learn the rules of the road.
You want to drive because:
Not being able to drive in the future is more painful than taking the time to learn the skill today; sacrificing time (& accepting some failure along the way) to be a proficient driver.
This trade works the same with any skill you’re looking to develop.
When you firmly believe the long-term positive impact of budgeting is greater than the short-term trade off of time, then you can stick to a budget.
Same idea, different lens:
When you fear where not budgeting will leave you, budgeting becomes easier to stick to.
It just comes down to:
A pervasive belief in a long-term benefit greater than the short-term sacrifice combined with consistent directionally-correct action.