Don't Budget, Be Happy

Say you've been reading this blog for awhile now, and you are actually inspired.  Okay, let's be realistic.  So instead, let's say you're like, "Wow, that Deadwood is a complete waste of carbon.  But I do want to save more."  So you sit down and start working on a budget.

Don't.

Seriously.

Don't.

"WHAT?!  Are you kidding me, Duckwing?  You completely exasperate me.  First, you tell me that Rule 2 is to "Save Like Crazy."  Now, you're telling me to not even try.  What the heck?"

Don't get me wrong, Slash.  I'm still a staunch supporter of saving like crazy.  I'm just not so hip on budgeting.

Let me tell you a story about a guy in Brazil named Jaime Lerner.  He was the mayor of a big city called Curitiba.  Jaime accomplished an amazing assortment of goals despite little resources.  So amazing, in fact, that mayors and city planners from all over the world descended upon Curitiba to learn how he did it.  Jaime believed one key to his success was his staffing strategy.  He filled his staff with architects.  His rationale was that most administrations were filled with lawyers and accountants - people whose disposition, or at least whose training, is all about why you can't do something.  Whereas, architects are all about why you can.

(Hmmm...I have a cousin who got her undergrad degree in architecture and then went on to get her law degree.  I have no idea what she's about.) 

"Okay, that's it.  We're going outside." 

Hold on, big fella'.  There's a point in here somewhere...okay, found it.  So budgeting?  Budgeting is all about what you can't do.  Can't buy that latte you crave - it's not in the budget.  Can't upgrade that laptop you use - not in the budget.  Can't buy that Louis Vuitton dog leash you covet - not in the budget.  Budgeting will make you miserable.  Is that anyway to live?  It's not, so you'll quit.

And even if you are one of the amazing few who actually sticks to a budget, it takes its toll in other ways.  The problem with budgeting is that it requires you to suppress your desires.  That takes a lot of willpower.  And psychologists theorize that people only have so much willpower in their reserves.  So if you use up a big ol' hunk of willpower on budgeting, you'll have little left to exercise, or to eat better, or to study for that CPA exam so you can go on to tell people what they can't do.

"Then how the heck am I supposed to save more?" 

My advice: Instead of denying your desires, desire less.  Buddha supposedly said, "Desire is the root of all evil."  Learn to let go.

"Oh!  Okay, I see.  If I want to save more, I have to become a Buddhist, is that what you're telling me, Drywell?" 

No, but become enlightened on this one point: Materialism is a little like drug addiction.  You buy stuff to make you feel good, but the effect is fleeting.  And over time, you will need more and more to get that feeling.  Case in point gone wild: A few years ago, I read a story about a teenager in Seattle who staged a heist of his own BMW M3.  Why?  He wanted his mother to buy him a Bentley.

So, how does one go about desiring less?  Meditation?  Gregorian chants?  Python whack-a-monk?  All good ideas.  But I prefer to track expenses.  Save your receipts and record each and every one.  Use categories that are large enough to be meaningful, but small enough to give you insight.  Here are mine:

A few notes:

1. I break some expenses into sub-categories.  I would much rather spend food money on Groceries than Junkfood or Takeout.  So these sub-categories let me see how I am doing.

2. You may need to set rules for which categories trump other categories so you stay consistent.  For instance, celebrations often revolve around food.  So do you track the expense as a Food item or a Celebration item?  I choose to lump it under Celebration.

3. For me, vacations are a big expense, but not an explicit category.  Instead, it's a separate field that allows me to cross-reference in a pivot table to see how much of my Food, Fuel, Flights, Lodging, Rec & Ent, etc. is associated with vacations.  (Perhaps I could do this with Celebration as well, but then it gets really complicated because we often celebrate with food while on vacation.  This is known in expense tracking parlance as: Get a life, Deadwood.)

4. Use Excel.  I have tried phone apps, Quicken and other things, but Excel is by far the easiest and fastest way to go.  And it gives you complete control over charts and pivot tables.  Phone apps may seem convenient at first, but I have been tracking expenses for four years now and have about 9,000 line items.  Excel's autofill function is a huge time saver - 10 seconds per receipt is a lot better than 15 seconds per receipt.

"That's a ridiculous amount of work.  I don't have time for that." 

Actually, you do.  Think of all your phone conferences each week where you have to pay enough attention so that you can't do email, but you can still fold laundry or grab something to eat.  Track your expenses then.

"Okay, then what?"

Analyze.  At the end of each month, see where you spent your money.  How much are you spending on cable?  How much on eating out?  How much on clothing?  What surprises you?  What makes you upset?  By going through your spending habits, you will develop enough insight to change your behavior.  Over time, instead of your budget forcing you to cut back, you will have the insight to choose to cut back.  That's a big difference.  You will realize that the latte isn't worth it.  Your laptop is just fine.  The dog leash is a stupid waste of money.  In essence, your desires melt away and saving becomes more pleasurable than spending.  No budgeting.  No depriving.  Just a change in you.

"Does this really work?"

Well, it did for me.  Despite my minimalist nature, tracking expenses has been hugely beneficial.  The first year, our spending dropped by $10,000.  The next year, it dropped by another $7,000.  (So it was $17,000 lower than the base year.)  That's real money.

"Whoa."

I know, right?

Architect your own enlightenment.

Track expenses.