Living within a budget would seem to be a perfectly straightforward proposition. The first part of the task is creating the budget. You list all of your income, then list all your expenses, add them up and compare the two. The second part is following the budget. You know how much you can afford to spend in any given category, so you don’t spend more than that. Again, perfectly simple. How hard can this be?
The answer is, “Very hard, indeed.” Setting up a budget is something most of us know at least basically how to do. Yet actually creating one—let alone following it—is something many people can’t seem to do successfully.
One reason for that may be the word “budget” itself. For many people, it implies restrictions, limits, spending less, and a sense of “I can’t afford it.” This is similar to the way we associate the word “diet” with “restricted diet” or “eat less.” Yet the word “diet” simply means a description of what you eat.
In the same way, a budget is simply a summary of how much you spend and what you spend it on. Because the word has such a negative connotation, though, it may work better for you to use the term “spending plan.” This isn’t a nitpicking or trivial distinction. I have seen workshop participants change their thinking about budgeting simply by changing the way they describe it. “Spending plan” implies something that is purposeful and under your control. It gives you permission to spend money in ways you choose instead of implying blame or a sense that you need to cut back.
Another creative twist that helps some people follow a spending plan more successfully is to rename the categories. Generally we simply list expenses as housing, food, insurance, car expenses, and so on. Instead, it might work better to describe each category by what it represents or provides for you. Think of what you really want or need in your life—from basic shelter and nutrition to good health, fun, satisfying work, spiritual growth, and connections with the people you care about. Make your own specific list, then use it to create the categories in your spending plan.
Using this method, your mortgage or rent payment might be listed as “nurturing environment” or “dream house” or “warmth and safety.” A health club membership or a trip to the dentist would come under “health investment.” Savings might be described as “security for the future” or might be put under “fun” or “family relationships” as “next year’s vacation.” Car expenses might represent “freedom to come and go as I please.” Clothing could be “self-expression,” “looking my best,” “comfort,” or “professional work appearance.” Insurance might fit under “security” or “being a responsible parent.” Paying off debt might come under “being a responsible adult,” “working toward financial freedom,” “respecting myself,” or even “learning from past mistakes.”
Again, like using “spending plan” rather than “budget,” this is more than just a semantical gimmick. When you think of what you spend your money on, and you emphasize what you get for each item rather than simply listing it, you are changing the way you think about your spending.
Using this method, you may find some items that give you more value than you had realized. You may find others that don’t seem to provide anything worthwhile for you, and you might choose to reduce or eliminate those. In either case, this renaming approach may help you make some positive changes in your spending patterns. It also may make it easier for you to create and then follow that “simple” spending plan.