The 50/30/20 Budget:
Let me just start with a disclaimer before going much further. I'm not the kind of personal finance person that loves sitting around and doing a budget every month. So, I like to keep it simple. I basically use the 50/30/20 Budget as a baseline, but I am also very willing to adjust those percentages and categories however I see fit. Of course, I only do that once I know where I am sitting in the first place. The basic gist of the 50/30/20 Budget is as follows: Everything falls into 3 basic categories and gets assigned a percentage of your take-home pay (which is actually your net pay plus you add back in elected deferrals, but not taxes withheld). No more than 50% should go to fixed expenses; 30% to flexible (or lifestyle) expenses; 20% to goals (like saving, investing, paying off debt).
Resistance to Budgeting:
Okay, now that we've paused to talk logistics of budgeting (or at least my general preferred method), let's return to discussing resistance in the area of budgeting. When looking at the three category types, fixed, flexible (lifestyle), and goals, is there any immediate resistance popping up? Do you fear learning what your fixed expenses really are? If they're above the 50% guideline, will you judge yourself negatively for "not leaving yourself enough wiggle room" in the other categories? When you think about the flexible category, also known as "lifestyle spending," are you afraid to learn that your spending is somehow "out of control?" Even if you did learn such a thing, what would happen? Would you feel somehow required to beat yourself up for your past actions, and would it do you any good if you did? When you think about the goals category, do you feel anger and fear over the debt you are holding or the retirement savings account you "haven't done enough with?" It seems to me that the resistance around budgeting may have a lot to do with our inability to let go of self-judgment. I want to let you in on a little secret: beating myself up has never made me a better person, but forgiving myself has.
We forgive others a thousand times over, and yet struggle to extend the same grace to ourselves. Remember that the nature of judgment is poisonous to the development of our inner selves because it separates us from love. In fact, love is one of the primary reasons to work out a budget. Again, it doesn't need to be a complicated one, but we must love ourselves enough to create a spending plan that allows us to live our best lives. In all fairness, that's all a budget really is anyway.
I spoke to a client (who has given me permission to share) about this topic and she expressed that "I think my resistance stems from a combination of just the confusion factor of keeping track of it all, and leftover fear from when I didn't have enough." This remarkable piece of self-reflection is specific to this particular client's situation, and yet I think it resembles much of the resistance many of us face when it comes to budgeting. I think many of us feel as though there's entirely too much to keep track of accurately. First, I want to say that these feelings are perfectly valid. Then I want to share yet another little secret. Once I figured out my budget using the 50/30/20 plan, it greatly minimized the number of things I'm actively trying to keep track of every month. Fixed expenses really don't change from month to month. So, unless you're doing something to intentionally change one of them (like move), it's not likely to be a category with much movement. The goals category doesn't change all that much for me month to month either. Retirement contributions and liquid savings are fairly automated. Debt repayment could vary if you're actively trying to pay off something. But in all actuality, you probably also won't have a lot to keep track of in this category either. That primarily leaves your flexible/lifestyle category. These things will probably vary and will be the ones you are watching out for month to month. After a short period of time, you are very likely to see patterns, which makes things much easier.
The second part of my client's observation is equally interesting. This person cites "leftover fear from when I didn't have enough." If you've ever endured an eviction, a bankruptcy, or even simply a time in your past when there wasn't enough, you might have a resistance to budgeting because scarcity mindset is being triggered. You don't want to see that there's "not enough," therefore you don't want to see at all. This scarcity mindset relates directly to our need to identify our "old story" where money is concerned. In doing so, we will be able to identify what strengths we gained, but also the areas in which we experience resistance as well. The budget could very easily be a place where this old story pops up and decides to make itself known to you. When this happens, it is critical that we examine the old story for what it is, old and in the past. Let's honor the parts that are deserving and release ourselves from the rest.
I'd like to suggest that we work to reframe the idea of budgeting in our minds. Rather than it being a source of pain, suffering, and a reason to beat ourselves up, perhaps we can see it for what it really is, a roadmap to freedom. If freedom is your ultimate destination, you need a good roadmap to get you there. It will contain a variety of options, and ultimately you will choose which one you will travel. When you do, it will be an informed decision because you will have studied your roadmap and chosen the path that's right for you.