Why Strict Budgeting Doesn’t Work (and what to do instead)
As a personal finance expert, I have seen firsthand that strict budgeting does not work for everyone. In fact, it can be a source of stress and anxiety for many people, leading to shame and guilt when they are unable to stick to their budget. This is why I believe there is no one-size-fits-all approach to money management.
Instead, I advocate for developing a healthy relationship with spending and understanding your personal money mindset and family patterns. By embracing financial experimentation and focusing on your own goals and priorities, you can find a method of managing your money that works best for you. In this article, I will explore the problem with strict budgeting and share a client case study of how we overcame budgeting challenges through a personalized approach to money management.
The Problem with Strict Budgeting
While strict budgeting may work for some, it can actually be detrimental to others. The truth is, there is no one-size-fits-all approach to money. We all have different beliefs, behaviors, and priorities when it comes to our finances. Simply dumping a budget on top of our existing mindset and behaviors is not going to result in new, sustainable results.
One of the biggest problems with strict budgeting is that it can create shame and guilt around our spending choices. When someone shames or guilts us for our decisions, it does not motivate us to make a change. Instead, it can create a shame spiral and temporary motivation that is not sustainable.
Instead of strict budgeting, I recommend focusing on developing a healthy relationship with money. This starts with having an open and honest conversation about our beliefs, fears, and priorities. It also involves experimenting with different approaches to managing our money and finding what works best for us.
Rather than relying on a strict budget, we should focus on understanding our goals and priorities and using our money to support those things. By making money personal to us, we can start to get really clear on what matters most and make decisions that align with our values and aspirations.
In short, strict budgeting is not the only way to be good with money. By focusing on developing a healthy relationship with money and understanding our unique beliefs and priorities, we can create a sustainable and fulfilling financial life.
Client Case Study: Overcoming Budgeting Challenges
I have worked with numerous clients who struggled with strict budgeting. One such client was a successful young woman from New York City who was making over six figures but was drowning in credit card debt. She believed that strict budgeting was the only way to be good with money, but it did not resonate with her. As a result, she was not tracking her money at all.
In our first conversation, I advised her to stop budgeting and to focus on establishing a healthy relationship with her money. We started tracking her money in a simple way that did not involve strict traditional budgeting. This approach opened up some freedom for her to start enjoying her money again and to give herself permission to attend the bachelorette parties and weddings that she wanted to go to.
We then worked on spending, so that she could have a healthy relationship with it. This was crucial because it allowed her to get up close with the things that turned her on in life and the things that she was actually motivated to have. By making money personal to her, she was able to get really clear on her dreams, goals, and aspirations.
If you’re struggling with strict budgeting, I encourage you to ask yourself what the purpose of money is in your life. Write it down and journal about it. Make it personal to you, not based on what someone told you it should be or what you think it is. Embrace experimentation with money and figure out what methodology and systems work for you. Remember, who you are with money will dictate how you manage it.
Developing a Healthy Relationship with Spending
I encourage my clients to develop a healthy relationship with their spending habits. This means understanding their beliefs, fears, and patterns when it comes to money, and finding a way to manage their finances that works for them.
Here are some tips to help you develop a healthy relationship with your spending:
- Define the purpose of money in your life: Take some time to reflect on what money means to you. Is it a means to achieve financial security, to support your family, or to pursue your passions and dreams? By understanding the purpose of money in your life, you can align your spending habits with your values and goals.
- Embrace experimentation: There are many different approaches to managing your money, and what works for one person may not work for another. Don’t be afraid to try different methods and systems until you find one that works for you. Learn from different personal finance experts and create your own system that suits your needs.
- Track your spending: Keeping track of your spending is essential to understanding your financial habits and patterns. However, this doesn’t mean you need to follow a strict budget. Instead, find a simple and flexible way to track your spending that works for you. This could be as simple as creating a spreadsheet or using a budgeting app.
- Give yourself permission to spend: Many people feel guilty or ashamed about their spending habits, which can lead to a negative relationship with money. Instead, give yourself permission to spend on the things that matter to you. This doesn’t mean you should spend recklessly, but rather that you should prioritize the things that bring you joy and fulfillment.
By developing a healthy relationship with your spending, you can achieve financial freedom and peace of mind. Remember, there is no one right way to manage your money – find what works for you and stick with it.
My video about Dave Ramsey upset a lot of people and I don’t care. I firmly believe that strict budgeting does not work for everyone. If it’s not working for you, there is another way. By establishing a healthy relationship with your money and making it personal to you, you can achieve your financial goals and aspirations. Ready to take the next step? Stop budgeting today, I can help you.