Financial Success Does Not Start With a Budget

The personal finance niche is a big lovers of budgets. You likely can’t go to a single blog without reading at least one post about them. While most of us are proponents for them, there are a few who make it work without one (though not something I recommend for most). I would argue that while a budget (or close money monitoring) is imperative for financial success, despite what most ”budget posts” will tell you, establishing a budget is not actually the first step in taking control of your finances or ultimately allow you to reach your goals.

Before you can even think about establishing a budget you need to understand you. You need to understand your spending habits and the emotions behind it all.

Sounds silly, obviously you know who you are right? Not so easy though.

People often don’t know or understand the emotions behind money which is how they end up in trouble. Though this is especially true for someone who is in debt and looking to get out, it’s not just people who are in debt. Paying debt off is just one of many financial goals one person can reach. If you’re attempting to reach any financial goal and simply can’t- failure to save for a goal, inability to control spending, get out of living paycheque to paycheque- you need to deal with you before you try to control anything else, especially money.

A budget is a way of consciously controlling how and where your money will be designated. If you don’t understand your personal relationship with money it simply will. not. work. The attempted budget will fail.

I remember the day I decided enough was enough. The debt finally had to be dealt with and we needed to get real, I had so much determination that day. We were going to do it! We were going to be debt free! We were going to budget! I spent weeks establishing our first budget, fool-proof it was. I researched everything about what people who were trying to pay debt off {insert your personal financial goal here} needed to do to be successful, so we couldn’t fail.

Except we did.

I tried, I really did but my budget failed. I looked at the numbers. I recalculated a bazillion times but I couldn’t make it work. I reread every bit of advice, why wasn’t it working for us?

Because I wasn’t paying attention to us. I wasn’t paying attention to our real life spending habits.

It wasn’t feasible to think we could really live off $50 per week for food for our family of three when 2L of milk costs over $4.00 and 12 eggs is $3.00-4.00. We had an infant in diapers, I was still breastfeeding extensively (read: ravenous appetite), food is expensive here and we have nutritional goals to meet.

My point is that I started my budget before I looked at my real life. While some families can thrive on $50 per week for food, we can’t. I didn’t look into our spending habits at all when I budgeted the first time. I didn’t see what needed to change and what didn’t. I dove right into ”expert” advice without talking to the CFO of the company whose finances I was attempting to control- me and my family.

Establishing a budget isn’t scary. It’s liberating. Taking an in-depth look at your finances for the first time however, is terrifying but if you want to move forward in your financial life you need to do it.

If you need a little help may I recommend, what I imagine will be a life changing $17 investment, into the Mindful Budgeting program developed by the lovely Cait from Blonde on a Budget? Though I haven’t personally used it there isn’t a single doubt in my mind it will change many financial paths going forward.

Note: when I wrote this post Cait hadn’t announced this program yet nor did I know anything about it. I am in no way affiliated with it but I whole heartedly endorse anything she stands behind and support the programs purpose. Go Cait!

Enjoy Plunged in Debt?

Pid

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Comments

  1. For me, financial success starts with a mindset that you’d go all the way and do the best thing to do to reach your goals. This is what I did and it is followed by making a strategic plan as to how I would reach every goal I set. Then, everything just follows smoothly.

  2. I agree with Jayson that financial success starts with a mindset. Until I changed my mindset, budgeting was a waste of time. Once I realized that I was living below my privilege, the passion of becoming debt free changed me forever.

  3. My first few attempts at a budget were epic fails because I wasn’t realistic about what expenses we had and what I really wanted that money to do for me. Once I figured that out, it was amazing. I could have quit the ‘budget game’ numerous times and had evidence they don’t work. So glad I pushed through to the other side.

  4. As you mentioned, both your budget and goals need to reflect your own current situation, not other people’s.
    In the PF community, it is very easy to forget this. We tend to compare ourselves to what others do and want to do the same thing. But we don’t actually check that it is the right thing for us in the first place, until we fail.

  5. This is so true. I have to up the food budget. It was a fun experiment to do $250 a month and it worked but then the kids started eating like horses and I want to buy them fresh, nice produce. 🙂 So I’ll be changing that quite a bit!

    • Catherine says:

      Yes produce is a big one for us too. Maria is definitely picking but loves fruit so we pay a ton for it!

      • I’m on a budget and I eat well. I eat lots of fresh fruit and fresh produce.. For those items I shop the
        Latino markets. I have done this in southern California and in Las Vegas and found prices up to 70%
        better then in regular markets.(Vons , Smiths, Wall Mart ………….)
        Furthermore I buy what’s on special. I’m talking about the big stores not the Mom and Papa stores.
        Since most shoppers in those markets are Latinos , they treat Anglos especially nice. If you live in an area with a large Latino population you will find Latino markets. I also found that almost everything except fruit and produce is over priced in those markets.

  6. I SO agree with this! Any time anyone asks me to help them with their money, the first thing I tell them to do is track their spending for three months. I’d never be able to build them a realistic budget without first knowing what they’re already spending!

    Incidentally, this is also a really great way to weed out the doers from the talkers. If you can’t track your spending for three months, you probably aren’t serious about improving your financial picture.

  7. I had tracked my spending for 3 months before making my first budget. If I hadn’t done that I’m sure my first budget would’ve been a total fail too!

  8. You hit on the big reason most people’s budgeting fails: the budget they sent isn’t reasonable. Instead of drastic changes I recommend people simply get in the habit of recording their income and expenses each month. Once you have a few months of data you can find areas where you are spending more than you’d like or that would be easy to cut back on.

    The other reason I think budgeting fails is simple: It takes work. Even recording your income and expenses takes an extra hour (or a few hours, especially at the beginning) and most people are bound to simply give up.

  9. Well put. I was constantly stressed out that our budgets failed. Because I would budget based on logic and what should be. Failing to take into account our health problems (read: co-pays and more convenience food) and my husband’s ADD, which makes him more prone to impulse purchases.

    In the end, it all proved to be too much to predict. Instead, I just started giving us a weekly amount to spend. It’s still a budget in the broadest sense of the word, but it doesn’t have me constantly fretting about specific category spending. Yet it still keeps our spending in check.

  10. I 100% agree with you. You have to have your mind right before anything else. Then you can make the magic happen.

  11. It’s so true! We have to do what’s right for our families first and not succumb to the ‘supposed to’s’. It’s easy to feel like a failure when others are so adamant that their way is the right way. It’s just like parenting, no two homes must do it alike;0)

  12. You’re right, a budget has to be realistic or it’s doomed! It’s a great exercise though to put together a budget that’s consistent with meeting long-term goals. Then if we learn we can’t live within the budget, we get a very useful, strong message: the way we’re living is not going to get us to where we’d like to be! Then we’re motivated to think about making the usual changes–make better money choices, strive to earn more, and spend less–or we have to scale back our goals. So even a budget “failure” has value–your point, right?

  13. Totally agree with you, if you don’t have the right mindset budgeting isn’t going to save you from financial failure. You may do budget for 3 months only to find out you’re back to square one because your mindset and old behaviours.

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