10 – Is Budgeting a Bad Word?

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Episode Overview:

Today, Ken tackles the idea of budgeting. For some, budgeting spurns negative emotions, when in fact it can be an empowering concept. Ken shares his experiences sharing the idea to budgeting with his wife and how her worldview was not the same as his. To some budgeting seems natural and essential, to others it seems evil and restrictive. Ken found that reframing the concept of “budgeting” to “prioritization” was the best way to overcome the negative associations of budgeting. Ken shares how to iterate your mindset regarding budgeting; He discusses the myths surrounding budgeting, clearing up some misconceptions. Budgeting, if done right, can actually be empowering and not at all a bad thing.

Transcriptions are auto-generated, please excuse grammar/spelling!

Happy Day to you. This is Ken Kaufman and I am thrilled you’re here for Episode Number 10: Is budgeting a bad word?

Now in the last episode, I gave some feedback on tracking net worth, why we do it, how we do it the frequency that we do it within what we do when we do it and where we should do it. Today, it’s time to tackle this concept of budgeting.

Some out there have negative emotions, and this word gives a negative connotation. When they hear it, it is, I think, a very misunderstood word and can be a very empowering word. Let me share a story from earlier in my life shortly after I got married. And you’ll find that I refer to a lot of stories shortly after I got married, because a lot of my perspectives about money and about how to build net worth changed when I now had a partner and I had somebody that I had to work with regularly who had a different perspective, and different way of thinking about it, for which at the end of the day, I’m very grateful because it’s helped to broaden my perspective and see things that I would not have seen otherwise.

So, for me, I have always intuitively understood and valued budgeting money and allocating money. It just came naturally, I wish I could explain to you how it even happened. I’m just naturally drawn to it, to figure it out, to categorize it and organize it in a meaningful way.

I view the money that I have as a resource, and I view my relationship to the money that I have as a stewardship, where I’ve been blessed or given these assets. And I have the opportunity to be thoughtful, careful and intentful in how I try to use them.

Money is a means to an end. Although sometimes I can get so focused on saving it or tracking it that it starts to become the end. But money is a means to an end. And ultimately taking care of it helps us accomplish what we want to get out of life. And for me, I’ve understood that pretty early on, although sometimes I can get a little too focused. But generally speaking, I see it as how I can accomplish things in the future.

So I’ve just always been this money nerd. Back when the internet was getting started and getting its legs in the mid 1990s. I was logging into the Quicken software program on my laptop at college. And I was downloading my banking transactions everyday into this software through a dial-up modem connection, you know, the one that makes that screeching noise. If you don’t know what I’m talking about, there’s this movie from back then called You’ve Got Mail, Tom Hanks and Meg Ryan star in it. Watch that movie. That’s the sound I’m talking about. Anyway, this is who I was, I loved to download and then categorize things and keep track of my budget and where things were going.

So when I got married, I learned that my wife does not see the world at all the way I do, especially when it comes to money. Now, it’s not that she was careless or anything she had successfully put herself through school with no debt. She’d been careful with their money, frugal with her money. So she had a good handle on what was happening in her life with money. But we just came at this from such different perspectives.

The first time that I brought up budgeting our joint finances, wow, my wife had a very negative reaction. My best recollection of the thoughts that she shared, I don’t remember exactly what she said, but I can hopefully express some things that will give the sentiments that I felt from her, were along the lines of this:

I don’t want to be controlled by a budget.

I want freedom to do what I want to do.

Budgets are so limiting, and they’re so short sighted.

Well, when we had this conversation, I was sincerely shocked. Needless to say, I was certainly naive, and didn’t understand that there was a different way of thinking about it, at least to this extreme. But I was just sincerely naively shocked.

I didn’t know what to say; budgeting was just so inherently good and commonplace for me. It was that money revolved around this budget. And to think that anything was different, was not comfortable for me to think about. But it’s just something that came so naturally, I ran into an issue, because I didn’t know how to explain it to her the right way. I mean, budgeting to her almost felt evil or bad.

And for me, it felt so good. But just came so naturally and my understanding of it came so naturally, I completely bombed when I tried to explain to her – what it did for me and why it was important and how she could get value out of the process, if she would not be so negative about it, but open up to it.

So I struggled to figure this out, it took me a while, in the early years of our marriage, I would create a monthly budget, sometimes in a spreadsheet or in Quicken or other software programs. And I would try to share with my wife, and you know, she would participate in a conversation but never really take much ownership of it.

I would track it vigorously throughout the month, I would stress over places where we were over and under spent, my wife did not put a single thought toward it. She wasn’t being mean or neglectful. She just didn’t understand or see the value of it the way that I did. And it’s something that didn’t come naturally to her either. So I realized that I needed to iterate my mindset and figure out the best way that I could explain to her why this was such a valuable process and why it was helpful, and not hurtful or limiting or controlling.

So one day, this light bulb just went on for me. I figured out how to explain it to her. I swapped out the word budgeting. And I put the word prioritizing and it’s a place. That completely changed everything for me. The struggles I had to explain it were now so simple and easy. This budget was no longer about limiting freedom, it was now about how do we ensure that we can have all the freedom we want by making sure we’re allocating our money to the most important things first by prioritizing that.

This was the embryo stage of me developing out this concept of the prioritization waterfall, and how every place that we want to need to spend or save money is accounted for and assigned a priority, just in a nice clean order. Of course it changes over time. But you have this nice clean prioritization of all these things.

So to stop the story here, now, budgeting just gets a bad rap. For many, it has this negative connotation, and it can even bring up very real strong negative emotions. And I don’t want to demean those things at all or, or say that people who feel this way are wrong, I believe there’s got to be trauma there in the past that you’ve struggled with. And for some reason, some of its attached to this concept of budgeting. And I think it’s because the budgeting was either done wrong, or because we’ve misunderstood in some way what the goal of the budgeting process is.

So I want to run through a couple of things that will hopefully help us get past.

Anyone who’s struggling with the word budgeting as bad, or who thinks that budgeting is a bad word to help get past that. And for those who have struggled to explain to others, why budgeting can be so good and helpful. Hopefully, you can take some things here and help you get alignment with others that you’re trying to explain this to.

So here’s one thing budgeting is not: it is not an arbitrary assignment of dollar values, which are sometimes even fictitious each month to random categories.

Instead, what it is, is a thoughtful, purposeful and intentional process of priorities that connect to how you will allocate the resources at your disposal. So it’s not fictitious numbers, it’s what’s actually in the bank account, and how are we going to allocate those.

Another thing that budgeting is not – it’s not a one time event at the beginning of the month that you never think about again until the next month, or maybe ever if you just forget about budgeting permanently.

What it is, it is a process that you go through that prioritization. And then you regularly regularly check in to see how you are doing with your priorities and if your priorities being met and fulfilled to help you accomplish the goals that you’ve set for yourself or to do the things that you want to do and that you love and you enjoy?

Oh, that brings me to the next one. One another thing budgeting is not – it is not an attempt to limit you or keep you from spending money on what you enjoy. It’s not, I promise you what it actually is, it is the best way to make sure that you have enough money to spend on what you enjoy.

When it’s done right, it will actually give you the ability to have the money there to spend. Because otherwise, if you don’t do that, sometimes you end up not having the money. If you’re not organized in the way you prioritize and spend your money. Sometimes it’s not there, that can be frustrating. So this is going to make sure it’s there. And it’s there real time.

Budgeting is not divisive; it does not drive wedges. It is actually clarifying. It empowers alignment with your spouse or your partner. And it empowers alignment with your daily financial activities.

It is not divisive, it does not drive wedges. It is empowering and drives in concrete alignment when it’s organized the right way. And again, when I first got married, I did not approach it the right way. And how I communicated to my wife about it, I had to really think through and iterate my mindset until I got to where we could get on the same page and get aligned about these things.

Now, I’ve got one more item here listed for what budgeting is not – it is not boring. Some of you think, oh, looking at money and numbers or spreadsheets or budgeting software and those things. If you think it’s boring, it’s actually not, it can actually be pretty fun, exciting, aligning. It can be empowering. And it can get some positive juices flowing. Because you’re talking about the things that you want to accomplish, whether you’re saving for it, or you’re going to spend money on something that’s really important to you or you’ve been saving up for whatever it is. Budgeting should be exciting.

Now, if budgeting is still a bad word and you can’t get past this, and the word that just is never going to create a positive emotion for you. My suggestion is do what I figured out to do early on, take the word budgeting out and put the word prioritizing in its place.

Prioritizing is the solution to anyone out there who thinks that budgeting is a bad word. All it is, is sitting down taking actual assets and money in your bank that you have and learning to prioritize where you’re going to spend that money based on what is the most important to you?

Well, there it is, we have the answer to the question: budgeting is not a bad word. Or if you think it is just put prioritizing in and then it’s no longer a bad word.

In the next episode, we’re going to talk about actually how to prioritize this money that we have the real money, not anything fictitious, and then how we can track our progress. And I’ve got a fun story to share with you in there about how my wife and I figured out how to help her completely get past this fear that budgeting or prioritizing would be controlling and eliminate her freedom in some way. So I’ll make sure to share that story at the beginning in the next episode. Make sure to subscribe to the podcast so you don’t miss it and future episodes. Also, I would really appreciate it if you’d leave me a review on the medium that you’re listening to this in whether it’s iTunes or Google Play, or Stitcher or Spotify wherever it is. I’d love any feedback you have, good or bad, because feedback is a gift and it will help me to know how I can be talking about and making sure to share things that are the most helpful for you. Many, many thanks to you for joining today.

This is a wrap for Episode 10. Happy day.

Transcribed by https://otter.ai

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About the Podcast

Join Chief Financial Officer Ken Kaufman as he helps you track and hack your net worth. For those seeking financial independence, your net worth is one of the most significant measurements of success. Using his two decades of financial experience, Ken Kaufman helps you overcome your financial obstacles and look onward towards a better, brighter financial future.

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