When it comes to money, can you guess what the dreaded B-word is?

If you said, “budget,” you’d be correct? 

Ironically, for something that is dreaded, it is also something people want to be good at. Case in point: 

“I want to stop not knowing how much I spend a month and start tracking my spending and making and sticking to a budget.”

“I want to stop flying by the seat of my pants with saving and spending and start doing it more deliberately (but I feel like I don’t have time to create and track a budget as responsibly as I’d like). I’d also like to figure out if/when I could ever afford a home or to have children.”

“…Improve my budgeting skills, hacks for making money management a habit rather than an admin task that I dread.”

The bold emphasis is mine. But these are unedited pull-outs from a pre-event questionnaire completed by attendees from a few of my speaking gigs last year. 

What I hear in their statements is a recognition of the value of having a spending plan, a desire to have the aptitude to create an effective one, and the discipline to adhere to it.

Do you relate? 

Do you create them? Are you good with sticking to them?

How would you describe your relationship to budgets – the “thing” that reflects your goals, priorities, and sense of security and control of the future?

People. Businesses. Governments.

However you describe your relationship, whether you intentionally create them or not, and whether you stick to the plan or not, here’s the truth: 

We all operate within a budget. 

We all have to make financial choices based on the constraints of the money coming in and the money going out

And by “we,” I mean that in the broadest sense: personally, businesses, and the three levels of government (local, state, and federal). 

So, it might surprise you that I have an opinion – one that isn’t too popular with some of my personal finance colleagues: 

I am not a fan of budgets. (Gasp, I know!) 

I am a fan of budgeting, however. 

To me, the distinction between “budgets” and “budgeting” is not simply a difference in semantics. 

It’s a difference in mindset and approach.  

One is a plan that represents a moment in time. 

While the other represents an ongoing process of creating, managing, and adjusting the budget over time. It’s dynamic and allows you to adapt to changes – both those you initiate and those you have to respond to.

One suggests you focus your attention entirely on spending – or the expense side of the equation. 

The other invites you to also look at the income side of the equation. 

One often feels restrictive, reminding you of what you can’t or don’t have the capacity to do.

While the other tends to foster a sense of abundance and possibilities.

The distinctions I just described between “budgets” and “budgeting” are why my feathers get rankled whenever a personal finance guru suggests you stop buying “fancy” $7.00 lattes in order to get out of debt. As if cutting your expenses (spending) is the only solution and approach available to you. 

Yes, some spending adjustments may be required. But at some point, there is only so much you can cut. 

Why isn’t there more talk about looking for ways to bring in more money? 

I thought of this last week when Kai Ryssdal, host of NPR’s “Marketplace” and co-host of “Make Me Smart,” echoed similar sentiments when he went on a rant (which I loved) about Congress’ approach to the national debt of the United States – a record $34.14 trillion. 

Currently, there are two bi-partisan bills that are in “committee” in the Senate and the House. Yet both focus solely on spending cuts, with no talk of potential tax hikes (or, the revenue side of the equation). 

The Harder Question 

I’ve never worked in government, so I don’t have first-hand experience making fiscal choices and trade-offs on that level. 

However, I am pretty well versed in this regard personally and from managing a business, along with helping others manage their personal and business finances. 

My experiences and observations are why I say:

“People often fail to stick with a budget because they create them based on how they ideally want to say they are spending their money – rather than on how they actually spend it or need to.”

“People focus on budgets rather than budgeting, because the former is treated as one-and-done while the latter requires active engagement.”  

“People focus on cutting expenses because the results (relief?) can often be seen (felt) faster.”

Like I said earlier, we all operate within a budget. And the state of any budget provides feedback about one’s degree of discipline, flexibility, and resourcefulness. 

Whether your bottom line shows you are in the red, near the red, or comfortably in the black, cutting costs shouldn’t be the only option you consider to move up and to the right. 

Actually, I believe cutting costs is the easier choice. 

The harder question to ask and choice to make is some version of, “How can more revenue be brought in?”  

Asking it, though, will: 

  • Unlock ideas and opportunities you’d likely never tap into if the only option you explored was to cut expenses;
  • Require more patience in letting the results unfold; and
  • Require you to change something about your strategy and approach.    

This is precisely why I am a fan of “budgeting.” 

The reiterative nature of this approach is an example of discipline and flexibility. 

It’s more positive and empowering. 

It focuses more on possibilities, growth and abundance (vs. scarcity). 

It keeps the long view in mind, while setting you up to have some short-term wins so that you don’t give up. 

It allows you to embrace the challenges of your reality (especially when you don’t like “what-is”), while simultaneously providing momentum for moving forward. 

All of this adds up to having a growth mindset, something that will help you manage your money better – in challenging and thriving times. 

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