Budgeting: We’re only human


I got a private message this morning from a fellow YNABer. It was a confession of sorts; this person had dutifully put a nice chunk of money into savings and then, almost immediately, had depleted it to cover various unbudgeted expenses. Some of them, like a car repair, were unavoidable, but one item — draining nearly a third of the savings — could only be called a splurge. The message ended with this: “Every attempt I make to budget and save I find a way to fail.”

I responded with the idea that maybe the problem wasn’t that the budgeter had failed to save but that the budget hadn’t allowed for the expenses (and the splurge) in the first place.

I think many of us come to budgeting with the understanding that if we aren’t suffering, we’re not doing it right. To succeed, we believe, we must do without all the things that make us happy. We vow never to eat out, buy a video game, get a massage or, essentially, do anything that brighten our lives until all of our other financial goals are met, in 10 to 20 years.

This would certainly be effective. If we could stick to it.

The budgeter who wrote to me was doing the “responsible” thing: putting every extra dollar into savings. But that plan left no funds for discretionary spending or unexpected needs.  (On a side note: “savings” is a very broad name for a category. Dollars seem to be more loyal when they have very specific job titles. But that’s a post for another day.)

Had a third of the savings money gone into in a “fun money” category and some into care repairs to begin with, the splurge and the repairs would have been budgeted for. No guilt. No failure. The overall spending would have been exactly the same, but the psychological effect would have been completely different.

I am not advocating reckless spending over careful budgeting. I’m saying that while our budgets should reflect our long-term financial goals, they also must be realistic about our actual spending patterns.

It’s admirable to create a budget that holds us to high standards; it gives us something to strive for. However, a budget that pretends the car will never break down or that we will never be too tired to cook dinner — or even be in the mood to just treat ourselves now and then — is almost certainly doomed to failure.

We are, after all, only human.