Wednesday, August 05, 2015

Budgeting Personalities

When I was a financial counselor, I saw quite a few people who had big budgets, small budgets, no budgets, and everything in between. I've come across quite a few budgeting personalities, although this is by no means an exhaustive list.

  1. Rollercoaster. This is the person who lives on rice and beans for 3 months only to blow it all on a luxury car and expensive apartment. I was going to use the heading bi-polar, but then I realized that was offensive, and many of my clients actually were diagnosed as bi-polar. If you truly cannot control these impulses, please seek the care of a psychiatrist or mental health professional. For those of us who just do it out of habit, try not going quite so far into rice and beans territory. During your "cheap" phase, save up a small sum of money each week as your "blow money" or as we call it in our house the adult allowance. This way, when you want to spend again, you have something available and don't go into debt. Also, if you have any major purchase (set a hard dollar limit) you are considering wait at least 3-30 days before making the purchase.
  2. What budget? - I have a ton of money. These were by far the most difficult clients as a debt management counselor. They usually made really good money and had easy access to credit. They were usually smart, professional, and easy to get along with. However, they could not see the problem even when it was right in front of their noses. I'm sure we can afford the private school, we've never had a problem before (even though our budget is $2,000 a month in the red). I'm not giving up my house, boat, car, toys because it's our ONLY entertainment (even though they cost $1,200 a month). I've always made it work before, so I don't see why I can't keep doing so (even with $50,000 of credit card debt and a salary of $70,000). This was so difficult because I wanted to just slap them in the face with the truth, you are GOING BROKE, and THERE IS NO CHAPTER 7 because you make too much money. Get your head out of the sand! But obviously that would be rude and unacceptable, so I'll just put it out there for the Internet. If that's you, please seek help. There is no easy answer, but if you take the advice of a trained credit counselor, you may be able to crawl out of the hole you've dug. The first step is recognizing the hole. Try not to wait until you hit rock bottom.
  3. What budget? - I have no money. Actually, these customers were pretty easy. They didn't have access to credit, so they couldn't overspend. There problems were more along the line of, my windows are broken so I can't afford the heat bill and have moved in with my uncle. Or, a door-to-door salesman sold us a water filtration system and we were unaware of the costs and now there's a lien on our house. Or, what do we do when the unemployment or food stamps run out. Or when the car is repossessed or the house is foreclosed. Here's the thing, education is your main tool. Go to the library, go to local food banks, contact your local church, call your local 2-1-1 number. There are resources for almost every need. If you've been taken advantage of financially because of your age, income, or mental status, contact your attorney general's office. Then, when your emergency needs have been met, sit down and create not only a budget, but a plan to get back on your feet. Consider career options, side-jobs, and all the available benefits. If you don't want to be a charity case, take the charity and pay it back when you've improved your life. 
  4. We have a budget - but I can't tell you what it is. There are a lot of people who think they live on a budget (or could live on a budget) but they just don't. It's too complicated, they don't track their spending, and they really don't want to. Here's the thing, you have a budget, you just aren't in control of it right now. Getting your spending plan on track is putting yourself back in the driver's seat. So create your own budget and then follow one of two plans to track your spending. Plan A is for the people who struggle with cards and receipts, use cash only and put it in an envelope. Anytime you take money out of an envelope for any reason put what you think you are going to spend it on and/or what you actually spend it on. Write it on the envelope. Plan B is for people who hate pen and paper - track every receipt using either an app, online tool, or excel spreadsheet. This can be a bit more cumbersome at first (and I actually don't use receipts much anymore since most of our spending is on cards) but it gives you a clear picture and history of where your money is going and makes for easier adjustments.
  5. Nitpicky McScrooge. OK, this is probably me most days, but I'm working on it. This is the person who not only tracks every expense to the penny and saves at least 10% for retirement and has an adult allowance for her husband, and balances each and every account at least monthly (except the checkbook, I hate that one for some reason). What's the problem? Without some checks and balances in place, this person will become a scrooge and hate giving money away or making money errors or having an emergency. How to solve that problem? Well, it's all about balance. Fortunately, my husband is the opposite, and the Holy Spirit is a great motivator. So, I try to give with open hands, plan for the unexpected, and relax about retirement, because I really can't calculate my expected annual income at 65 when I'm only 30. Plus, it's all God's anyway. We came into this world with nothing, and we leave this world with nothing. What does it profit a man to gain the whole world and lose his soul? Sorry to wax philisophical, but this is a heart problem, not a budgeting problem. Although for some practical motivation, if you live in the United States and make at least the median income, you should be supporting (education, healthcare, basic needs) at least one person in a 3rd world country for every person in your family (just my humble opinion).
  6. Generous McGiving. This is the George Washington Carver. The person who makes a bunch of money and gives it all away before he gets to the bank. Maybe we could use a few more of these in our world today. The problem, if you give away the rent money you might get kicked out of your apartment! Set up a basic needs budget first and put the money for those bills in a place that's hard to access so you don't give all your money away (hide your checkbook until bill-paying day, if you must). If you are very wealthy, look into the best ways to donate money such as a charitable needs trust. Make sure you have enough income for now and the future, and set up your will accordingly. Make sure no one in your family or church has a need, and then keep on giving!
  7. Fluctuating income and/or expenses. Many people have income that fluctuates. Some only get income 10 months out of the year. Some have paychecks that vary with commission or bonuses. Some get paid weekly, and others once a month. Figure out the best budgeting system for yourself and stick to it. Use your minimum income (and/or minimum expenses) to set up your budget and then stock any extra for those days when you don't have the higher income.
  8. I follow someone else's plan. Here's the thing, your budget won't work unless it works for you. If you want to follow Dave Ramsey, that's great. If you try to follow Dave because your neighbor did and paid off all their debt, then I don't think that's the right solution. Figure out what your personality is and work with it. Pay of your debt, certainly, but Dave (and all the other financial gurus out there) are not necessarily right all the time, so go with your gut and make your own plan. Focus on your goals, not someone else's.
I'm sure there are more budgeting personalities out there, but hopefully the advice I gave will help some of you who may be struggling with which direction to go.

Save for my future, or buy me pretty things? You decide!

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