Finding Joy in Budgeting

Why do we struggle with doing a budget?

Doing a budget is like exercise and eating well. We all know we ‘should’ do it and it’s good for us and yet somehow Cheetos, Chapman’s ice cream end up in our kitchens. We know exercise is good for us and yet we can sit and binge Netflix on the couch for an entire day. If it feels like a chore and we cannot connect to our why and find joy, we won’t do it. 

How can a budget bring joy?

By connecting it to our why, our dreams and our goals. When we are clear about where we are going, what we want to have and how we want to live, we have destination or a dream to work towards. Then our budget becomes this powerful tool to achieve that dream and now that it is connected to our why we are more likely to do it. We may never actually enjoy doing a budget but when we connect to our why, we are more likely to do it because the outcome creates joy for us. Just like burpees – I have yet to meet anyone who loves burpees and yet millions of people do them because they love the results.

The goals or dreams for now may be just to survive this pandemic and self preservation. Unexpected events happen, today it’s COVID tomorrow it could be divorce or a critical illness though we don’t wish that on anyone at all. So today we may start a budget based on our why being I need to survive COVID and this financial crisis. Later, we want to connect to our outcome goals of how we want to live our lives and that could include material possessions like owning a home, it could be experiences like how often and in which way we want to travel and it can include some practical things like how do I want to retire and when.

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We want to set up our goals and then work backwards from there. As I mentioned, things can and will happen to derail so it’s super important to have an emergency response plan.  All companies have one and all of us personally could benefit from one as well. When we know our why and have our goals, we are building the budget towards and we have our ERP in place it takes the guess work and emotions out of the equation.  We can then just execute the plan, on autopilot and feel confident and certain. It becomes an essential desire management tool.  It is about what you want most vs what you want now. Going back to the fitness analogy: what I want most is lose 5lbs and get off my diabetes meds what I want now is to binge on my favourite Netflix series eating a bowl of ice cream. It is not that the desire stops -it just becomes easier to manage when you filter decisions through you dreams and goals. 

What is a budget?

Basic concept of a budget is money coming in and money going out. No one likes a dictatorship, right?  Someone telling you what you can and cannot do, where, when and how right?  Do you want your money to dictate your life or do you want to take control of your money, tell your money where to go and have control over your life? Most of us want to be in control and a budget is key to having that financial control. We tell our money where to go, how often and how much -that’s essentially what a budget is.

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A budget is as unique as the person. Your budget, your goals. Not having one is like driving blindly not knowing where you’re coming from, where you are and where you’re going.  When we drive with a GPS, we tell the GPS our destination (our money goals) then where we are now (our budget) and only then can the GPS create the road map or best route to reach our destination.  It’s the same for your budget and your goals. Knowing where you want to end up or your outcome goals, knowing where you are now or your current income and expenses and then you build the plan to get there and have a emergency response plan so you can adjust as needed.

How do you create your budget or spending plan?

On a basic level a budget is just what money is coming in and what is going out. 

Start with your income. What are all your sources of money coming in? -full time job, part time job, side hustle, child support, alimony, inheritance, trust fund etc.  What are all of income sources you have and get a total for that?

Next you want to look at every expense -Fixed vs variable expenses.  If you have never done one start by tracking every penny, have everything flow through your bank account so you can pull up 3 months history. We did a budget for a couple once who estimated their monthly Starbucks expense for their family of four to be $75.00.  After reviewing 3 months of bank statements, they realized it was actually $400.  No judgement here – just find out where you are now so you can make an informed decision of what to do in order to achieve your outcome goals and have an emergency response plan.

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So, you know your numbers now what?  Now you can make the necessary adjustments to the numbers to fit your goals and your situation.

What are you financial and life goals?  What do you need your money to do for you? General goals are emergency fund, pay off debt, saving for the future/retirement, tax benefits/credits.

Now you build your goals into your budget. For example, I want to save $1,000 emergency fund in 12 months.  1000/12= $84/month. Now you may need to find $84 in your budget by reducing spending somewhere or increasing your income to create it or both. There is an old adage, “live within your means”.  We must first understand what our means are – our income or incoming money and then we can work on how to live within it, how to expand it or live below it.

What are some budgeting Apps?

There are many smartphone apps to help with budgeting and they automatically connect to your banking and can automate your transactions too. Be sure to check with your banking institution before downloading such apps to see if it breaches your contract. The top 3 budget apps according to Canadian Living are:

1. Mint: this is a FREE app build by Intuit. It synchs to most financial institutions, categorizes expenses and can make a budget for you. It sends notifications for suspicious activity as well as items that pull you away from your goals.
2. YNAB (You Need A Budget) –similar to mint this app is based on 4 key principals

Every dollar has a job, embrace your true expenses, roll with the punches, Age your money

This app is not FREE, but offers free 30-day trial and is more educational in nature with free online courses.

3. Mylo – this app runs in the background and rounds up your change and invests it in low cost Exchange-Trade Fund or EFT so it’s a budget with a forced savings twist.  Again, this app is not FREE.

What are some great DIY tracking resources?

Janine Rogan has an excellent downloadable excel spreadsheet that is really robust! http://janinerogan.com/2014/07/making-a-budget.html

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 Another fillable tracking sheet is by Erin Skye Kelly https://www.erinskyekelly.com/financial-transformation-download

 Financial Consumer Agency of Canada FCAC some really good tips and a budget tracker and you can earn badges.  Sometimes we need those rewards https://itools-ioutils.fcac-acfc.gc.ca/BP-PB/budget-planner

A really great place to start your first budget is with the Bromwich+Smith budget planner https://www.bromwichandsmith.com/tools/budget-planner