I’M NOT SURE HOW anyone can achieve financial peace and prosperity without addressing the “b” word—budgeting.
I got my first credit card in my late teens. I bragged that—in my wallet—I had whatever my credit limit was and could do anything I wanted with it. By my early 20s, I was in credit-card debt. But as long as I could pay the monthly minimum, I didn’t think I had a problem. Of course, the interest rate was astronomically high—sadly, I never read the fine print to know exactly what it was—and my savings were nonexistent. I was not on the road to financial peace and prosperity.
With the help of a good friend, I began working on my financial situation. We started by putting together a basic budget. I didn’t know where my money was going. I made up some numbers as my “budget” and he had me track every expense for 30 days. I dutifully carried around a little notebook and wrote down every penny I spent, even if I put it on my credit card. It was one of the hardest and most sobering experiments I’ve ever undertaken. At the end of the month, my actual spending was $700 more than I had budgeted.
It would be a great story if I told you I changed my ways, started keeping and maintaining a budget, and lived happily ever after. Alas, my deeper awareness of how I spent my money did not lead to regular budgeting. I was able to cut my spending, but not enough to retire my credit card debt or start investing for the future.
Then I met Kathleen. She was a single mother making less than me and saving money. On our second date, I saw she kept a budget on her refrigerator door that listed every expense down to the exact dollar. I was terrified. But love conquers all. I learned someone could be so amazing that I could overlook her scary habits. We were married and I began to learn how to live on a budget.
I’m not sure which is harder when you start budgeting—the commitment or the process of actually doing it. Since I chose to get married, the commitment was made. The process was a little harder to master. We sat down together and revised the tried-and-true budget that Kathleen had been using for years. This was before personal computers, so we had to use paper and pencil (although we could have used pen, because my wife didn’t change the numbers on a whim like I wanted to do).
One of the secrets she taught me was to list our expenses in our checkbook and track them before we spent anything else. This may seem obvious but it was a revelation to me. We would enter our paychecks and then record all the expenses for the next two weeks. While this made it more difficult to balance the checkbook—a concept I was only slightly familiar with—it was easier to track how we were doing. The details of budgeting may be obvious to many. But I’ve found one reason people don’t do it is because nobody ever taught them those details.
As we earned more money over the years, it was more fun to budget and save. Within a couple of years, we began tithing and giving away 10% of our income. We opened another checking account to make it easy to transfer money we were going to give away before we even considered spending it or saving it.
Eventually, Kathleen trusted me enough and I trusted myself enough that we became less obsessed with budgeting. It’s like when you start exercising or pick up any new habit. When you get into a regular routine, it becomes muscle memory and you don’t have to think about what you’re doing. For a decade or two, we didn’t do any budgeting and we did okay. A couple of years ago, we again started recording every expenditure, so we can enter retirement with a firm grip on our expenses, and so we can figure out what we want and need when our income is more limited. I’m surprised to say that I’m actually having fun tracking every expense.
When I was serving in a congregation, I was often blessed with the opportunity to officiate at weddings. I would always meet with the couple to get to know them and do a version of premarital counseling. We would discuss the service and the best way I could customize it to make it special for them. I’d also talk about the three biggest conflicts that come with marriage—sex, money and children.
Sex and children were fairly easy conversations. Money was almost always a challenge or an adventure. (One couple changed their mind about getting married after we had the conversation. Much easier than divorce, especially financially.) Falling in love and making a public commitment to spend the rest of your life with someone is one of the most sacred events in anyone’s life. The commitments that come after that day may not be as public or sacred, but they’re just as important—commitments like budgeting and living together with differences.
Almost every couple had different perspectives on how to handle money. Some wanted to keep it separate and some mingled it together. Some were worried and some hadn’t thought much about it. They say opposites attract, and my experience personally and professionally—especially in the realm of finances—is that this is nearly always true. One person is risk-averse, while the other likes taking chances. One person worries about money and debt, while the other wants to live in the moment and worry about paying things off later. One likes to put budgets on the refrigerator and the other runs away in terror. When I would bring up budgeting to most couples, they said they knew they “should” do it but hadn’t gotten around to it. I suspect that’s true for many, if not most, people.
The “b” word has gotten a bad rap. For too many people, a budget connotes pennypinching, financial claustrophobia and sacrifice. My 20-something self saw it as something for number nerds who don’t have a creative bone in their body. My 60-something self knows how hard it can be to have the discipline and rigor that it can demand, especially in the beginning.
I’m convinced that budgets can change lives because a budget changed mine. We just have to do a better job of marketing. I was schooled and practiced in sales and marketing before I learned about theology and grace. I ought to be able to help people see the wonder and magic of living with a budget. If my children are examples, I haven’t done a very good job.
Perhaps I can design a new line of refrigerators that come with a budget stuck on the front door. Or maybe I can add to my marriage-ceremony vows, highlighting how far the couple has come in making a spiritual and financial commitment to each other, including agreeing to spend X dollars on groceries, gas and goodies.
Everything that we can learn about investing, asset allocation, insurance, index funds vs. active funds, stock prices and bond yields is worthless if we don’t start with the basics. And nothing is more basic than having a budget. Knowing how much we have, how much we spend and where it’s all going is a reality check not only for our money, but also for whether we’re living our values. If we do it right, and we’re lucky enough to do it with the right person, we might even experience another “b” word—bliss.
Don Southworth is a semi-retired minister, consultant and tax preparer living in Chapel Hill, North Carolina. He recently completed his Certified Financial Planner education. Don is passionate about the intersection between spirituality and money, and he encourages people to follow their callings wherever they lead. Follow Don on Twitter @Calltrepreneur and check out his earlier articles.