Both Fun and Discipline are Keys to an Effective Budget

A New York Times article titled “Why A Budget is Like a Diet—Ineffective” discusses some ways that modern budgets don’t work and how to fix that. A major reason that budgets are ineffective is that they turn saving money into a chore that isn’t any fun.

The comparison between a budget and a diet made in the title is interesting, because it relates to my coaching for weight control with some clients. I’ve long felt that living within your means, whether with respect to calories or finances, should be kept effective and fun with occasional opportunities to disregard the restrictions.

Here are some of my tips on how to make a budget last:

  1. Pick a purpose for which you’re saving. A vacation, a new house, a new car, or even and important goal, are good examples. This will make your savings more concrete and real, instead of just a number on your computer screen.
  2. Splurge every once in a while. I coach dieters to pick one night a week to eat out and go off the calorie budget a little, so that the process of restraint doesn’t seem so endless. The same goes for limiting your spending. Set aside a little bit of money to pick something you’ll really enjoy and that will make the most of your money.
  3. Spend money on experiences, not things. Experiences will be all the more rewarding because they’ll bring you closer to those you are with and they will make memories that will last longer than simple items might. Go to concerts with friends or loved ones, go on a remote hiking or canoeing trip, or pick an exciting vacation destination. Focus on building memories, not acquiring possessions.
  4. Split your money into separate accounts: for fixed expenses, saving, unforseen urgent expenses, and luxury expenses. As the article states, it’s more beneficial to set aside a little money for luxuries than to take small amounts from your fixed or urgent budget. This helps limit unnecessary spending and whatever you don’t spend can either be rolled into the rest of your budget or saved for the next month’s luxury budget.

Remember that achieving budget control depends on having fun and continuing to have some luxuries over time.

What are your thoughts?

JS

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