"If you’ve got big money goals in 2020, chances are that they need to start with some new mindset shifts around financial management. You might be tempted to go all the way back to basics and revisit your “budget,” but before you do, consider these four steps for thinking about your money planning a little differently:
1. Call It Something Else
Budgets are a lot like diets; they feel like something we should be doing. We’ve got a friend who keeps a super niche one that would never work for our lifestyle. We get geared up for them in front of big life events, and then promptly fall off the wagon after a few weeks. Having success with money has a lot to do with integrating it into a lifestyle, much in the same way we think about our physical and mental wellness. Because yes, managing your money is self-care.
So make step one of your 2020 budget effort a complete reframing of the word. Stop calling it your budget and see what happens when you take away the power from that loaded word. Instead, refer to it as your finances or cash flow. Using the same kind of language and mindset that we try to apply to other wellness to get changes to stick is an important part of getting your budget right in 2020.
2. Give Every Dollar a Job
Part of this reframing mindset starts with the actual process of how you manage your money looking different. I used to “budget” by racking up a list of all my expenses and plotting that against my income — and if there as a little left over, that was a win! (That’s a budget, right?). Well, sort of, but that’s actually a little bit more of an old-school checkbook register. If a calculator can do your entire job on budget day, then you’re missing an opportunity to more proactively use financial management to meet your goals.
Instead of this simple income and expenses exercise, work backward from your goals, and put dollars to them. Thinking about buying a house? Figure out what you might need to save for a down payment and extras, give yourself a time horizon, and plot that against a calendar.
If you end up in the joyful boat of having a little extra left over, those dollars need a job too! Even if that “job” is spending money or splurging on a few seasonal wardrobe must-haves, having all of your income purposefully allocated makes financial planning much less of an exercise in “guessing” at our month-to-month resources.
3. Find Your Why
And speaking of purpose, money management needs a lot more motivation than just being sure all the bills are paid on time. Again, the principles of physical wellness help us out here. Of course it’s hard to get to the gym when that distant, surface-level goal like “just 10 pounds ago” is the only thing pushing us to make it to pilates. Instead, we’re at our best when we focus on how we’re going to feel after and think about how these tiny, daily actions are going to contribute to a life of well-being that will pay us dividends down the road. (Couldn’t help it!).
If you’ve been struggling to get motivated to manage your finances in a meaningful way, revisit your why. Your “why” also isn’t the same thing as a consumption goal — though those are fun too! Instead, your “why” is about the feeling and the outcome of your financial efforts. These things are much more powerful than the financial milestones they are often exclusively tied to.
For example, take a goal like home ownership. In reality, owning a home is the “consumption” goal, but it’s not your “why.” Instead, your why might be “I want to put roots down and feel like this city is my new home,” or “this next step will give our family a place to grow together.” These mindset shifts are subtle, but a much more powerful personal message to tap into than just seeing a dollar figure in your head when you think about a financial milestone. They are the very feelings that keep us motivated and sticking to an action plan when it feels easier to splurge on unexpected expenses, or not push ourselves to ask for that raise.
4. Track Your Progress
Finance fatigue is a real thing. There are so many apps, tools, platforms, and options for us nowadays that sometimes we can feel a little paralyzed by the options for tracking our financial progress. But seeing incremental changes in your financial future over time is insanely motivating, so it’s important to find an option in this area that works for you.
Mint is a classic for resource categorization. Clarity Money gives a more holistic view of your finances. Goodbudget takes the classic “envelope” concept of financial management and brings it to 2020. And when that fails? A good, old-fashioned spreadsheet can give you just as much insight. While these options all streamline something that still definitely falls in the “life admin” category, they don’t do the work for you. You’ll still want to spend some up front time financial goal-setting, reviewing your overall long-term financial plan, investments, and personal financial bucket list.
The important part is just to start, and routinely stick with it — checking in on yourself at reasonable intervals that make sense for your income and lifestyle. You could almost call it a budget date with yourself — almost.