Your heart drops when you step on the scale after the holidays, or you open your credit card statement to a find balance so high you go through it line by line suspecting that a Russian hacker used it to buy bitcoins. We’ve all been there.
Whether it’s an unexpected few extra pounds, or a big credit card bill, our reaction is almost universal. After the realization that you eat out way too much, you’re overcome with a burst of disgust and motivation that causes you to declare that you’re going on a diet/budget. And sometimes it works… for a little while anyways.
The problem is that they both feel too restrictive, and viewing it as deprivation makes things worse, only leading us to an appreciation for carbs and $5 lattes that we never knew existed before. And we humans are master rationalizers. Soon our mantra mysteriously shifts from “nothing tastes as good as skinny feels” and “a penny saved” to “I deserve it, life is too short”.
Just like everything else in life, a change in perspective works wonders. I learned early in my career that a surefire way to start an argument with a couple was to bring up the “b-word”. Don’t believe me? Suggest to your significant other that you go on a budget and watch the mood in the room instantly drop. Instead, I suggest clients set various goals and then aim for “savings targets” to meet them. Striving for a goal frames it in the positive and makes your efforts more sustainable.
Because of the negative connotations of a budget and a resistance to being restricted, most people never even take any concrete actions to control their spending. They just walk around with this nagging feeling that they’re spending too much and feeling guilty over every little purchase. Other people think that using Quicken or a Mint.com account is going to solve their problems, but often times it makes things worse because it’s all hindsight.
Most budgets only look backwards and every time you open it up you say “Yep. Look at that, I’m spending way more than I thought”, which is enough to motivate some to change their ways, but most of the time it just makes you feel bad. After you do that a few times the magic of negative reinforcement kicks in and you drop it all together. It’s the equivalent of buying a bathroom scale and thinking it’s going to give you a beach body without stepping foot in the gym. In reality it’s just serves as a depressing reminder that you’re not where you want to be.
Instead, make a list of the goals you want to achieve, and set monthly savings targets that you need to accomplish them. At the end of the day saving more or spending less is one and the same, and I personally would rather have a carrot on a stick than a ball and chain.
Money, just like fitness, requires motivation, not deprivation.