Budgeting gets a bad rap—but what if it’s actually the key to affording your Mediterranean sailing trip and your weekend fun? 

A lot of people view the idea of making a budget tedious or unnecessary. For some, the simple idea of looking at their bank statements or even thinking about finances makes their heart rate rise as if they’re about to go into a test they haven’t prepared for. 

I enjoy personal finance so much that my friends say I light up when I discuss the topic. For me, understanding and managing my finances effectively is key to realizing my dreams and living my life intentionally. So when a friend reached out with questions about personal finance, I was more than happy to help! Some of the questions that came up included:

• How can you organize personal finances to afford what you care about without feeling deprived?
• What’s the most effective way to budget?

As I started thinking about how to answer the brief, I realized there was a lot of content to cover! And I don’t want to short-change you, so I’ve decided to address this in the form of a series. Think of this as your Personal Finance 101 series – How to fund your extraordinary life

If your system hasn’t worked for you or if you’re looking for ideas on how to improve yours, this series is for you. I’ll go through a step-by step guide to help you approach personal finance with more confidence and excitement.

After all, this is where you get to set up the systems that enable you to pursue your goals! And what’s more exciting than planning for your dream life! 

This Week’s Habit: Embrace budgeting – it’s your dream fuel

Why does budgeting matter?

Before we even talk about how to budget, let’s take a step back. Why should we even budget? We don’t budget because someone told us we should or to brag to our friends about our money management skills. (Note to fellow personal finance nerds – if you are the type to get excited about personal finance, you and I are likely the minority.  Fair warning: most people will probably yawn and try to avoid hanging out with you if you bring up finance tips too often…) 

We budget in order to help align our spending with our values and dreams. 

What do I mean by that? We talked recently about setting time aside to prioritize our dreams, and taking the first step towards that by carving out time in our schedules. In addition to a time commitment, those dreams and goals can require money.

When you are leading an intentional life, your spending should reflect what you truly value – with your money getting spent in areas that you care about most (after your basic needs are met). 

If your money isn’t actually going towards things that you care about, that mismatch can create tensions or dissatisfaction in your life. The key here is to be intentional about where your money is going. If one of your dreams is to take a trip with friends on a sailboat in the Mediterranean, but you seem to always be spending your money on weekend drinks, then maybe it’s time to realign your spending with your goals. 

What If I don’t need a budget?

Now I sometimes hear people say “I don’t need a budget, it works itself out at the end of the month” or, “I’ve got enough money coming in that I don’t need to worry about spending, and whatever is left over goes to savings”. If you’re in that category and you’re able to spend on whatever you want and pay your credit cards in full each month. If you are able to go do the things you love and value and you don’t have any longer-term goals you want to save for –  lucky you!  If you’re in that boat, you’re very fortunate and likely in the vast minority of people. For most of us mortals, we can benefit from a little planning and optimization to put our money where our dreams are. 

Who Actually Needs a Budget?

I would recommend having a budget if you fall in any of the following categories:

• You have long-term goals you would like to save for (such as a house, or retirement)
• You have medium-term goals you would like to save for (such as a trip, a large purchase)
• You have recurring things you enjoy doing or that are important to you want to continue to afford (such as going out to eat regularly, treating yourself to a massage, or taking your cat to the vet)
• You have irregular spending throughout the year (such as paying for car insurance twice a year or spending more on Christmas gifts at the end of the year.) 
• You are not Elon Musk. Oops, nevermind, even he needs to be able to balance a budget! 

In the next posts, we’ll get into what actually goes into a budget and how to make it work for you.

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Actionable Tips:

Tip 1: Repair your relationship with money

If you’ve been avoiding thinking about money because it stresses you out, try to take a small step to repair that relationship. Ask yourself what makes you recoil away from finance topics or speak with a trusted friend or family member about it. The first step to repairing the relationship is to honestly understand where your feelings are coming from. 

Tip 2: Reflect on joyful spending

Take a few minutes to reflect on times when you felt happy spending money. When it genuinely felt good in a lasting way (note spur-of-the moment purchases sometimes have short-lived dopamine hits, but meaningful spending still feels that way when the initial excitement has passed). Maybe you love to spend on experiences or on gifts for others. Or you love taking your significant other out to a fancy dinner.

✍ Action: Make a list of those joyful spending experiences. What themes come out?

These will likely provide clues about what you truly value and where you want to align your spending.  

Tip 3: Reflect on areas of fake joy

We all know the feeling of quick surge after buying something new – but that feeling doesn’t always last and we’re back to looking for the next purchase to provide that boost. Reflect on spending that didn’t bring lasting meaning (look beyond basic necessities here). These will provide clues as to areas that might benefit from more intentional spending patterns. 

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Closing Thought:

This week, make yourself a cup of tea (or coffee, or wine) and take a few minutes to think about one thing you’d love to do this year. Get a friend, or partner to tag along in the discussion and dream together about your long-term goals. Throughout this series, we’ll work through how to organize your finances to fuel your dreams.

✍ Action: What’s one dream worth organizing your finances for?

Intentionally Yours,

IE.