Why Your Budget Doesn’t Work & How To Fix It

In Frugal Living, Personal Finance by KelbyLeave a Comment

I’m a firm believer in transparency. The simple act of removing your façade and showing your true self to the world can mean the difference between people getting to know the real you or the caricature you’ve created.

I would argue that, if given the choice, most of us would much rather interact with other authentic people, than carefully contrived characters.

So with that, I need to cut to the chase and come clean with you.

For the past few weeks, while I’ve been giving tips on how to navigate everyone else’s financial landmines, I have neglected to stay consistent with my own. As tough as that is to admit, it’s absolutely necessary. In my quiet reflection on what went wrong, I realized a few points about budgeting that I’ve found play a larger part in financial success than the actual dollars and cents.

Money is more about psychology than it is about math

Much of the rhetoric that you hear from the personal finance “experts” leads you to believe that your money problems are the result of you being poor at math. If you would simply ‘spend less than you earn’ and ‘cut out unnecessary expenses’ you would be well on your way to becoming Bill Gates 2.0.

The problem with this logic is that it doesn’t account for the most important decision-making tool known to man: Emotion.

Just think about the most important decisions that you’ve made this far in your life and try to identify ONE that wasn’t decided in large part by emotion. You come up with anything? Me either!

We are emotional beings, so it stands to reason that trying to take the emotional aspect out of the equation when managing your money significantly increases your chances of failure. This is also the case with debt. Many of the “experts” will suggest that you pay down your debt with the highest interest rates first because, when you do the math, it lowers the total amount that you will pay.

Well, “experts,” this is also flawed because if we simply applied mathematical knowledge to our finances, we shouldn’t be in debt at all. That’s because mathematically you can’t spend more than you earn – although the little plastic card in your wallet persuades you to think otherwise.

You must understand your ‘Why’

Far too often we’re so focused on the ‘what’ that we completely skip over the more important, ‘why’. For example, I recognize that on a day-to-day basis, I am far more likely to question What needs to be done and What steps should I follow to get there, than I do Why am I doing this and Why did I choose this method.

One day, while on my quest to see if I could find the end of the internet, I came across a motivational speaker named Eric Thomas (aka: the Hip-hop Preacher) whose video “What’s your why?” really made me take a step back and think about the motivation behind the decisions I make.

Although his primary audience is athletes and career-oriented professionals looking to ‘level-up’ in their respective fields, I took the context of the message and looked for ways to apply it to my personal finances

Just as it is with any change that you try to make, if you don’t have a strong enough reason for why you’re doing it, the change will be short-lived. As it relates to your finances, in order to find success in managing your money, you must ask yourself some important why questions.

Start with understanding why your spending habits are the way they are. Are you an emotional spender? Can you pinpoint certain situations that are more likely to cause you to bust your budget? Once you’ve satisfied those questions and determined that you want to make a change, your questions begin to sound a little different.

From there, you move to discover your ‘why’ for wanting to make a sustainable life change and why you may want to be debt-free. The answers to these questions are very important as they will often determine how successful you will be on your new path.

Fixing the problem

Let me be clear, I know that getting out of debt and properly managing your money does involve a certain level of mathematical fortitude –after all, it involves numbers. But until we are able to rationalize the psychology behind why we buy what we buy, we won’t get far enough in the journey to apply math to the equation at all.

As I mentioned earlier, recently I haven’t been as consistent with my spending and budgeting as I should have been. I can trace the origin of the problem back to me taking the emotion out of my budgeting process and not keeping my ‘why’ at the forefront of my mind when it comes to getting out of debt.

Maybe some of you can relate. The great news is that we can correct our course. In my situation, I’ve put my ‘why’ at my fingertips, literally. Since my phone is an extension of my hand, and I’m likely to look at it a bazillion (that’s a lot) times a day, I have pictures of my wife and my daughters as reminders of why I don’t want to stay in debt and motivation to not have my daughters suffer from the same financial missteps that caused me so much trouble.

Sure it sounds sappy, but it’s MY ‘why’. Yours will likely be completely different. The important takeaway is that you understand that your financial picture is a lot more than just numbers added and subtracted together. You can read all of the financial tips and hacks online but until you take care of the psychological aspect of your money, you’ll just be spinning your wheels.


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