Tuesday, July 12, 2011

Diets Don't Work and Budgets Don't Either!

What works instead?

Life Style Changes

A person who has lost weight has most likely made significant changes in habits in order to reach a goal--while they may now have a better diet, it is the change in lifestyle that has created success.  Additionally, a person who is financially fit, has "good" habits with money and consumption, has made this a lifestyle.  This financially fit person may in effect use a budget as a part of a "good" habit but a budget is a tool and not a source of deprivation as it is for many it fails for.

For persons who are climbing the mountain of prosperity out of the pit of debt doom and gloom a budget may not be your best choice.  This is why--diets and budgets to those persons trying to get "fit"' feel as though they are punishment (and let's face it they kind of are).  Who is going to continuously for a lifetime submit herself or himself to punishment?  Diets are punishment for too many late night snacks and budgets are punishment for too many hours and dollars logged on the credit cards.  Eventually feeling so deprived breaks us--instead of creating new habits we cave to our previous ones ("Then look for me by fridge light, Watch for me by fridge light, I'll come to Phish Food by fridge light, though diets should bar the way").  The diet has failed and the budget has failed--we feel like failures so we eat or spend (some of us eat and spend) in order to feel better about our failures---and the cycle becomes vicious.  

So what can you do if budgets don't work...

First you have to know where your hang ups are.  Do you spend when your sad?  Is your overspending a result of convenience food?  In order to understand you spending style you need to evaluate your finances and that can be scary.  However, until you really understand where your money is escaping to you cannot break its escape.  The plan is easy--write down everything you earn and spend in a month.  Find an old notepad, journal, anything you have lying around (and no don't go and buy something for this--it is not necessary) and when you spend $1.79 for a cup of coffee at the convenience store--write it down,  the 25 cents you found in the parking lot--write it down, the mortgage/rent payment you made today--write it down...get the picture. So a typical days entry may look like this:

July 12, 2011

-$25 Recreation Program for Sally
-$39.78 Groceries ($25.26 Grocery/$14.52 Convenience Food) 
-$45.89 Gas
-$2.28 Latte
+$20 Reimbursement Work
-$89.53 New Shoes for Reunion

During this month don't judge your spending--you won't get an accurate reading of where you spend if you restrict yourself to look good on paper.  Also if you have a spouse or significant person who you share finances with, get them on board (if you can).  Personally, my husband refused to ever take this step but he did start putting his receipts in a specific spot so I could enter them in.  What happens at the end of the month?  You open a bottle of wine (or in my house a box of wine) and you face the truth...now you track your spending it out on paper...  

The following website allows you to download a free budget worksheet that has an exhaustive list of places you may have spent 


You will need to add up all of the items from you notebook for each entry you have and either jot them down on paper or if you are tech savvy put them in an Excel spreadsheet.  So add up all your grocery expenses, restaurant expenses (I divide restaurant and fast food into two categories personally), your utilities, clothing, house payment(s), etc.


Grocery: $118.27+$39.64+12.45+$208.05=$378.41
Utilities:  $99.62+$18.07+$75.20+$110.24=$303.13
Household Expenses (cleaning supplies, home repairs, home improve, etc.) $12.10+45.63=$57.73
And the list goes on and on and on....

I personally do this process on paper so I can make notes if I need to.  After the truth is apparent for you and your family...yes it was you and your family that spent $175 on fast food this month... \you then can start making a plan.  I go through with a highlighter and look at any section that I see as a trouble/overspending spot and highlight it.  This lets me know that I need to pull back in this area.  If I see an area that needs more spending (charity, saving, etc.) then I highlight this in a different color.  What occurs then is a mental plan in my noggin to make a change--a slight easy lifestyle change that eventually will add to making me stronger and more financially fit.  Spend less on Y so I can spend more on X (X can of course be a savings plan).   If there is another person involved in your finances talk to him/her about what you have discovered and work together coming up with a plan on how these changes can be made.  If you are spending too much on fast food (and it is around lunchtime that the spending occurs)--start brown bagging it.  Have a Carrie Bradshaw fetish for footwear...can you consign a couple old pairs and look to E-bay or consignment stores for your next pair using those funds earned?  You found your elephant in the room now you have to poke it back into its cage and then you can start feeling less frayed and worried about finances.  No its not a budget it is a lifestyle change.

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