The Art of Personal Finance
A monthly budget is a work of art, not a science. People tend to put too much pressure on themselves to be exact and do it right. Gone are the days of old-fashioned budgeting like our grandparents did where there was $400 for groceries and that’s it. Today, being financially savvy means knowing that change is the only constant and that life will throw you curve balls. Practicing financial wellness means learning how to walk through the twists and turns with awareness and grace. When my clients fall off their budgets, I tell them to remember this process is about making progress not perfection. Here are four concrete guidelines for striking balance with your money.
1. Your financial planning system must be aligned with your personality, learning style, set you up for success and support you in meeting your goals. Key attributes of a sustainable system are that it’s highly customizable, not overly automated, it’s adjustable, allows for mistakes and is easy to refresh. Your system should encourage you to proactively plan on a monthly and annual basis and address the entirety of your financial life.
2. When overspending happens, financially empowered people pause and take a moment to reflect on what happened, particularly if there were signs of unconsciousness: rushing, urgency, feeling high afterwards, compulsivity, impulsivity or a case of, “I want it now, I’ll deal with it later.” There are five primary reasons people overspend: periodic expenses, income, planning, emotions, and credit cards. For help identifying and preventing overspending, refer to my blog post, Five Reasons We Overspend.
3. Cultivate the art of moving money around within your budget. This is called adjusting. Life on life’s terms means giving yourself permission to change your mind and move money between categories. Rearview mirror (end of month) accounting, and the powerless feeling that comes with it, can be avoided by staying connected and making adjustments to maintain a balanced plan throughout the month. If a little over or unexpected spending happens, say on entertainment, a financially well person is accountable, knows there is a little less money for something else this month and acts accordingly. I encourage my clients to have a completed spending, saving and earning plan before the first of every month. I do not expect them to know exactly where their money is going to go, but intentions, boundaries and goals are in place. Every month, they create a plan that is balanced so that they know if they spend, save and earn according to this plan, there will be enough money left in their accounts at the end of the month to start the next month in the green.
4. Expanding your financial life necessitates having a sense of humor about the art of personal finance. It is a fascinating journey! While it may be tempting to throw your budget out the window after a bad retail therapy day, remember what your goals are for your own financial success story. Keep your intentions handy and read them often to remind yourself that there is a method to the madness. You too can experience a sense of great possibility and more peace of mind around money by tuning in and mindfully tending to your garden of money.