Budgets

How to Flip the Switch and Develop a Budget Mindset

Flip the Switch and Develop a Budget Mindset | www.TheHeavyPurse.com

Budgets can be very polarizing; you either love or hate them. For many people, they are a dirty word. Often times, it is because they are worried about living beyond their means and know a budget would prove it. They are not ready to face their reality yet. Let me take the fear out of budgeting and show you how to make one work for you.

Solutions for the Top 3 Excuses on Why Budgets Don’t Work

It is probably no surprise to learn that I am a huge fan of budgets, and I have heard every excuse as to why they don’t work for you. So I would like to dispel some common myths and invite you to look at budgets in a new light because when done correctly, budgets can be your new best friend. Let’s dig in.

Budgets Are Too Restrictive

Countless people have attempted to follow a budget, maybe even tried multiple times unsuccessfully. They claim budgets are just too restrictive for them and argue it’s unnecessary. Deep down, they worry that following a budget means fun is no longer an option. This is probably the most popular excuse and myth.

Flip the Switch: Budgets give you freedom. Now you choose how you want to spend your money. When you are just spending with your fingers-crossed and hoping everything will be okay, you really don’t have freedom. It is an illusion. But when you take the time to figure out how much money comes in and how much goes out, than you can start making mindful choices on how you use your money. Maybe you want to cut back on dining out and divert that money into your vacation fund instead. Or cancel the gym membership you never use and put that money in a 529 plan for your children’s college education. Now you can use your money on what matters most, giving you real freedom.

Lesson for Kids: Show them you can live a good life on a budget when you use your money on what matters most. (There is a reason why most adults don’t like budgets. They heard their parents complain about them and were never taught how to use them.)

Budgets are Too Complicated

Budgets can be overwhelming to some people. They open up a spreadsheet, take a look at all the various categories and start hyperventilating. It seems like you need a PhD to budget, so they give up and claim it’s just too complicated.

Flip the Switch: There is no universal “right” budget for everyone but there is a “right” budget for you. There are tons of budget templates online. You need to find the one that works for you and fits your needs. Some people prefer a very thorough budget whereas others need simplicity. The most important thing is actually following a budget, not impressing everyone with your color-coded spreadsheet. Your budget should give you a birds-eye view of how your money is flowing in and out. Now when opportunities appear, like they did for my friend, Anna at Are Ya Gonna Eat That, she can decide whether a half-marathon fits into her budget and participate guilt-free.

Lesson for Kids: Teach kids how to manage budgets now so they won’t be intimidated by them once they leave home. It will already be an ingrained habit. Start with something small, like their birthday party. Once they become teens, show them how to run a household budget.

My Spouse or Partner Refuses to Follow a Budget

Some couples appear to be a match made in heaven, except when it comes to finances. One might be a saver while the other is a spender. One wants to follow a budget while the other wants to burn it. So in order to avoid arguing, budget talks disappear and peace reigns once again. Or does it? Most likely you get a temporary reprieve at best.

Flip the Switch: Focus first on setting goals together. When couples work together to achieve common goals, budgeting becomes far less combative. The partner that was initially resistant begins to see how budgeting represents freedom over restriction. You design a budget that works for both of you, even if one person remains responsible for tracking expenses. Budget conversations become optimistic reviews of progress towards goals, rather than pointing fingers and casting blame for overspending.

Lesson for Kids: Demonstrating good communication skills and goal setting with your spouse is a powerful lesson for your kids to observe. Money arguments can tear a family apart but seeing parents handle money in a loving and constructive manner will help shape their own positive money habits and beliefs.

Shannon

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November 4, 2013  •  53 Comments  •  Budgets

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  1. Monday, November 4th, 2013
    I have certainly had the the budgets-are-restrictive mentality till I flipped the switch and realized they could certainly help me save for other key areas of my life. Having a budget is like having a map...it gives you a wider picture of the terrain you are passing through as you aim for your destination.
    • Shannon
      Monday, November 4th, 2013
      You got it, Simon! It's exactly like a map and helps you make smart decisions based upon your goals and what you truly want. I find once people stop viewing budgets as restrictive they truly see how helpful and freeing they can be. Glad you flipped the switch! :)
  2. Monday, November 4th, 2013
    My wife and I played the "budgets don't work" game for years....until we tried it. It took us awhile to get the hang of communicating about our money, and keep track of what we were spending, but there's NO WAY we would be on the right path out of debt without budgeting!!
    • Shannon
      Monday, November 4th, 2013
      You're definitely not alone, Travis. So many try budgeting and can't make it work so they give up. I'm glad you and your wife figured how to make it work for you and have had amazing success with it too! You two are a huge inspiration to anyone working towards eliminating debt.
  3. Monday, November 4th, 2013
    We had to flip the switch some years ago in order to get out of the financial mess we were in. I had the mentality that having a budget meant we failed. In reality we did...we failed financially and it was hard to admit.

    I had no choice but to learn how to manage my money better and it started with a budget followed by discipline to stay on budget.

    In the end it all worked out and we're on our way out. I'm sure for a lot of folks the word "budget" is a bad word but if they realized a budget could help them save money and yet still enjoy a shopping trip every now and then they'd start one quick-style.

    Great post Shannon! Hope you had a great weekend, happy Monday hon!
    • Shannon
      Monday, November 4th, 2013
      It's no fun have to get out of a financial mess but lots of people also choose not to do so. So it's great that you and your husband took stock of your situation and addressed your mistakes. Budgeting is definitely a great way to get you back on track and you've come a long way on your financial journey. You have a great week, Corina! :)
    • Friday, November 8th, 2013
      I know one thing though, even when the day comes that we're debt-free, I still plan on sticking to my budget!

      Thanks for sharing this post with us Shannon! Have a great weekend :).
    • Shannon
      Sunday, November 10th, 2013
      Absolutely, Corina! Budgets are definitely not punishment! :) Hope you had a great weekend!
  4. Monday, November 4th, 2013
    Great post!
    Most people who think that "budgets don't work" have never tried one. They really do work and can help you accomplish amazing things if you give it a chance!
    • Shannon
      Monday, November 4th, 2013
      Thanks, Holly! I think a lot of people try budgeting with the belief that it can't work so it doesn't. But like you said, if you keep an open mind, and give them a chance, they truly can help you accomplish great things and are not restrictive.
  5. Monday, November 4th, 2013
    We were long under the belief that budgets were too restrictive. Now that we've been on one for nearly a year, we are loving it, as it truly does give you freedom! Amazing. :-) Great tips as usual, Shannon.
    • Shannon
      Monday, November 4th, 2013
      Thanks, Laurie! I'm so glad you gave budgets another try and figured out how to make it work for you. It truly feels good to know that you're spending your money on what matters most.
  6. Monday, November 4th, 2013
    Great post Shannon! The first one drives me nuts at times as they do not have to be restrictive at all. I know it's so easy to see them as restrictive, but after you get it down it is really freeing. Of course, I am biased... :)
    • Shannon
      Monday, November 4th, 2013
      Thanks, John! I am biased too! :) Budgets do get a bad rep. Some people see restriction whereas I see possibilities. Knowing how much money I have to play with means that I can choose how to use that money on what makes my heart the happiest, guilt-free. How could I not love that? :)
  7. Monday, November 4th, 2013
    My wife wanted us to start budgeting but I knew it would fall on me to record expenses and track our income. When I finally got on board my only regret was not starting sooner! It only takes a couple hours a month and being able to see our spending versus income can be really eye-opening and so important when we have such big savings goals.
    • Shannon
      Monday, November 4th, 2013
      You are a spreadsheet guru, DC, so I bet once you got onboard, you loved budgeting! :) I find that once people embrace budgeting, they wonder why they didn't start sooner. It really can be eye-opening and help you make better choices as to how you use your money. Many people find they were spending money on things that meant little to them and didn't have money to do things that did. And when you have big savings goals, budgeting is a must to keep you on track.
  8. Monday, November 4th, 2013
    I have one month of budgeting and it's been great. not hard to keep it, not bad to know how the next month might look like. Husband is not into this, but at least he's bringing the money home so that I can budget it ;)
    • Shannon
      Monday, November 4th, 2013
      I'm glad you've started budgeting, Dojo, and seeing how it can work for you. It is nice see how money is flowing in and out. Your husband might not be into right now but as you show him how it can make difference, he may come to embrace it too!
  9. Monday, November 4th, 2013
    Thanks for the shout-out, Shannon! I agree with all your points, as well - I don't really view it as a "cap" on categories or fun, but rather a nice outline of the direction we want to go with our financial goals. I love spreadsheets, but I agree it's completely worthless unless you stick with it, so people have to find one that works best for their needs!
    • Shannon
      Monday, November 4th, 2013
      You're welcome, Anna! I agree - budgets and goals go hand-in-hand with each other. A lot of people spend their money unconsciously and really don't know where their money goes. Following a budget, gives you perspective and puts you back in control so you can make smart choices with your money.
  10. Monday, November 4th, 2013
    You are so right about how a budget will quickly show you that you are living beyond your means. It was a true eyeopener for us. And at first we were upset about even having to do it, but then I turned it into a challenge of how low can we continue to get our flexible expenses each month. And, now I know how much it truly costs us to live each month, so when our income goes up or goes down, I instantly know what needs to be done to make sure all expenses are covered. So much nicer then simply going into panic mode.
    • Shannon
      Monday, November 4th, 2013
      It can be real eye-opener, Sicorra. I love how you turned into a challenge too. That's a smart trick as it can be very motivating and people forget that budgeting is supposed to be painful! :) And yes, once you know exactly how you much you need per month, you can make adjustments, rather than panicking, which never feels good.
  11. Monday, November 4th, 2013
    I agree Shannon, both partners have to be on the same page or the budget won't work. Great post! :)
    • Shannon
      Monday, November 4th, 2013
      Thanks, Mackenzie! It can be so powerful when partners get on the same page and start budgeting together. It can really strengthen a relationship.
  12. Monday, November 4th, 2013
    Excellent stuff here Shannon! We've really tried to teach our kids that budgets are a good thing. It's tough on them when it seems like their friends are getting everything they want but all they hear from their parents is "It's not in our budget this month."
    • Shannon
      Monday, November 4th, 2013
      Thanks, Brian! It is so important to start talking to kids about budgeting and give them some hands-on experience. It can be hard for kids to see their friends getting things they want. I found the girls having an opportunity to earn money for the things they want and managing some budgets have really helped them be less affected by what their friends have and more focused on figuring out what makes them happy.
  13. Monday, November 4th, 2013
    I'm a budget-lover myself, but admit it took me a very long time to stick with one for many of those reasons. But it's like exercise, once you get in a rhythm, it just becomes normal. And like exercise, it's not always easy or fun, but you do it for the awesome results.
    • Shannon
      Monday, November 4th, 2013
      You're are so right, Tonya. It is a lot like exercise. It may not always be fun and you can find lots of excuses to not get started but it does deliver results and keeps you financially fit. :)
  14. Monday, November 4th, 2013
    Budgets do give you freedom! Even if you aren't interested in writing down each little expense in your life, you still need to be diligent about checking your back account, paying yourself first and taking care of bills.

    I still like to run my budget once or twice a week with pen and paper! Pretty old school for a millennial. :)
    • Shannon
      Monday, November 4th, 2013
      Absolutely, Erin! Paying yourself first and taking care of the bills right away is so important. And then once you do that - you can decide how to spend the rest of the money. There's nothing wrong with with pen and paper either! :)
  15. Monday, November 4th, 2013
    I used to use all those excuses, and I can totally agree with Holly's comment that usually you haven't tried if you are using those reasons not to budget. Budgets don't have to make you feel like a failure, which is a misconception I used to hold. We'd try and fail and give up. I've learned that things are fluid and if you go over in one place, you just need to make it up in another.
    • Shannon
      Tuesday, November 5th, 2013
      Absolutely, Kim! Using a budget shouldn't make people feel like a failure but empower them to make good choices. Our attitude towards budgets can definitely influence whether they work for us or not.
  16. Tuesday, November 5th, 2013
    The attitude with which you approach budgeting makes all the difference. I agree, they aren't restrictive, they give you the freedom to reach your financial goals!
    • Shannon
      Tuesday, November 5th, 2013
      It really does make a huge difference. It sounds like you have the right attitude towards them, Stefanie!
  17. Tuesday, November 5th, 2013
    You know, we wrote a budget for a few months and in a weird way we seemed to end up spending more money. I think that somehow writing down that we had money in the clothing budget or whatever gave us license to spend all the allotted funds. Now we just put a fixed percentage (around 40%) of our income directly into savings after we get paid, and we spend whatever is left. It's a lazy person's budget, but it is effective. Once in a while we have an unexpected expense come up and we have to pull from savings, but since we save so much it's not usually a big deal.
    • Shannon
      Tuesday, November 5th, 2013
      Great point! Everybody works a bit differently and it takes time to figure out which way works best for you. I'm glad you found one that fits your needs and helps you save. Thanks for stopping and commenting. I appreciate it!
  18. Tuesday, November 5th, 2013
    The key for me is that budgets really do give you freedom! Sort of like how planning gives more room for spontaneity!
    • Shannon
      Thursday, November 7th, 2013
      Absolutely, Leah! So many people just see restrictions whereas it allows you to direct money towards the things that you really want.
  19. Wednesday, November 6th, 2013
    I think the point about not needing to make it complicated is a really good one. You don't have to make a category for everything. The main purpose is to make sure that your sending your money to the important places and that you're not spending more than you earn. You can accomplish those two things with a very low level of complexity.

    The other thing that's helpful for us, but I realize may not be for others, is look at your budget as a long-term trend rather than a month-to-month limit. We look at our average spending over the last 3, 6 and 12 months to make sure that on the whole we're staying on track with our goals. We've rarely ever set hard caps on a category within a given month.
    • Shannon
      Thursday, November 7th, 2013
      Great point, Matt! People need to find a system that works for them and examine their budgets from different angles. There is a reason why businesses compare year-over-year growth, etc. and we need to do the same. In the end, we are in the business of living the life we want debt-free, so we need to know where to invest and where to cut back.
  20. Thursday, November 7th, 2013
    Great post! Couples that budget together, stay to… ah never mind haha. Budgets are a great tool, but I think many overcomplicate them from the start. It's a good idea to start simple and yes, you're absolutely right – budgets can give you freedom. Great tips for everyone in the family!
    • Shannon
      Thursday, November 7th, 2013
      LOL! It's a cliche but it's true! :) I agree, Anthony. For some reasons people believe in order for a budget to be effective it's must incredibly complicated and almost painful to do. It definitely does not need to be that way!
  21. Friday, November 8th, 2013
    Following a budget correctly has really helped me change my mindset on 'this is how I choose to spend' versus, 'this is what I can't spend money on.' I budget for the things I like to to regularly (like eating out at restaurants), without making sure I don't go too overboard. I used to tell myself, 'no eating out this month to save money', only ending up hating my budget. I now allow more room for my big goals, like paying off debt, while at the same time, I save for life goals, like traveling more! It's all about seeing budgets as managing your resources, not restricting yourself. Great post, I think it hit all right things perfectly!
    • Shannon
      Friday, November 8th, 2013
      Fantastic, Kayla! That is exactly what budget should do and I'm glad you adjusted your mindset. It is all about managing your resources and spending it on the things that matter, including paying down debt and enjoying life. Thanks for stopping by and commenting. I appreciate it!
  22. Sunday, November 10th, 2013
    Budgets are how I manage our expenditures. Granted there are times where I don't strictly follow one, but whenever I am considering a purchase outside of the routine expenses (aka groceries and kids' stuff) I review what I've already spend this month, and how much I have left to spend before I've tapped out my monthly spending money. If it "fits" into budget, great. If not, unless it's an emergency, it has to wait. I'm doing that now with our holiday shopping. Back in September I created a budget and gift list. Then I spread the purchases across Oct. Nov. and Dec. so that I have the money on hand for the purchases.
    • Shannon
      Sunday, November 10th, 2013
      A budget is a must-have for me too, Carol. I love that you created your holiday budget and gift list back in September so the cost could be spread out. It's so much easier and less stressful when you plan ahead. So many people don't set a holiday budget and end up spending more money they could afford. Starting a new year with new debt isn't much fun!
  23. Sunday, November 10th, 2013
    Great concept! I love how a budget frees up opportunities to do things you really believe in. Thanks for sharing this!
    • Shannon
      Sunday, November 10th, 2013
      Thanks, Maggie! I really believe budgets get an undeserved bad rep. They really can be freeing. :)
  24. Wednesday, November 13th, 2013
    I live by my monthly budget. I plan for the month before, if something comes up that I don't know about last minute and I can't pay for it with my monthly spending cash then it doesn't happen. Its helped me tons to stay on track of paying down my bills!

    Great tips!
    • Shannon
      Thursday, November 14th, 2013
      It sounds like you got a great plan in place that works for your Arelis and that's what matters most. There is something that comes up but it's great that you're holding true to your budget.
Shannon Ryan SHANNON RYAN, CFP®
  • Meet Shannon

    "As a Certified Financial Planner, it is my passion to help individuals and families build a healthy relationship with money. I look forward to helping you raise financially confident kids.” - Shannon Ryan
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