Before I faced my financial armageddon, I tried several times to squeeze my life into a traditional budget. I’d fill out some spreadsheet that someone gave me, or fill out a page torn out of a personal finance workbook, and I’d start off with high hopes of organizing my finances. Everything would go well for a week or two, then something would come up and I’d find myself breaking that budget. Then, usually a few days later, I’d buy a thing or two outside the budget because I wanted it, viewing it as a reward. Before long, the budget was long forgotten and nothing whatsoever had changed.
Traditional budgets don’t work over the long term for the same reason traditional diets don’t work over the long term: you’re subscribing to someone else’s definition of what your behavior should be, not your own. Everyone’s life has a number of patterns in it, and those patterns are comfortable to us and keep us going on a day to day basis. We get into a groove, so to speak, and the only way you can get out of a groove and into another groove is not by deciding to do something different, but by creating a new groove and hopping into it. In other words, you have to blow the real, tangible obstacles out of the way first.
To explain this, I’ll use an analogy with another topic that I love, cooking. Most people, especially younger people, get by with using lots of prepackaged foods simply because of the convenience of it, so they get into a routine of using these prepackaged foods on a regular basis. Others get hooked on eating out and takeout for similar reasons: it’s easy, convenient, and fits with their lifestyle.
The only way to break out of such a groove (and prepackaged foods and takeout are expensive) is to create the possibility of a new groove. How? By making it simultaneously more convenient to eat right and less convenient to eat out and eat prepackaged foods. For example, you can make it more convenient to eat right by preparing meals in advance that are quite simple to eat at your convenience, while making it harder to eat prepackaged foods by tossing all of them out and not buying more.
A similar logic applies to any aspect of personal finance: it’s difficult to change the basic routines of your life. So how do you make some of these expensive routines less convenient and make others more convenient? Here are some ideas:
Make expensive routines less convenient by leaving your credit cards at home. This makes the effort to pay for frivolous items much greater, thus reducing the chances that you’ll waste money on such items.
Make inexpensive routines more convenient by finding the biggest money waste in your monthly finances and eliminating it. Are you leasing a really expensive car? Next time you go to the dealership, select something much more economical. That way, your budget has more room to breathe.
Make expensive routines less convenient by doing your shopping at lower-end stores. Switching to a new store means you’ll have to spend time coming up with a new “routine” of going through the store, enabling you to reconsider the things you’re buying. Once you’ve shopped there a time or two, you’ll have a new groove – one that can save you some real money.
Make inexpensive routines more convenient by spending time with different people. If you spend most of your time with friends who make more than you, you’ll spend more and have more expensive routines. Instead, spend time with friends who make less than you and let them lead a bit in your activities. You’ll have a lot of fun – and spend less in the process.
Look for ways in your own life to find a new groove – and get your finances in better shape.