Budgets are more like a balancing acts. They are not effective and motivating us!

How many times have you created a budget, and then invested large sums of time, energy, and emotion in comparing your desired results against this new standard you’re going to live by? You already know that the numbers don’t lie and taking emotion out of money decisions is best. The thinking goes like this: If I just save $X per day, month, or year and then invest it in $Y and get $Z% over time - presto - I will be free!

I would submit to you that our budget promoting money mindsets are in fact contributors to the lack of meaningful results that this type of planning produces in our lives. There is something missing, perhaps even more than one thing. There are, undoubtedly, more than the following four reasons why the act of budgeting does not produce desired outcomes. However, these four are foundational in understanding why traditional budget thinking is outdated.

1. Budgets are nothing more than measuring sticks.They are digits on a page that we manipulate to see how we can achieve financial nirvana, avoid catastrophe, or enjoy our next vacation. They are void of emotion. There are many who believe that money and emotion should not be in the same room together. As seemingly wise as that may appear, life simply does not work like that. We have mechanisms in our brain that trigger various responses, many of which are not logical. We all know about fight or flight mechanisms. There is another called the Reticular Activating System (RASK). In short, the Reticular Activating System (RAS) is in the base of our brain and regulates what our brain “lets in.” It is the part of our brain that causes us to see that thousands of people just bought the same car we did. Has anyone else driven down the road and all of a sudden noticed the same make and model of car you just bought? Budgets do not account for these type of human reactions when it comes to thinking about money.
2. The basic premise to budgeting is comparative constraint or predictive financial prejudice. In other words, we just round the corners of the square peg so it fits the round hole instead of getting a bigger hammer. All we do is find out how naughty we have been or brilliant we think we can be with our money. In speaking and coaching people around the subject of money for over 30 years, I have found that apathy around our finances in part comes from this thing we call budgeting. It triggers a strong fight or flight response in our brains.
3. A budget is never a good source of motivation. I am by no means suggesting that budgeting does not have its place. I am suggesting that a budget will not, in and of itself, change anything. How many times have you heard yourself say, “Well I just have to review my budget, or make one, or consult with someone who has one?” Motivation is an inside job that budgets just can’t replace. Whether we like it or not, we are feeling beings. We have a capacity to feel and for many, budgeting feels confining, regretful, and hard. Just mention budgeting to someone who has not figured out what’s really important to them about their money and I guarantee you will find someone who is demotivated. When budgeting comes up, these people experience many emotions. Then things like procrastination, avoidance, and distractions become the substitutes.
4. Budgets and the budgeting process are not effective at helping people learn to process through their competing desires. Competing desires outweigh smart accounting principles and constraint. How many times do we hear, “Just save more and spend less” or “You can’t have your cake and eat it too?” I don’t know about you, but I am tired of those types of statements. Processing competing desires is an emotional process that logic is ineffective at solving. I would submit to you that if you don’t have a compelling reason to tell your money what to do, then you probably won’t! Budgets do not provide a compelling reason. 

So what does provide motivation? What will give you a reason to tell your money what to do? What will initiate that type of change, shift, and financial confidence? I believe that one key to unlocking those mysteries lies in what you believe to be true about money. Beliefs trump budgets every time. You will only create something to the extent that you believe it to be true. For example, if you believe that time is money, then you will probably always trade time for money. You create worlds where you are the engine. If you stop, the world stops spinning too. Believing something is true, causes your mind, thoughts, and actions to align. Begin to be intentional about what you believe is true about money and the motivation around money will begin to look like a whole new world.

Money is just money. What’s most important is the meaning we assign to money. Money is a tool. It is not time. Money is one part of a two part equation. Time is the 2nd part of that equation. Bringing meaning to money means exploring what you believe to be true about money, then opening your mind to new possibilities. One possibility I’d like to introduce is the idea of Capacity. Capacity has 3 parts: Time, Money and Contribution.

The next piece of this conversation answers the questions:

• Capacity for what, exactly?
• Capacity for whom?

When you process through beliefs about money, time, and contribution, you come out the other side armed with a new deeply seeded internal motivation that gives power, meaning, and motivation to deal with money in a proactive way. It becomes what is needed. Fuel for taking action!

Ray Dalio says it well in his book Principled: “Think for yourself. What do you want? What is true? What are you going to do about it?” 

Are you ready to do something about it? To get over the frustration of breaking budgets time and time again? We work with our clients everyday not just on the mechanics of money, but on the beliefs that will empower them to live financially free. We offer a 1 hour capacity coaching session to start the conversation. Schedule your Free Capacity Coaching Session now!

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