Budgeting Without Consequences isn't Budgeting. It's Playing Pretend.

Written by Jesse Mecham  |  on


We do budgeting better than every other piece of software out there. The Budget is the King.

One aspect of the software that you may or may not have stumbled across, reinforces our devotedness to The King. We call it Rule Three.

Consequences Aren’t Just For Kids

When my kids want to spend some of their “Fun Money”, I let them. I try to guide them in their purchases, but I also try not to be overbearing. I want to let them learn for themselves.

So my oldest will tell me he has three dollars and forty-five cents and wants to buy something at the store. We go to the store, and he picks something up that’s five dollars and really wants it. He’s $1.65 short.

And let’s be honest, I don’t balk at $1.65.

Do I cover the difference? It is just $1.65. It doesn’t mean anything to me.

Heck no. I’m a dad, and I hold my ground.

Your “Other” Budgeting Software is a Yes-Man, Pushover Dad!

With traditional personal finance software, when you overspend in your budget, you…see a red number.

It’s like your dad covered the difference for you. Didn’t even make you grovel a little bit.

You spend an hour setting up your budget, shut down the software, and go on your merry way. Some time later (sometimes a lot later), you remember to update your software and see how things are going. You reconcile everything, and click over to your budget (likely buried in the interface somewhere, or relegated to the same area as all of the other reject reports that are thrown in for eye-candy but add no value to end-users).

The budget tells you that you overspent here or there, have some extra in this place, and you’re kind of like, “Okay… I guess, that’s good…Honey?! We overspent on our grocery budget.”

Your spouse responds, “Did we? Ahhhhhh.”

And that’s pretty much the end of it.

Not if you’re being governed by The King. He has rules.

The King’s Rule Three

We call Rule Three, ‘Rolling with the Punches.’ That’s just a fancy way of saying there’s something the software does that really is, dare I say it, quite boring:

When you overspend in a category by, let’s say $50, you’ll have $50 less to budget for the next month.

The King makes you pay yourself back for the overage.

Did you actually overdraft your bank account? No, there were other categories with surpluses that covered it. But you did borrow from yourself when you overspent, so you pay yourself back with next month’s money automatically.

See? I told you it’s boring.

But heck if it isn’t extremely effective.

A Real Life Example

A few years ago Julie and I had to make a sudden trip to Alabama. The plane tickets cost us $500. That wasn’t anywhere near what we had available for ‘Vacation’ in our budget. We overspent the Vacation budget (even though it wasn’t technically a vacation, we classified it as such) by $435.

Well, the next month we had $435 less than normal to budget because we had to pay ourselves back. Well, $435 was a pretty big hole for us to climb out of, so we ended up overspending in groceries and utilities that month by about $250.

So the next month we had $250 less than normal to budget. It was better than $435, but still not too great for us. That month, because of the $250 hit, we overspent in groceries (again, that was a theme for us) and gas for the car by $98.

We were gaining ground, see? We dug ourselves out of a $435 hole and got to a fairly manageable $98 hole. That next month, even though we were $98 poorer when it came to what we had available to budget, we were able to make it work and we didn’t have any overages that month (beyond the small, insignificant ones that crop up all the time).

We were held accountable for the $435 overage. There were consequences.

So the next time you yell to your honey that you overspent in Groceries by $320, they’ll maybe have a little more to say, like “How the heck are we supposed to handle that next month?! What are we going to do!? WahaHaha!!”

I’m not saying it’s a mature reaction, but at least it has some substance to it.

(And you dig out of those holes by cutting back, or earning more.)

You Can’t Ignore Rule Three’s Writing on the Wall–not Forever at Least

Sure, you can continue to borrow from next month’s money, but eventually it’s going to come back and nail you. Robbing Peter to pay Paul only works for a short while. It’s like your own personal Ponzi scheme–eventually you run out of suckers and need to make a break for it. Well, eventually you run out of “next month’s money” and the Great Day of Reconciling comes where you need to bring in some extra, or go into debt.

And you know I don’t want you going into debt, so the obvious choice is to make adjustments as you go along.

The nice thing about Rule Three is that this adjustment it makes is automatic. Most of the time, you won’t even feel it make its gentle corrections.

You need to budget with consequences. We want you to become better at managing your money, not just better at using software to manage your money. That small change in thinking makes all the difference.

Your Next Step

Budgeting is not restrictive. You won’t be spending less, you’ll be spending right. So what do you have to lose? Except all that debt and stress?