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Why Budgeting Will Lead to More Awareness — Carl Richards

Carl Richards says budgeting and flossing can lead to more happiness.

I don’t run into too many people who love to budget. And when you add another person to the mix, like a spouse or partner, there’s a good chance one of you will actually hate the idea.

Budgeting clearly has a marketing problem. It’s a bit like flossing. We understand how important it is to floss, but it’s not something we like to even think about, let alone actually do. So we lie to the dentist about how often we do it and promise to do better, only to skip it again the next day.

Budgeting and flossing: Both insanely important, super simple, and for many of us, nonstarters. I had this conversation with Jesse Mecham, the founder of You Need a Budget, the online budgeting tool, and he touched on something that I agreed with completely. Budgeting is more about awareness than it is numbers.

In fact, budgeting equals awareness.

And who doesn’t want that?

I think anyone who takes the time to think about it would agree that spending money in a way that’s aligned with what we value will bring us more happiness. Of course, the only way to know if our spending is aligned with what we say is important is to track it. Tracking it will make us aware of how we’re spending our money, and then we’ll have the information to decide if we want to make changes.

So why aren’t we doing it?

1. It’s not fun.

True. But remember, to paraphrase Stephen R. Covey, the self-help author, it might be even less fun to spend your entire life climbing a ladder only to find it’s leaning against the wrong wall.

2. I already know where my money is going.

No, you don’t. Sorry. Unless you track your spending, you don’t know where your money goes. Everyone I’ve ever seen go through the process of tracking spending for 30 days usually ends up saying some version of, “I had no idea I was spending that much on X.”

Trust me, you will learn something you did not know about yourself.

3. I’m not sure I want to know.

I think this is the biggest mental hurdle. Sometimes it’s better to be blissfully ignorant, at least for a while. The reality is that as we become aware of what and how we’re spending, we’ll find some things that surprise and bother us. Then we have to decide: Do we want to change?

There are plenty of reasons not to budget, but there are even more reasons to do it. You will become more aware, and while that awareness may be painful, it may lead you to spend money in a way that has the potential to lead to greater happiness.

So here is my challenge to you. Try tracking your spending for 30 days. (I hope the results of this challenge are better than my project at the homeless shelter.) Don’t stress about what app to use. If you have an app or another tool, great. But if you don’t, I suggest buying a stack of index cards. Pull one out of your wallet every time you buy something and write it down.

Tell me what you learn. I’m going to try it, too, and I’ll share what I learn. I think we’ll all be surprised at least once.

This commentary appeared April 1 on The New York Times’ Bucks blog on NYTimes.com.

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The opinions expressed by featured authors are their own and may not accurately reflect those of the BAM ALLIANCE. This article is for general information only and is not intended to serve as specific financial, accounting or tax advice.

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