Budgets make me feel inadequate, but made me rich

EOD_Steve_Rich_Pic

Image courtesy of stockimages at FreeDigitalPhotos.net

Last year I recorded a show about the 7 Common Denominators of the Wealthy.

It was then I realized there were many commonalities related to having – and operating on – a household budget.

With so many wealthy habits tied to being on a budget, why is it that most people don’t do one? It is because budgets makes us feel inadequate.

It certainly has made me feel inadequate. Tell me if you’ve felt the same way before too.

Budgeting makes me feel inadequate

Think back to the last time you created a budget. How did that make you feel?

I’ll tell you how it made me feel: Inadequate.

  • We wanted to buy my daughter a computer for Christmas
  • My wife wants to upgrade the stereo in her 8 year old SUV
  • We need to replace the windows in our house (it was crazy-cold last winter!)

All of these dreams go into our budget to see what can be done. Guess what? We can’t do everything we want.

Even with two breadwinners in our household, we can’t do it all. I like the way Paula Pant puts it: “You can afford anything, you just can’t afford everything.”

I feel inadequate and don’t like what our budget is telling me. Our budget is telling me “No” when I want it to tell me “Sure, go right ahead Champ!”

Budgeting makes me feel controlled – and I am

I am 100 percent positive that I would be blowing tons of cash if we didn’t budget. We would be visiting Target unnecessarily, our house would be full of silly plastic stuff, and I’d be receiving more than my fair share of drop-shipments from Amazon.com.

However, budgeting allows us to pay the mortgage, buy groceries, and heat the house without trapping ourselves in credit card debt.

We create our household budget before the month begins so we can decide where it should go. Once money is allocated for necessities (food, shelter, transportation and utilities) the rest is ours to do with as we please. But there is only so much we can spend on entertainment without neglecting the need to pay for our cell phones and such.

By having a visual representation of our “spending power” we are letting ourselves be controlled. But guess who put those restrictions on us? We did. It is our budget that is controlling us after we created it.

Budgeting is necessary to make money last longer

Even though I feel controlled and inadequate by our spending plan, we do realize the importance of doing a budget every month. It forces us to face reality, make smarter purchasing decisions, and get what we want when it makes sense to do so.

I look back at our purchases from 2014 and think we spend way too much on food and our summer vacation. But guess what? It’s OK. It’s our budget!

We still reach many of our goals like paying cash for vacations, saving for retirement, and staying out of debt.

Also, the money we make goes farther because it’s being put where our values are. It is for this reason alone I can look past the inadequacy that my budget makes me feel.

Budgeting has helped us to double our net worth – and you can too

Last year I shared How We Doubled Our Net Worth. We didn’t inherit money or win a lottery, we just obeyed some common sense principles that anyone can follow.

It was our budget that helped keep our spending in check. It was our spending plan that pointed dollars to our retirement plans. It was purposeful spending that allowed us to spend money on the things we wanted and stop spending foolishly on things we didn’t.

Do you want your money to go farther? Would you like to double your net worth in eight years – or  at least get your life back from the enemy (debt)?

The first step is to get on a budget. This gives you the power to tackle the second: Get rid of debt and soul-sucking interest payments!

Start your own budget today

Not sure where to start?

Here are five budgets that work – that is, if you work the budget:

  • Pencil and Paper: Simply list your bills and debt payments on one side and your income on the other. See how far you can get before you run out of money, then start working on cutting expenses and increasing income to get further down your list.
  • Enemy Of Debt budget spreadsheet: Of course there’s a free EOD budget. Why haven’t you tried it yet? Just click here
  • The Absolute Simplest Budget That Works: This is my video course on creating a budget that can be used over-and-over. It fosters communication between spouses, tricks you into revealing your true priorities in life, and allows you to make mid-month adjustments to make the money go farther. My fellow Team EOD members have allowed me to offer a special deal just for you, because you’re the BOMB!
  • Mint.com: Many of my friends use Mint as their budget. It does some magic by importing many of your financial accounts into a free online resource. Check out their webpage for free tutorials on how to use Mint.
  • YNAB (You Need A Budget): Oh my gosh! This is the budget MY WIFE USES, so you KNOW I’m on board! Download and use YNAB on all your computers and add transactions while standing at the cash register or gas pump by using the free Android and iPhone app. Try YNAB free for 34 days and get 10% off by using this link.  Note: This is an affiliate link and I will receive a small commission if you use it. But if you don’t use it you won’t get the discount – so it’s a win-win.

If you already have a budgeting process or program that works for you then please share it in the comments.

The bottom line: Budgeting should give you power and wealth

Budgeting is a tool that allows us to be purposeful with our spending and achieve our goals. Businesses budget, why shouldn’t we?

Track your spending and commit to sticking to your budget for 90 days. I can guarantee you will feel like you got a raise and you won’t feel so financially inadequate.

About Steve Stewart

20 Responses to “Budgets make me feel inadequate, but made me rich”

Read below or add a comment...

  1. I love budgeting! Our budget has definitely made me feel like a failure at times, but it is also the only reason we notice when we get off track. It keeps us accountable.

  2. The reason so many fail with budgeting is their outlook. They see it as a negative thing – restricting their spending. If they flip their outlook around to be more positive – it’s not restricting your spending, it’s helping you achieve your financial dreams – then there is a greater likelihood of following a budget. Too many people though are focused on instant gratification, wanting to see results now or wanting to spend now, and the idea of waiting 20-30 years to reach true financial freedom doesn’t work for them.

    For us, we have used good old Excel spreadsheets, but this year I am going into the digital age and giving Quicken a shot.

    • Yes! Look ahead at your goals! Reach for the finish line – even if it is 30 years down the road.

      Mindset about money is so important to our financial health, don’t you think? I’m sure you’d agree that having a positive outlook on our financial future will help us get through our current financial failures – um, I mean “challenges”

  3. I was helping an acquaintance start a budget last week and we were working through a lot of this. We love budgeting, but it can feel like you’re a failure at times but the great thing is they can keep you on the straight and narrow to reach the goals you want. I think of it as like looking in the mirror – it shows me if we’ve done something wrong and when we do I want to clear it up right away. Without that budget we’d have no clue where we went off course.

    • You’re right John, and we should look all three ways: Forward with our budget (what we plan to spend), around us as we are spending (is this purchase helping me reach my overall goal), and behind – as you said – to see if we did something wrong (or to see how far we’ve gotten while we are winning!)

  4. Having a plan for your money is the key to being successful with it. I’ve tried a number of tools and apps, but continue to come back to tracking my budget in excel. It works best for me.

    • My wife and I used a souped-up Excel spreadsheet for years. I still offer it to my clients once they get out of crisis mode. Did your budget do both the monthly forecasting and track your spending too?

      • JMK says:

        I started our spending plan in Excel in 2005 and this week I’m down to row 10,200. It’s very simple and set up like balancing a checkbook – date, description, amount, new remaining balance. It’s interesting to be able to unhide the rows of prior years and see what we were paying for our utilities 10yrs ago, and also what we wasted money on back then. I always have the spending plan laid out 12mths into the future. We’re both paid the same amounts every other week so plugging in the expected income is straight forward. Our spending at this point is pretty predictable for most things (mortgage, insurance, cell, internet etc. and we stick to the same amounts for gas and groceries every week so I plug in that amount. For utilities I include an estimated amount based on that month’s usage for the past 10yrs so that gets us close. Then as the year unfolds I replace the estimated amounts with the actual spending. I don’t budget for things like hair cuts or random clothing replacement because they happen so infrequently and don’t follow a predictable schedule. Because we’ve cut the unnecessary stuff from our plan we live on about 55% of our take home pay so any week where there is an expense not on the plan we just add a row and there is slightly less excess than expected at the end of the week. Every Friday whatever bills came through that week (gas, grocery, cell, insurance) and which ALL go on the credit card for travel rewards gets paid off. Yes, every week, sometimes before it’s even been posted to the CC website. Then whatever excess is left and not required for large expenses in upcoming weeks gets transferred out to either our retirement accounts or an extra mortgage payment. I never let the balance drop below zero so we never pay bank fees, and it acts as an easily accessible $1k emergency fund. By being able to scroll down the spreadsheet and look at where we should be in 3mths or a year if we stick to the plan, means I can enter an expense we’re considering and look into the future to see the impact. If we have a large expense coming up that’s not an essential and therefore not part of the plan (our annual family trip) then we let the excess pile up for a few weeks/months and then pay cash. We use this method to replace cars as well. When 45% of your take home pay is excess not required to cover the absolute essentials it doesn’t take more than a few months to pile up enough for the next 3yr old car (which we’ll drive for at least 10yrs). I can’t imagine not having a spending plan. How would you really know where you were at? The balance on the bank account tells you nothing if you don’t know when the next pay will arrive or what upcoming bills need to be covered.

  5. Kathy says:

    I’ve never understood people’s aversion to budget. After all, they have complete control of it. If you want to plan for a new stereo, put it in a budget category, save for it and buy it without any guilt or remorse. When I was a kid, my mom always said “we poor people have to pick and choose what we spend our money on” and in my child’s mind I felt deprived (perhaps because Mom didn’t choose to spend our money on a new dress for me). But having a budget allows you to do exactly that. You get to pick and choose what is important enough to include in the budget. That is ultimate control in my opinion.

    • Oh yeah, you got it. The budget is complete control. Most people think a budget is restricting but they would be wrong. It’s not the budget, it’s their income. That’s why people who make $40k and those who make $100k can feel the same about a budget – it’s what they try to accomplish within the confines of their income that makes them feel deprived – not the budget.

      Thanks for the comment Kathy!

  6. Our budget is telling me “No” when I want it to tell me “Sure, go right ahead Champ!” Ha ha, funny mine tells me the same damn thing! I totally get where you are coming from. If I didn’t have my budget, I’d have one fabulous wardrobe, and probably a trip planned, and very nicely pedicured toes. Sigh…but I have a healthy diet, a roof over my head in a cute, safe neighborhood, a reliable car, and just a small car loan for debt. Do I want more? Sure, but my budget is a lifesaver as far as keeping me afloat and not going into credit card debt or doing something stupid like dipping into my retirement fund.

  7. Nicole says:

    Our budget is telling me “No” when I want it to tell me “Sure, go right ahead Champ!” Ha ha,

    Hahahahaha i feel the same way as you do Tonya 🙁 :'(

  8. I’m with Kathy on this, I think having a budget is about being in control and being smart. We’ve used Quicken for years and we have monthly “budget meetings” to see how we’re doing and make any needed changes.

  9. Being on a budget is a hit of reality, and it can be a bit of a downer – like leaving the Matrix and recognizing his reality in a liquid-filled vessel was a downer for Neo. But when we’re not on a budget, the Debt Matrix of “You can have it all!” / “Buy it now!” / “You deserve it!” is more free to work on us. I know where that leads. I’ll take budgets and the reality they make me face over the Debt Matrix. (If you haven’t seen The Matrix, this will make no sense at all, and I apologize.)

    • “If you haven’t seen The Matrix…” Who hasn’t seen The Matrix? It’s the BEST MOVIE EVER!

      Top 5 reasons why being in debt is like being in The Matrix:

      #5 – It takes a lot of fancy moves to escape it

      #4 – The “Machine” needs you in order to stay alive

      #3 – No matter how much we are told that the world revolves around it, there is no spoon

      #2 – Loan Officers wear the same suits as The Agents

      #1 – When we are in it, we don’t want to know the truth

  10. My budget definitely makes me feel inadequate right now — but I’m hoping it makes me rich too. Or at least comfortably middle-class 🙂 The idea of planning ahead for emergencies instead of paying-as-I-went with credit cards was a pretty new one for me and I’ve adjusted my mindset but my bank accounts are still catching up; I hold my breath every month hoping that the car will hold off on needing anything until my savings are fuller! I’d feel better paying for a $200 repair out of $600 saved-up repair dollars rather than draining the category or having to borrow from another savings location.

Leave a Comment...

*