Why Budgeting Isn’t Enough And What You're Leaving Out

Welcome to today's episode. So are you somebody who has a budget, but you don't feel like it's working? You are maybe seeing your debt continually accumulate. You're not being successful and paying it off as quick as you would like. You're not seeing any progress in your savings. In fact, You're dwindling it every once in a while. You are just not seeing a benefit from budgeting. You're confused as to why people are so adamant about having a budget. So the key takeaway, budgets are not the action piece. But they are necessary. So what are budgets? Well, budgets detail, first of all, our need for bills. What is it that we need to have or that we've committed to? That is one category in our budgets that we need to make sure is spelled out. Knowing this need, we are set up one third of the way. The second thing a budget will tell us is our spending desires. We have also needs in spending, groceries, fuel, those types of things. You know, maybe there's some medications, whatever it is not covered by insurance, obviously, but those things are in a spending section of your budget. And then hopefully, if you're doing well, you have a third category of savings. This amount will support you for spending in the future. That's what savings is. It's just paused until the future when we spend it or when our kids spend it. It's going to be spent in the future. So creating a budget is just a document telling us how our money is supporting us. But the key piece of information from a budget is making sure that we are not spending more than we make. That income is equal to expenses. That it's not over, and equal is fine as long as you have savings as part of that expense. When I talked about those three pieces, savings is just future expenses, so income should equal expenses. I use a budget. It's a document. It's not changing, right? And I don't, on the document I have, I don't note anything that's going on during the month. However, when life happens, or when I'm looking to maybe make a major financial decision, I go to my budget to view where I can shift my money. View where it's exactly going. And if I were to pause a few expenses or if I was to make a shift for a moment that is what my budget tells me. It's a, it's a living, breathing document, but it's just up to date with my income. So every time I get a raise, I make sure I include that. And then I adjust for that. Is it just increasing my savings? Is it going to an inflation of bills or an adjustment there? How does that overall look? So having a budget is very powerful. It is very, very, very, very, Like I said, a very key piece of your overall money plan. It is a foundation. It's a guide. It's a plan. It's a map. Whatever word you choose to use here. that maybe, you know, gives you direction, gets you excited, is what you should be using. I know most people don't like the word budget, so pick something else. Pick something else. But it is a necessity to have before you go down the road, before you want to see progress. So now you're going back and you're like, okay, but I'm that person that's done that and I don't, I don't see any benefit. So going back to my client. Even though she had a budget, and she's somebody I personally knew before we worked together. She's very good with numbers, very good with spreadsheets. But the action piece, right, remember budgets are not the action piece, they're my noun. And now we're going to create a verb. The action piece she was missing was a cashflow system, a money management system, creating it to quote, keep track, keep track. So what is a cash flow system? A cashflow system puts our money where it's needed. Having a system that is set up, that's structured fully, but very easy to use. will help us make sure that all of our financial needs are met. For example, making sure your money is in the account where your bills are either automatic pay or where you manually pay from so that you don't have to fret. You don't have to worry. You don't have to second guess. First off, if you have enough money for bills, and second, if you can maybe fudge a little bit of spending out there, right? You just know. It, decision fatigue is huge, and this helps do away with that. It puts our money where we can see it, where we know. And essentially the cash flow system becomes our tracking system. I want to kind of expand on that just a little bit more. As a Gen Xer, so if you are a Gen Xer or even if you're a baby boomer, you will know and remember this, but I remember going to the grocery store for with my mom as a child. I loved to go and I remember being at the checkout. You know, they ring up the, I loved watching them do that, ring up the groceries whether it was manual input and then it started getting the reader. So that's technology change, right? As the total was presented to my mom, she was ready to finish filling in the check. Yes, I heard an audible sigh. We know that it took some time to write a check. However, if you think about it, My mom would rip that check out of there. Again, there were no duplicates. There was nothing behind it recording it. She would hand it to the cashier who, if you remember, they had to do a process for the store themselves. Stamp it, mark it, you know, do something in the cash register. So while they are doing their process, my mom goes to her check register, makes the notation, the amount, and quickly does She knows right then and there in sync, you know, in line with this expense, how much money she now has going forward. It's in the moment. It's not behind. It's not, you know, reactive, but in this day and age with things being able to, you know, be paid with so many different ways, so quick, There's no way we could take the time, even if you are not writing a check, to sit there and fill out a check register. So, you know, think about it. This day and age, we need something that can keep up with more of this fast paced. I know some people, they keep their receipts and they write them down later. They're very good. They're very diligent. That's a lot of work. It's a little still reactive. Right, but as long as they stay on top of it, I know there are some other individuals who use an app, and as soon as they walk out of the store, they do it. But these people have been successful with the check register situation I just described before. They were really good at it then. That this is the way they've kind of moved forward to the digital age, and it's still working for them. But, for those of us who are really just leaning into this fast pace, our lives are busy. I'm not saying their lives are not busy. We're just trying to find a way to add the action piece. So you may be feeling like my other client. When she came to work with me, she says, I've created a budget, I create my little spreadsheet, and I get behind on actually noting that. You know, waiting until you get home we know is just not successful. And then we get two days behind, four days behind, a week behind. She would find herself in the same situation. And then she would think to herself, well, why does it even matter? I am doing okay. How many of you are saying that? I'm doing okay. Using no tracking system essentially is what you're doing. So for my recent client who was doing that, trying to implement an old way and a new system, she says, I just knew I needed something more. So she reached out. She says, I have a nest egg for the future. But I want assurance that I'm not overspending it and that I won't outlive it because she doesn't really know the flow of her money. And she wants to have better tabs of that. And when she asked for a solution, I had to chuckle. She asked that it will not suck the life out of her. And I chuckled because I've heard those same exact words out of another client. We think about the tracking, we think about the attempts we've made. We just automatically think that that is what somebody is going to have a solution for you. They're going to have that solution, and you're going to have to spend an hour a week, or you're going to have to spend, you know, 20 minutes a day, whatever is in your head. And it does not need to be that. So before I go on to the solution for that, I want to share the other piece that is missing in that budgeting realm. So we don't have an action piece, but we're also creating debt. So my client who came to me with the budget, not having the cash flow system, she also did not have her savings for her commitments that were coming up. She hadn't been taught how to which I know most of us have not, to look beyond the monthly budget. Getting stuck in that paycheck to paycheck, month to month budget is such a vicious cycle. If you listen to my pop up podcast, I talk about it there. But really, those traditional budget methods are almost as bad as the traditional tracking methods. And so, You end up getting your car registration, which is a very common one. And you're thinking, Oh my gosh, where's this money coming from? Because, you know, you had all of these other bills. So not being able to build in the stability with what she was doing, that's where her debt was coming from. Not being able to be better prepared for those commitments she had already made and learning how to plan and prepare. Beyond the paycheck. That is the second key piece that is missing in traditional budgeting. Going back to your solution for putting into action your budget. The cash flow success method I teach in my 60 day program as well as in my signature program. So if you remember, a cash flow system puts our money where it's needed. So in the program, we set up the entire method pertinent to you. , it's customized, it's tailored, it's personalized. Sometimes there's things that need to be tweaked. We set that up and then you're taught payday moves. So those payday moves, payday, you get paid, you put your money where it's needed. And then when you put it where it's needed, Those bank accounts become your quote, tracking system. Day and age, quick. You know, you do these payday moves, you have money routines where you're keeping tabs, you know, I do have a spreadsheet, but it is proactive covering that second element that is missing. So the client who came to me with a budget, after we implemented the cash flow success method with her, got it , all the accounts set up, she knew what she needed to do, showed her the payday moves. She says. I think splitting the bills, money, and the spending money has been good because it's definitely made me more aware. I'm gonna pause out of her testimonial real quick. You know me and I talk about clarity a lot. This is just another benefit, another layer. To your clarity, to your awareness, to your money growth, she says, so it's made me more aware. Oh yeah, let me buy that right now. And I'm like, wait, like, how much do I have? And what do I need the money for this coming week? So she says, I am more aware and I think ahead and I'm, you know, pausing for just a moment before I make the purchase. I used to just look at my account and be like, Oh yeah, I have enough money in there. Not thinking of the 20 bills or whatever I had. She would just look, check my bank account method, she had enough money, and make the purchase. Then finding herself in the situation with those irregular expenses, that car registration, and now what does she do? Because she had money for the purchase. Honest. Yes, we all have that. But then when we get those commitments later, that's where we scramble, that's where we turn to either dipping into our savings and draining it, or using a credit card. That is how our, our credit, our, you know, debt accumulates. So as I said earlier, all of my clients take this cash flow success method and make it their own. While tweaks need to be made. to support your financial situation. So maybe you're receiving an inheritance, or child support and it can't quite line up with the exactness in the method. So we make a few tweaks. We adjust our payday moves. We adjust those money routines and your, You're moving ahead, you're going forward. You still have a tracking system. I know we've covered a lot and hopefully it's made sense. Go back and listen again if you're unsure. Reach out if you have a question. But I want you to take a look at your current budgeting system. Are you successfully tracking and saving? Saving without spending a lot of time. Are you spending more than 5 to 10 hours a week? Are you recreating your bank account in a spreadsheet after the fact and wondering what is the point of this? What is the point of this, ? We already know what our bank account says or that we had to use that credit card and you're like, but I need to know, but then what are you going to do different, ? Keeping doing the same thing and the same moves are not going to help you move forward. finding that challenge and thinking, what can I do different to get me over the hurdle? So I invite you to explore the financial freedom jumpstart. It's my 60 day program. It's all strategy. In that we go from budgeting to cashflow and begin your journey into financial stability. When I was talking about those future commitments and learning how to plan for that, we definitely touch on that in this 60 day program. It's a six session, 60 day program. Click the link down below or visit my web website for my services and look for the financial freedom jumpstart. Remember, budgeting is not an action piece. It is a necessary piece, but it is not an action piece and you will not see results until you have a successful cash flow method or a tracking system that is showing you you're making progress to your goals. So jump on a free call to discuss what coaching will look like. Visit my website to learn specifically about the Financial Freedom Jumpstart and take that necessary step you need to find success with your money.