I never liked to make budgets. Making a budget was always one of the most hated tasks in my ‘To Do’ list.
And, I guess, this holds true for most people.
As such, despite repeated attempts, my budgets were inevitably a half-baked exercise. So, they failed to bring in any tangible benefits, besides leaving a sour taste every time.
Fortunately, I stumbled upon the formula to transform my hatred for budgets into an enduring love story.
#1. Switching from Me to We
The fact that I was the breadwinner in the family did not mean that I should be allocating the limited resources.
No! Not at all!
My spouse and kids were (and are) equal shareholders. They weren’t (and aren’t) slaves who had to simply follow my directives.
Moreover, they all are intelligent individuals. In many matters they are a better decision makers than me.
Therefore, (ideally) they too should be having a say in all monetary decisions… and that is what I did. I put into practice what our Prime Minister Shri Narendra Modi has been advocating… financial inclusion.
And, that has made all the difference:
By virtue of this collective decision-making
- My spouse and kids appreciate the tussles involved in managing a limited sum.
- The everyday arguments and friction have disappeared.
- Everyone is wholeheartedly committed to the budget.
End result: The regular unpleasantness around making a budget is gone.
Read Also: top rated home theater systems in India
#2. Making reward oriented budget
Like many people, my earlier attempts at making a budget involved
– working out my monthly income
– adding up all the expenses, and
– trying to bridge the gap between ‘one’ inflow and ‘multiple’ outflows.
What a boring and pathetic approach!
This had to stop.
So, we “collectively” decided to build in an incentive system into the budgeting process. Every month (or every few months) each family member would get to buy a thing of his or her choice.
One month my spouse would buy an iPad; next month my son would get his bike; 3rd month a piano for my daughter; and so on.
So now my son doesn’t crib if I tell him to slash his mobile bill. My daughter is more than willing to cut her burgers and pizzas. I too splurge a lot less on my gadgets. Oh! what fights we used to have on these issues in the past.
End result: From desperation to avoid, we are now desperate to make the budget… every month… month after month.
Also Read: How to save income tax in 2018
#3. Don’t worry about accuracy
Making a budget is not a maths exam. I don’t have to score a 100 / 100.
So, I stopped taxing my brain till the last penny was accounted for. It didn’t matter as long as I was able get 90-95% numbers right. This saved tons of meaningless efforts and fruitless hours.
Likewise, a budget is neither carved in stone. I don’t have to be too adamant, to stick to it.
So, I stopped creating a scene over petty transgressions. It didn’t matter as long as we were able to maintain commitment to our budget. This saved our energies spent on trivial matters.
Remember, budgets are not meant to ‘tie’ us down. They are meant to ‘liberate’ us from financial worries.
- Don’t get so involved in the numbers, that it leads to Numerophobia.
- Don’t get so involved in the execution, that it leads to Aversion.
End result: Flexibility and Approximation have made our budgeting process useful and successful.
#4. Break the routine
Initially, my budgets were a dinner-table conference.
This soon got too monotonous.
So, on couple of occasions, we have done our budgets in our car, while driving down for a weekend vacation. Once, I did it over a conference call with my family, while waiting at the airport for a much delayed flight.
And the best was when my kids did the whole budget on their own!
Besides, in difficult months we have often challenged ourselves to
- Cut costs in many creative and divergent ways, and
- Bring in more money to the table through part-time jobs
Even though we were running dreadfully short of cash, we decided that we will not take the easy options that most people resort to i.e. personal loans or credit cards.
End result: A great feeling of satisfaction in successfully managing the tough times.
#5. Budgeting is NOT about money
Earlier, my impression too was that budgets were supposed to be all about money and managing it intelligently and judiciously.
But then I realized that it was not my salary or the bank balance or our car / house / mobile phone that was creating unhappiness and discontentment.
Rather, the primary source of our dissatisfaction and depression was the envy for what our neighbors had.
All our desires for a better car, better house, better vacations, better clothes, were coming from this peer group pressure.
The day we broke this mental block, was the day we gained freedom from financial stress. The focus shifted from looking out of the window into our neighbor’s house to looking at what ‘value’ any new thing had to offer.
The ‘materialistic’ prism was broke and replaced by a frame of ‘meaningfulness’.
End result: We are a lot more at peace with ourselves; and enjoy a lot healthier relationship with the society.
The benefits of preparing our budgets were absolutely astounding.
Within a matter months, we had transformed our finances from “paltry” to “plenty”. Our debts are almost a history. Rather than dancing to its tune, the money is now completely under our control. There are a lot more smiling faces in and around the house.
If you too suffer from a similar phobia, do try this novel approach towards budgeting.
Sanjay Matai, MBA from IIM Calcutta, is a Personal Finance Mentor with an experience of 20 years in Corporate Finance. He has authored four books on personal finance and investments. He has written 250+ articles as an expert on the panel of moneycontrol, and many of his columns have been featured in Financial Times, Business Today, DNA.