HOW TO BUDGET FOR 2024! Tips from a money coach

As a money coach, I often hear people say that they need a budget to get their finances in order. However, I have found that traditional budgeting methods simply do not work for most people. In fact, they can often cause more harm than good.

One of the main issues with budgeting is that it lacks flexibility. Life is unpredictable, and budgets do not account for unexpected expenses or changes in income. Additionally, budgeting can create tension and resentment in relationships, especially when one partner is more committed to the budget than the other. In my experience, there are more effective alternatives to budgeting that can lead to long-term financial success.

The Problem with Budgeting

I have seen countless individuals and families attempt to use traditional budgeting methods to manage their finances, only to end up feeling frustrated and overwhelmed. Budgeting is often compared to dieting, and just like diets, they rarely work in the long-term. Here are some of the negative consequences of using a budget:

• Lack of flexibility: Budgeting can be rigid and inflexible, making it difficult to adapt to the ebbs and flows of life. One of my clients, Gail, and her husband, Dan, were using a budget, but they weren’t talking about their money. Gail assumed they were operating out of the budget, but in reality, they had accumulated $50,000 in debt. If you’re not using the budget or checking in regularly, you can’t assume that it’s working.
  
• Over Reliance on budgeting apps: While there are many good budgeting apps available, they may not be suitable for everyone. For example, some clients have come to me with lots of debt, and they’re using budgeting apps but are still way off track financially. These apps track different categories, and overspending in one category and underspending in another can make it challenging to figure out where your money is going.
  
• Lack of simplicity: Budgeting can be complicated and challenging to follow, especially for those who are not financially savvy. Saying that someone is “stupid” for not being able to follow a budget is not helpful or productive.
  
• Lack of fun: Budgeting can be restrictive and take the fun out of life. It can create a plan and system that one feels obligated to follow, leading to resentment over time. One partner may love the budget, while the other hates it, creating tension and conflict in the relationship.
  

I encourage my clients to ditch the budget and start to focus on developing healthy financial habits and communication skills. By focusing on open and honest communication, we are able to get you back on track by identifying your priorities and creating a plan to achieve your financial goals.

Instead of budgeting, you need to have systems in place to manage your money effectively. For instance, you need to communicate openly and honestly about the choices you make regularly. If you grew up with limiting conversations and ideologies about money, you need to address them and find ways to overcome them.

Mark and Amber’s Financial Journey

I have seen many clients struggle with the traditional sense of budgeting. Mark and Amber were one such couple who came to me with over $200,000 in credit card debt. They had been following the Dave Ramsey method, but neither of them really believed or wanted to budget. As a result, they were constantly arguing and pointing fingers at each other when it came to their money.

The first thing I told them was that they didn’t need a budget. Instead, we needed to focus on healing what had happened as a family and what would continue to happen if they didn’t talk about the real issues. The credit cards were just being used as a way to check out and not stay on the same page.

We worked on getting them to a place where they were willing to listen to each other and meet each other’s needs. This was a much harder conversation than just putting a budget in place. We talked about their priorities overall in life, not just financial priorities, and what actual wins they could both have as a family and with their kids.

Mark had grown up in a household with a lot of scarcity and fear, and his dad had taught him that spending money was a bad thing. This was hurting him and his self-esteem as a business owner, and he wasn’t performing in his business the way he wanted to. On the other hand, Amber had grown up around a lot of money and was used to getting what she wanted. They were operating from two totally different energetic places, and a budget wasn’t going to solve that.

Instead, we got them on the same page about what was important to them as a family and talked about their communication regarding the choices they were making on a regular basis. We also set them both up with their own spending accounts to track their money and realize where they could make changes.

Overall, Mark and Amber’s financial journey was not about budgeting, but about communication, understanding each other’s needs, and setting priorities.

Effective Alternatives to Budgeting

Instead of budgeting, I suggest trying these effective alternatives that will reset your financial life today and forever.

Set Up a Spending Plan

Instead of a budget, I recommend setting up a spending plan. A spending plan is a flexible and more realistic approach to managing your finances. It allows you to track your spending and adjust your plan according to your needs and priorities.

Practice Mindful Spending

Mindful spending is about being intentional with your money and aligning your spending with your values and goals. It involves taking the time to reflect on your spending habits and making conscious choices about where your money goes. By practicing mindful spending, you can reduce your expenses and increase your savings without feeling restricted.

Use Automation

Automation is a great way to simplify your finances and ensure that your bills are paid on time. You can set up automatic payments for your bills and savings, which can help you stay on track and avoid late fees. Additionally, you can use apps and tools that automate your budgeting and savings, making it easier to manage your money.

Focus on Increasing Your Income

Instead of cutting back on your expenses, focus on increasing your income. This can be done by taking on a side hustle, negotiating a raise at work, or investing in your education or skills. By increasing your income, you can have more money to put towards your financial goals and reduce your reliance on strict budgeting.

Conclusion

I’ve been trying to convince people to Stop Budgeting for a while now. It’s not flexible and doesn’t work for most people. Instead, take the first step and break out of the cycle by contacting me today!