As I have previously confessed, I have been much more organized and educated about our family’s finances lately than ever before. I have read close to 20 book (seriously) on the subject this past year and read countless other articles and listened to hours and hours of podcasts.
Recently I taught a Family Finance class to a few families in our area. This was my second time teaching the class and I absolutely love seeing people empowered by the control they gain over their money! It’s a beautiful thing.
As I was preparing to teach my class about budgeting, I had this epiphany and I like it so much I thought I’d share it again with you.
So often we think of budgeting as this miserable drudgery that just reminds us of how far we are from where we want to be–I know I did. Let’s change that mindset:
Budgeting is like packing a suitcase for travel.
Before you pack your suitcase, you need to know a few things. You can’t just start gathering up stuff in a pile and expect to pack the right stuff. So we have a few questions we need to ask ourselves:
-Where am I going? What do I want to do when I get there?
-When am I going and for how long?
-How I am traveling? Bus? Airplane? Car?
-How big is my suitcase?
Once we know where we are planning to go and what it is we want to do, we can envision some of the things we will need. Maybe we are planning to return with some souvenirs, so we’ll need to take that into consideration when we are packing and leave space for them. When I teach the Family Finances course, our first day of class ends with each class member completing a Financial Bucket List sheet (inspired by Lauren Greutman’s book The Recovering Spender) . I love this activity because each person gets to dream. Then we go home and each couple talks about their financial bucket lists together and they compare notes and share dreams and discuss what they want to do with their combined future. It can be a really strengthening exercise for a couple, but also a motivating experience for an individual. The bucket list helps you to consider your long-term goals and dreams and help you see where you want to go. Seeing the big picture helps put day-to-day decisions in perspective. It answers the questions Where am I going? and What do I want to do when I get there?
Am I going next week? Next month? Next year? How long will I be gone? My suitcase will be different if I am packing summer clothes or winter clothes, right? If I’m going to be gone for one week or four, I may choose different outfits and different quantities of items. As we consider timing and current needs, we can prepare for them. I am a big-time list maker. When I am planning to travel, I make a list of all of the things I know I need to pack and as ideas come, I add them to my list. This helps me stay organized and keeps me from forgetting important things as I pack my bags intentionally.
Each method of travel imposes different restrictions and requirements. We all have restrictions imposed on us, right? Are we paying off lots of debt? Are we paying lots of medical bills? Are there certain things we just can’t buy right now? Sure! That’s the nature of traveling down any path:if you are trying to hike a trail down the Grand Canyon, you stay on the trail. You can’t simultaneously go down into the Grand Canyon and climb Mount Everest. Choose your destination, find the path that will get you there, and then STICK TO IT!
How big is my suitcase? It is so crucial to know how much income you have coming in each month. You can’t move forward without knowing this. Sometimes we think we know, or we have an “idea,” but that is not enough. You need to know to the penny how much money you are brining in each month. Is your suitcase expandable? Know your pre-tax income and see if you are overpaying in taxes each year. If you receive a big tax refund each year, chances are you are overpaying in taxes each pay check. Talk with someone in your HR department about making that correction and it will be as if you just unzipped the expansion on your expandable suitcase. Once you know how big your suitcase is, you can begin packing.
When we pack, we start with the essentials. I want to make sure I have clothes, underwear, deodorant, toothbrush and toothpaste, contacts and contact solution, a hairbrush, socks, shoes, and a phone charger. If my suitcase is small, I may be bringing only a trial size of contact solution or a fewer amount of clothes that I will have to wash while I am traveling. I can’t just keep piling stuff into or on top of my suitcase and expect it all to arrive safely at my destination. In fact, many times overstuffed suitcases come open or break apart during travel (Have you ever seen a broken suitcase coming around the conveyor belt in a big, clear, plastic bag? I cringe every time hoping it’s not mine!). We can only pack what will fit, so we start with what we need the most. This concept is also true when we are budgeting. We can’t spend money we don’t have (It’s really not an option—remember what happened to the suitcase? It ain’t pretty.), so we start with the things that are most important first: food, rent/mortgage, electricity, and water. Then we add more if there is still space. Have you ever noticed that it doesn’t seem to matter how big your suitcase is you always seem to fill it? I think that is often true with our finances as well: regardless of whether we make a lot of money or a little, we use it all. It all depends on how and what you pack. If you are careful with the space in your suitcase, you will have enough space to bring all the things you need and a few extra things you want as well. Nobody’s carrying a suitcase big enough to hold a kitchen sink, so don’t consume yourself with the idea that you need a suitcase that big. Instead, focus on the space you do have and then utilize that space as best you can. Maybe down the road you will get a bigger suitcase, but in the meantime, you haven’t broken the one that you have from overfilling it.
This mindset is so empowering. As you move forward each paycheck packing intentionally, you will get to every destination you desire. I know I’ve mentioned it before, but I’m doing it again: my favorite tool for budgeting is YNAB. If you are trying to get your suitcase in order before it breaks all over the conveyor belt, give YNAB a try. By using the link I provide, YNAB will give you an additional month free after your free, 34-day trial. If you’ve looked into YNAB before, you should also know that they just updated their app so that you can choose to do 100% of your budgeting on your phone without ever needing a computer! It’s just getting better and better all the time! Use it to pack your suitcase and you will arrive at your destinations happily.
I like this. It’s very insightful. 😀
Thanks, Bethany!