"Isn't a budget just something we use to tell poor people everything is their fault?" is a question that was directed my way recently.
And while my answer was a firm, emphatic no, I can understand how it's come to be seen that way.
High-profile money gurus love a dumb gimmick, and one of their favourites has to be attacking small, enjoyable purchases.
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Cafe coffee? "You're literally peeing thousands of dollars down the drain!"
Getting a haircut? "Cut your nonessential spending!" (But don't turn up to work looking scruffy, what are you, a hippy?)
These points are ridiculous. They also don't work, as anyone who has tried them will know.
Cutting out $5 at a time won't get you a house deposit. But it will leave you miserable, stuck at home, and eventually giving up on managing your finances entirely.
The solution is not to throw the budget out the door and YOLO your way to freedom. A budget is still the foundation of everything else you'll do with your money, whether you earn a little or a lot.
There are plenty of rich and famous people who go broke. You can spend any amount of money if you put your mind to it.
In the process you'll miss out on the ability to save, invest, and create a financially comfortable life for yourself.
Buying a house, investing in shares, going on holiday, all only happens if you manage to spend less than you earn. Everything fun happens in that gap between earning and spending.
So fine, how do we create a budget that actually works?
You start with the big expenses first.
Housing, transport and food, are where most of us spend the most of our money. Stats NZ figures show it takes up about 60 per cent of the average New Zealander's spending – although don't forget that's an average figure, and for some it will be higher.
If you can reduce even one of those categories, it's powerful. Bigger spending means the potential for bigger savings.
Can you change your living situation to be cheaper? Can you negotiate power or internet bills so that they're lower? Can you walk or bike to work instead of taking the car? Can you reduce food waste, so that you buy less overall?
The best thing about these changes is that most of them are set and forget. Make them once, and keep reaping the savings.
Your willpower doesn't get tired out from constantly saying no to every $5 indulgence in your path.
The next step is to think about what makes your life happier – and keep it.
This is why the constant harping about people spending on coffee baffles me. Coffee is the perfect small treat that can fit into a budget.
You cannot go without treats entirely. It's the same as going on a restrictive diet. You will last a couple of weeks before you snap and binge.
It's silly. It's unrealistic. And it's pointless.
Keep a diary for one week of everything you spend. Next to each one, write down if it was a true need, and also, whether it made you happy.
Seeing it written down does two things. One, it will help you see patterns of the spending that actually isn't adding anything to your life.
But two, it shows you what is making your life happier. From there, you can start thinking about how you'll keep it in a smarter way.
Small treats that fit into your budget are a great thing. Big treats that you can't actually afford are only creating stress.
I love a secondhand dress; I'll rarely buy a new one, though. I love a good takeaway coffee; but I usually have them only twice a week, because it increases my enjoyment when it's not just part of my daily schedule.
The things that make your life enjoyable are precious, and should be kept. Any of us could be hit by a bus tomorrow - but we probably won't be, and having our finances sorted will let us enjoy life even more.
You can spreadsheet, app track, or money diary your way to a good budget. I don't care.
Sorting out your priorities, and what makes you happy, is what will help you stick to whichever system you choose.
What do you want in your budget? You can have anything you like – just not everything at once.
Frances Cook wrote this while enjoying a brownie and an oat milk hot chocolate in a local cafe, and it was very nice thank you.
This column is general information only, and not individual financial advice.
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