Belts and Budgets

1269613009money-belt Ahh, the holidays.  That time of year when spirits are lifted and offenses are forgiven.  When the smell of wassail and a freshly cut Fraser fir wafts through the home.  And, of course, it’s a time when both belts and budgets are stretched, almost as if it’s tradition.  I try never to ask of you something that I’ve not struggled with and asked of myself.  So it is with humility that I offer this prescription for a merrier Christmas and happier New Year regarding belts and budgets:

Eat and spend less.

Deep, huh?  Actually, it is.  Most of the mechanics of successful money and life management are embarrassingly simple; it is WE—you and me—who are hard to manage.  This stuff may be simple, but it’s certainly not easy.

The first question we should ask is, “Am I a natural?”  Do I have an innate proclivity for success in the realms of food and financial-based consumption?  Some people are blessed with a body that can incur a high-caloric blitzkrieg and not seem worse for doing so, but that’s a tiny minority.  For the rest of us, we must reach a mathematical equilibrium in which we’re expending a proportionate amount of the calories we take in.  Then, each of us has a physiological disposition that either makes it harder or easier to reach a comfortable and healthy balance.  That last component is what makes dieting a challenge—many of the variables are unseen.

Budgeting has a similar set of variables.  Money comes in and money goes out.  The primary objective is to spend less than you take in, and the “physiological disposition” equivalent in personal finance is the amount, frequency and variability in the level of income.  It is, necessarily, easier for a family with one monthly paycheck and a set of monthly bills to manage household cash flow than it is for a two-income family with self-employed individuals responsible for the income.  But regardless of the level of complexity, believe me when I tell you that there are natural budgeters—those who have a tendency to spend less than they take in—and those with a predisposition for over-consumption.  Hopefully you’re one.  (Frankly, I’m not.  It’s work.)

The first step towards managing each of these topics well, especially around the holidays when the challenge is exacerbated, is to know where we are weakest.  For food consumption, behold the “French Fry Rule”:  Know the extent of your will power.  For me, I’ve learned that I AM capable of saying NO when the server asks me, “Would you like French fries with that?”  But once the fries are on my plate, I will, invariably, eat them!  Know where (and also when) your will power is strong and weak, and play to your strengths.

When it comes to financial overindulgence, consider “The Four Forms of Money Rule”:  There are four primary forms of money—cash, checks, debit cards and credit cards—and each of us is most responsible with one and least responsible with one.  Personally, I am least responsible with cash.  If cash is in my pocket, much like if French Fries are on my plate, I’m going to dispose of it!

The key to success in both healthy budgeting and eating is to KNOW YOURSELF.  Don’t allow yourself to deceive…yourself.  Be honest and give yourself a fighting chance by playing to your strengths and avoiding your weaknesses.  And when you start to hear that lie in your head, pouting that you’re depriving yourself of a well-deserved treat, remind “it” that the balance and comfort you’ll feel when the temptation has passed is a far more desirable than the momentary indulgence.  As my good friend, Pat Goodman, tells me, “You must not only want what you want; you must want what your wants lead to!”

And if you think I’m asking too much of you, check out Leo Babauta’s blog post entitled, “The Case Against Buying Christmas Presents.”  I’m not necessarily suggesting you go that far, but Leo shares some great wisdom in here that speaks to the underlying causes of holiday-specific excess in spending and takes it to another level.

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3 thoughts on “Belts and Budgets

  1. Excellent Tim, I completely agree.
    The one thing I would add is that there are a few simple things people can do to make themselves better with their cash flow. Like many recurring events/expenses, Christmas/holiday season isn’t a surprise. You know it will come every year. Take 2 minutes to determine what the budget will be, divide that budget by 4 (since there are only four months left until the holidays) and then jump on your bank website and set up an automatic transfer of that amount to your savings account every month. Come mid-December you will have the money waiting for you to spend. (This obviously works better when one has 12 months to save up, it’s a little easier on the wallet.) On the other hand, you drop it on the credit card and pay for it in January and February out of your cash flow anyway. Be more purposeful!

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