Money Doesn't Have to be Crippling

Yesterday I was running late for a meeting, but I was almost out of gas. I quickly pulled into a station, threw in my debit card and pin and set the pump on auto pump. For nearly 5 agonizing minutes I waited in my seat for the pump to finish.

The most stressful part of that interaction was how delayed I was to that meeting. Imagine if I added to that stress by also not having enough money. If you don’t have $100 on your debit card most cards at the pump get declined. Then I would have had to run in to the attendant and maybe pumped $10 or $15, whatever was on that card. Or what if I pulled out my credit card, knowing that I already had $5,000 charged. I think, “what’s $30 more?” I drive away with that constant pull of stress in the back of my head wondering how I am ever going to get out from under that debt.

This is the way most Americans are living their lives. I have spoken to hundreds of them. More importantly, the reason I know what it’s like is that I used to live like that. It is stressful to live this way. It feels out of control. And it is completely unnecessary.

Some clients when faced with getting on a budget say they don’t want to live like that. They don’t want to feel like they have limits.

But there is a limit, right? The limit is the last dollar you can borrow on the credit card before you have maxed it out. You can only have one loan on a retirement account at a time. You can only borrow so much from your house. So, there is a limit, whether we like it or not. Accepting this fact, I suggest living your own limit—not someone else’s.

What I think challenges people is that they see a lot of fear mongering and shame out there with people in the financial space. They see all these budgeting apps designed to make us view each purchase with deep self-judgment.

There is a different way, and it works better than any of those things.

First, save into your company retirement account. Call up HR and ask them to make the contribution. For the rest of the budgeting system, use your own bank account. Auto transfer money each month into things you care about like travel and gift-giving at holidays you celebrate. Auto transfer money each month into what would bring security like an emergency fund or home repair reserve. Pay your bills. And then spend the rest. Only, make it easy by getting a second checking account and auto depositing a weekly spending amount. Use it up until it’s replenished.

To get the system in place if you have credit cards or weren’t saving for retirement or home repair reserves or emergency fund, you will likely have to spend less money than before. I have had clients do this. Through an iterative process they whittle down their spending to adjust for those savings accounts. Months into the process when I ask how it feels, they seem to downplay it. No big deal.

But I sometimes like to ask if there would ever be a chance of going back. That gets a stronger response.

No way. Never. Not even for a day would anyone want to feel that way again.