The
“B” Word
Unfortunately, many
folks view budgets like diets: “deprivation.” But that’s because they don’t have an “authentic
budget.” An authentic budget is a gift you give to yourself which doesn’t involve deprivation.
An authentic budget
reflects and affirms your priorities, honors your values, and assists you in playing the game of life to win.
Do You Play
to Win -- or to ‘Not Lose’?
When I was a young
girl, my dad and his friends played poker for fun. (My mom never bought that line!) He won a lot. One day, a poker friend
asked what his secret was. Everyone got very quiet waiting for his answer. “I play to win, and you play to not lose.” At the time, I
realized this was a vital part of my father’s success in life—even though I didn’t know what it really meant. Now, some 40 years
later, I think I have some insight.
Playing to win is
proactive because all your resources are applied to the task at hand. Playing to “not lose,” on the other hand, is reactive, because you
react to what others are doing or not doing. Playing to win trusts in the goodness of the universe while playing to “not lose” means
knowing that something will go wrong.
When it comes to the
game of life, most folks play to “not lose.” Their relationship with money is one of fear and impending doom. They get so focused on
saving pennies that they miss out on the big picture, often losing hundreds—or even thousands—of dollars a month.
To make matters
worse, our brains are wired to keep us in the “not lose” mindset. The left brain (the fear center) constantly focuses on negative
thoughts like “I’m a failure” or “I feel guilty.” The right brain, on the other hand, sees the big picture and
keeps us moving in a positive direction.
The left and right
brain need to stay in balance so you can get your finances under control. Some tips for doing that:
Step
#1: The big picture. Engage the right hemisphere of your
brain! Caroline, your left brain created inaccurate conclusions about the article and that’s why you felt so guilty. The family in the article
has different values. They think in “deprivation” mind set. They moved out of NJ to facilitate the “diet” oriented budget.
They don’t take vacations, don’t buy treats and—in short, are living a deprived lifestyle that’s totally at odds with your
commitment to joy and prosperity. The frugal family is also mal-nourishing their children. $3.89 cents to feed a family of 6 noodles and tomato sauce?
Need I say more? An authentic budget for them would never be an authentic budget for you.
Step #2:
Discernment: Now that you have a more balanced “right brain” picture of the thrifty family’s situation, what does your
gut tell you about your own budget?
Right! Your budget is
still off!
At this point,
don’t fall into the trap of assuaging your guilt by 1) rationalizing, 2) justifying, 3) minimizing or 4) defending. (I call these the four
horsemen—as in the apocalypse, because they lead to disaster). Now is the time to honestly look at why your budget is off and leave guilt and
failure behind so you can make responsible choices for the future. (Responsibility means the ability to respond correctly.)
Let’s revisit
your budget: In the homework you provided me, Caroline, every budget category—with the exception of your mortgage—was off. Some were way
off. More about that below.
Step
3#: Gratitude. Give thanks you have the ability to notice
you are off. Awareness is the hardest part of any situation. Appreciate that you have the tools and resources to get back on track!
Step
#4: Action. With feelings of guilt and failure aside, you need to adjust your budget and your habits. If you add a new expense, what other expenses
will you cut back on? If a one-time event has realigned your budget (or a series of one-time events), you still need to make adjustments.
Caroline, you took my
“cash out” challenge, and did your homework—
1 month of receipts
so I could diagnose the problem in detail.
Here’s what I
found:
Kids and
money
Like many families,
you’re unconscious about spending money on your children. You say you think you spend about $200 a month in impulse purchases for them,
including the video store ($11 dollars on popcorn and candy?), the pizza place and the grocery store.
Want to know the real
number you spend on “add-ons,” Caroline? $600 a month! OUCH! Basically anywhere you go adds an extra 5-10% to the cost.
The cash-out challenge revealed you are an impulse buyer. On almost every occasion, your “normal” spending was kept in check only
because you did not have a credit card or checks with you. I know this surprises you, as you do not think you are an impulse buyer! (Statistically,
about 50% of our purchases are impulse!).
Teach the
Kids About Money
I can’t
encourage you enough to empower your children by setting them up for success. Give them each $10 a week. That’s $120 a month for all 3. Remind
them before leaving the house to bring their own money. Let them buy whatever they want (as long as it’s in line with your values) but ONLY if
they have the money.
DO NOT loan them
money or fill in the gaps—not even sales tax! Then, when they declare, “I don’t have enough money,” affirm that they may
not have enough, but that they certainly could have it next time if they save up their money now.
You’ll all be
“richer” for it.
Avoid the
Withholding Tax Trap
You’ve set up
your withholdings to get money back from the IRS, but as I’ve said for years, this is a bad idea. You don’t receive interest or benefit
from the money that is withheld year-round. Although you’ve made a lot of progress reducing your credit card debit, IT WOULD BE GONE BY NOW if
you had changed your withholdings and used that money to pay off the debt.
This would leave an
additional $500 dollars a month to “get into the game of life.” Add this to the $600 you’re overspending, and you now have an
extra $1,100 a month to put toward the life of your dreams.
I told you there
would be magic!
Here’s my
advice, in a nutshell:
Develop your
awareness. Change your perception. And what was “possible” is now probable. “Expanding your Money IQ” means being open and
aware. We are always responsible. Which means: we have the ability to respond. Our ability to respond depends on our perception, our perception
on our thoughts, and our thoughts on our awareness.
Be aware of your
“self talk.” Realize the brain is trying to help, but it’s your job to make it work for you.
Karen has a Ph.D. in
Psychology and Master’s Degrees in Business and Economics. Karen blends hard money skills with life skills, and wants everyone to learn to live
a life of joy and prosperity. She’s committed to teaching folks how to accomplish this. If you want more information on budgeting, the
“cash-out” challenge or her upcoming books, please e-mail info@KarenMonroy.com
And if you have a
question(s) for Dr. Karen, please e-mail: info@KarenMonroy.com |
