Budgeting is something that sensible people do. Right?
Idiots (like me) just get by on a wing and a prayer, without really much of a plan for their money.
That’s something I’ve been wanting to change for some time, but something has never sat quite right with me about budgeting. And I think I’ve finally figured out what’s been niggling at me.
Traditional budgeting puts income first, before quality of life
The Money Coach says, “budgeting ensures that you will always have enough money for the things you need and the things that are important to you”.
And yet, this idea isn’t what budgeting does, because budgeting starts by asking you to calculate your income first, and work from there.
In theory, it’s about creating balance:
But seeing as you’ve already worked out how much you have available, the only thing you can trade-off is what you need or what matters to you.
In reality, this way of budgeting is allowing your income to dictate your life:
It forgets that we don’t only spend money on things, we spend time on things too. And yet we don’t have any space in the traditional budget equation to recognise that we need to accumulate that time.
And this is total bullshit. Which is why we’re so used to hearing things like:
- I’d like to spend more time with my kids, but I have to work
- I’d like to get in shape, but I have to work
- I’d like to meditate, but I have to work
Not only is it flawed in its logic, but it reduces our options to find balance, because it is saying that:
- You couldn’t do anything to increase that income, which – to be fair – can be very difficult and/or impossible, but also
- The option that seems even more crazy and impossible – that maybe you could consider reducing the time you spend on generating income (work) so you have more time to do the things that matter to you
This way of budgeting never even looks at the income you need, it just looks at the income you have, and what you can do with it.
So you’re left with very few ‘levers’ to pull if you want to make changes.
What would it look like to shake this up?
If we accept that many of the things that matter to you cannot be bought, and that time is important to us too, then wouldn’t it make more sense to balance the equation between:
- The things you need and the things that matter to you
- The free time you need
- The income you need
Otherwise, by simply accepting that our income is fixed, we’re simply accepting that we’ll spend 40, 50, 60 hours of our week at work.
We’re not even questioning it – it’s just the starting point for the budgeting process. The majority of your waking life is all wrapped up in the step: ‘calculate income’.
This means you’re accepting that the 40, 50, 60 hours a week you work are worth trading in for the money you earn – without having a clear plan of how you plan to spend it in the first place, or how it will help you get the life you want.
In other words, you’re giving up significant amounts of time in your life for unspecified or vague reasons.
So what if budgeting genuinely balanced the life you want to lead with the free time and income you need to lead it? Wouldn’t that be powerful?
This is a topic I’m going to come back to, because I have a lot to still think about. And I’d love to hear your thoughts on it, too.
But right now, it’s 9 am in Madrid, it’s sunny, and I’m choosing to spend my time on something else right now. To be continued.
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