Money Myth Number 2: "Budgets are so boring and restrictive"
When the budget you’ve been given doesn’t take into account that you have a life, with its own wants, needs and desires, then it’s true, a budget is a restrictive plan that is just about the numbers.
So, let’s get rid of boring budgets.
Firstly, let’s deal with the name. Budget. Even the name sounds awful. Who wants to be on one of them?
Not me. To me, “budget” means, “It’s wrong to spend money! Never mind if you’re miserable– look how well these numbers add up!”
But the thing is this: whether we are on a budget or not, every month we will spend money. And knowing in advance where that money will be spent is a key part of great money management and being connected with our money.
So every month, I now set up what other people may call a “budget”, but what my MoneyMinder Online account calls a Spending Plan. The difference isn’t just in the change of name.
“Spending Plan” acknowledges that, yes, money will be spent this month. Not only will it be spent, but some of it will be spent on (gasp!) things that make me happy.
The naming thing doesn’t stop with just the title, “Budget” vs Spending Plan. One of the features of the Money Minder Online Spending Plan is that you can rename all the categories, add them, combine them, and re-order them.
That’s because the Spending Plan isn’t just about the numbers. When you look at where you are spending your money, you see your entire life. And everyone’s life is different.
For example most budgets don’t have a separate category for pets. This is fine if you don’t have pets, but if you do, then they are often an important (and not inexpensive) part of your life. If there’s no category for “Pets” then where do vet bills go? What about their food costs? Pet care when you’re away on holiday? Grooming cost? Toys? Pet insurance? This is YOUR life, not the budget form designer’s.
To be fair, you could put the money you spend on your pets under “Discretionary, but that makes it sound like it’s a frivolous want to take your pet to the vet, and let’s face it, it’s not.
A Spending Plan is motivating because it is about your life, and how your money is going to help that to happen the way you want it to.
It’s your money, your spending plan, and your life.