7 Reasons Why Budgets Don't Help You Feel Better
While budgets can be helpful money management tools, they don't always lead to peace and happiness. At FinCon 2023, Rachel Duncan, Ed Coambs, Aja Evans, Meredith Adams, and me, Lindsay Bryan-Podvin took to the stage to discuss why a budget doesn't help people feel better. Discover the seven reasons a budget might not make you feel better about your finances, from not earning enough to feeling like a failure.
1. Budgets Only Solve One Problem
You may have been pinning your problems on your money when your money was a tangible problem you could point at, but there were other things in your life going on. A budget might help solve one particular problem in your financial life, but once you get a budget in place, you may discover that there is more than the budget that needs to be tended to. You might learn that you were using “I don’t have a budget” as a scapegoat for not being able to sleep at night or have meaningful friendships, and once you have a budget, learn that other areas of your life need attention.
2. A Budget Is a Tool
A budget is a financial tool, but it’s not the end-all-be-all of personal finance. Much like mindfulness is a stress management tool but not everyone’s preferred stress management tool, a budget is just one tool in a personal finance toolkit.
There are plenty of people out there where a budget or spending plan just isn't the tool for them. Some people might feel good about their monthly income and expenses but struggle with creating a savings plan for their emergency fund or need help verbalizing their financial needs with friends.
Other money management practices that a person might need that aren’t a budget include a debt paydown plan, lifestyle alignment assessment, values-based spending determination, college savings plan, long-term care insurance, and financial communication help.
3. Budgets Make You Feel Like You’re Failing
The rigid rules associated with budgeting might make you feel like you are a “budgeting failure.” While some people may find reassurance in budgeting rules (e.g. “Spend 50% of your paycheck on needs, 30% on wants, and 20% to saving,” or “you should spend no more than 28% of your income on housing,”), others may feel like they are failing when they can’t adhere to others’ budgeting rules.
Many people might be able to stick with a budget for a while but have a hard time with the rigid guidelines long-term and feel like they’ve messed up. Still, others might not be able to extend flexibility to their budget and feel like they are “bad” for needing to spend money on grocery delivery, even though they suffer from chronic fatigue syndrome and need to outsource as many chores as possible.
Instead of adhering to someone else’s rules? A better choice is to personalize your budget to meet your unique needs.
4. Budgets Need to Be Flexible
A big challenge in personal finance is the misconception that a budget is a static, rigid tool, instead of a living and malleable tool that flexes with life’s needs. This misconception often makes people feel like they are “failing” when they don’t allow their budget to change over time. When people don’t allow flexibility in their budget, it makes sense that a budget wouldn’t help them feel better.
Personally, I prefer the term “spending plan” instead of “budget” for this very reason. I think a spending plan allows you to increase or decrease your spending as needed to better align with life’s ebbs and flows. Without this flexibility, a budget might feel more restrictive and stressful instead of serving as a helpful, and flexible, financial guideline. Learning to be flexible is a key component of how to budget better.
5. Budgets Are Hard on a Low-Income
There is a myth in personal finance that if you stopped spending money on lattes, sneakers, and TVs, you would have plenty of money to go around. However, that just isn’t true. We cannot “save” our way to financial security or “cut spending” as a way to get out of poverty. I’ve shared before that in the U.S., wages have not increased in over 40 years. On top of that, the “Living Wage Calculator” estimates the local wage rate that a full-time worker requires to cover the costs of their family’s basic needs where they live. And, spoiler alert! The minimum wage simply doesn’t cover a person’s basic needs in the U.S. So even if you work full time in a minimum wage job, a budget wouldn’t help. In other words? Of course, a budget is going to fail when minimum wage doesn’t even support most adults in the United States.
6. There is no “Done” with Money
What comes after the budget? Unfortunately, creating a budget (and adhering to it!) doesn’t mean you’re done with money. We all have to engage with money throughout the duration of our lives, whether we are earning it, spending it, loaning, it, saving it, or investing it. A budget is one piece of the different things we have to take care of financially. A person who thinks a budget will check off their “financial” to-do list might not feel great when they realize that money will continue to be a part of their lives.
7. Money is Emotional
For many folks, having a budget is a cause of happiness and celebration. But, as a financial therapist, I’m here to remind you that a budget often stirs up lots of feelings and emotions related to money. Money is inherently emotional. In my practice, I’ve seen and heard a range of emotions, from sadness and worry all the way to guilt and overwhelm (fret not! I’ve also heard emotions like excitement, relief, and eagerness!). Until we start normalizing that money is emotional, it makes sense that someone might feel emotionally out of sorts after making a budget.
Understand Your Relationship With Money to Feel Better
The personal finance industry’s emphasis on “needing a budget” just isn’t the magic pill it’s often toted as. While budgets are a helpful tool that can help people with certain financial stressors, budgets might also uncover deeper financial or emotional challenges. Like any type of tool, a budget is just one tool, and its effectiveness will vary from person to person. Confusion over using and engaging with a budget can make them feel less helpful. Remember that a budget should be flexible and adaptive to your needs. Plus, you can’t “save” your way out of underearning. Beyond budgeting, the emotional side of money plays a big role in feeling good about money.
If you want more on the intersection between money and emotions, consider hiring an experienced shame-free financial therapist to lead a workshop, presentation or keynote.
As a passionate advocate for financial wellness and emotional health, I offer practical strategies and empathetic guidance to help people navigate their relationship with money. Plus? HR surveys find that companies who invest in financial wellness retain employees and improve their bottom line. Reach out today to learn more about scheduling me to speak!