A monthly budget is a work of art, not a science.
People tend to put too much pressure on themselves to be exact and do it right. Gone are the days of old-fashioned budgeting like our grandparents did where there was $400 for groceries and that’s it. Today, being financially savvy means knowing that change is the only constant and that life will throw you curve balls. Practicing financial wellness means learning how to walk through the twists and turns with awareness and grace.
When my clients fall off their budgets, I tell them to remember this process is about making progress not perfection. Here are four concrete guidelines for striking balance with your finances.
1. Your financial planning system must be aligned with your personality and learning style. To create a sustainable system, make sure it’s highly customizable and flexible — allow room for mistakes. It shouldn’t be overly automated. Your system should encourage you to proactively plan on a monthly and annual basis and address the entirety of your financial life.
2. When overspending happens, financially empowered people pause and take a moment to reflect on what happened, particularly if there were signs of urgency or compulsive behavior like, “I want it now, so I’ll deal with it later.” There are five primary reasons people overspend: periodic expenses, income, planning, emotions, and credit cards. For help identifying and preventing overspending, refer to this blog post.
3. Cultivate the art of moving money around within your budget. This is called adjusting. Life on life’s terms means giving yourself permission to change your mind and move money between categories. Rearview mirror (end of month) accounting, and the powerless feeling that comes with it can be avoided by staying connected and making adjustments often to maintain a balanced plan. If overspending spending happens, a financially responsible personknows there is a little less money for something else this month and acts accordingly. I encourage my clients to have a completed spending, saving and earning plan before the first of every month. I do not expect them to know exactly where their money is going to go, but they need to have intentions, boundaries and goals in place. Every month, they create a plan that is balanced so that they know if they spend, save and earn according to this plan, there will be enough money left in their accounts at the end of the month to start the next month in the green.
4. Expanding your financial life requires you to be flexible on the art of personal finance. It is a fascinating journey! While it may be tempting to throw your budget out the window after a bad retail therapy day, remember what your goals are for your own financial success story. Keep your intentions handy and read them often to remind yourself that there is a method to the madness. You too can experience a sense of great possibility and more peace of mind around money by tuning in and mindfully tending to your garden of money.