{"id":5173,"date":"2018-03-22T13:40:00","date_gmt":"2018-03-22T20:40:00","guid":{"rendered":"https:\/\/www.soundcu.com\/?p=5173"},"modified":"2023-10-30T21:31:44","modified_gmt":"2023-10-31T04:31:44","slug":"use-psychology-to-build-a-budget-youll-stick-with","status":"publish","type":"post","link":"https:\/\/www.soundcu.com\/blog\/use-psychology-to-build-a-budget-youll-stick-with\/","title":{"rendered":"Use Psychology to Build a Budget You\u2019ll Stick With"},"content":{"rendered":"
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When you start looking for financial advice (or any kind of advice, for that matter), experts will share their take on what\u2019s \u201cgood\u201d and what\u2019s \u201cbad.\u201d In personal finance, there are some classifications that we can all agree on: Debt is bad. Emergency funds are good. Overdrawing your account is bad. Earning interest on your savings is good.<\/p>\n

Aside from the obvious examples, the guidelines are a bit murky; plus, the financial advice gurus often contradict each other. One expert will tell you that spending money is \u201cbad\u201d and saving money is \u201cgood.\u201d The next will say that saving money is \u201cbad\u201d and investing it is \u201cgood.\u201d Another might tell you that there are some \u201cbad\u201d investments and some forms of \u201cgood\u201d debt.<\/p>\n

If you\u2019re waging an inner battle of good vs. bad every time you whip out your credit card or peek at your monthly bank statement, it\u2019s probably time to give your views on budgeting a shake-up. Start by losing the desire to classify everything as \u201cgood\u201d and \u201cbad.\u201d There are good and bad ways to spend money, just as there are good and bad ways to save it. Following that logic, there are good and bad ways to budget.<\/p>\n

A good budget is one that, quite simply, works for you. It allows you to meet your needs and plan for your goals, and\u2014most importantly\u2014it motivates you to keep on budgeting. Successful budgeting systems vary wildly in their approach and in the tools you need, but they tend to have the same three actions as building blocks:<\/p>\n

\u2022\u00a0\u00a0 PRIORITIZE<\/h2>\n

\u2022\u00a0\u00a0 TRACK<\/h2>\n

\u2022\u00a0\u00a0 REWARD<\/h2>\n

These building blocks not only help you organize your finances, but they also have the ability to boost your motivation (and there\u2019s real science to back that up). Read on to see if your current budgeting system has all three building blocks in place.<\/p>\n

1. PRIORITIZE<\/h2>\n

What it means: Prioritizing your goals means taking a little personal reflection time and writing a few things down. Prioritizing your goals should not be confused with categorizing your expenses\u2014we\u2019re not talking about combing through your budgeting spreadsheet and pondering whether \u201cfast food\u201d and \u201ctakeout\u201d should be combined into a single category. We\u2019re not even talking about what you think you \u201cshould\u201d be saving up for. No, we\u2019re talking about your goals. What do you want your life to look like over the next few years? Is it your dream to train for a new career? To have an adventure in a foreign country? To throw an awesome wedding? To start your own business? To raise a family? Allow your goals to be a judgment-free zone\u2014goals and dreams are as diverse as the minds and personalities behind them. In most cases, goals reach beyond the familiar trifecta of \u201cpay off student loans, buy a house, save for retirement.\u201d<\/p>\n

Why it works: Prioritizing your goals gets you buzzing about what your money can do for you. There are a couple of motivating factors at work here. Number one: by prioritizing your goals, you are asserting your beliefs and your values. You are also reminding yourself of why you\u2019re willing to adopt a budgeting system in the first place. Studies show that you\u2019re more invested in activities that you see value in\u2014and although budgeting literally deals with values (the dollars-and-cents kind), including your personal values in your budgeting system is what generates determination and stamina. Creating and sticking to a new routine is a pain if you think you have to or you should do it; it\u2019s a lot easier if you\u2019re mindful of why you want to do it. Number two: prioritizing your goals is a great starting point because it reminds you that you\u2019re in charge. You have a say in where your money goes. Social scientists point to autonomy as being a critical element to sustain motivation\u2014and what\u2019s more autonomous than realizing that your budget is a collection of choices you make in order to create the life you want?<\/p>\n

Get started: Grab a pencil and paper. Ask yourself what you want. Think about it for 10 minutes. Write the answers down. Realize they are achievable.<\/p>\n

2. TRACK<\/h2>\n

What it means: Tracking your expenses means being aware of where your money is going as you spend it. This is the part where financial advice experts start to disagree again: some swear by tracking your expenses with good ol\u2019 pencil and paper, others swear by budgeting apps and spreadsheets, and some push more unique approaches like portioning your spending money into envelopes. The good news is that it doesn\u2019t really matter how you go about doing it, but just that you do it. When you track your expenses, a couple of things come to light right away. You start to realize that every transaction, no matter how big or how small, is either contributing to a goal or taking away from it. There\u2019s no such thing as \u201cbuying a pumpkin spice latte just because.\u201d You will soon see that the cost of your fancy coffee comes out of somewhere\u2014ideally out of your budgeted spending money, but potentially out of your vacation fund or your groceries or your student loan repayment plan. The second thing you\u2019ll notice is that the longer you\u2019ve been tracking your expenses, the more you\u2019ll see evidence of your progress.<\/p>\n

Why it works: Yet another critical element in sustaining motivation is competence, or your ability to do something well. As it turns out, we thrive on being reminded that we\u2019re improving. On the surface level, tracking your expenses helps you to identify your spending patterns and to course-correct when necessary. More importantly, by tracking your spending, you\u2019re also tracking your efforts. You\u2019re creating a record of your progress along with a record of your transactions. Before long, you\u2019ll have tangible evidence of how your actions and your follow-through are contributing to a calmer, happier financial life. You\u2019ll see how capable you are of budgeting. You\u2019ll find it easier (and even exciting) to keep your budgeting winning streak going.<\/p>\n

Get started: Try out a new budgeting system today. Browse the App Store or do a quick web search, or pick up a book on the topic. Don\u2019t spend much time evaluating or comparing budgeting approaches. Just pick one and try it out.<\/p>\n

3. REWARD<\/h2>\n

What it means: Rewarding yourself means encouraging and celebrating your progress as you create healthier financial habits. Don\u2019t be afraid to use some creativity when defining your personal finance milestones and rewards. Milestones can be time-based (e.g., using a budgeting app every day for 30 days), achievement-based (e.g., paying off all credit card debt) or increment-based (e.g., having your emergency fund reach $500, $1,000, $2,000\u2026). Rewards can take on many forms as well; material rewards are the most common, but consider incorporating time- and experience-based rewards into the mix too (for example, you can list \u201cpermission to spend an entire day just vegging out\u201d as a reward).<\/p>\n

Why it works: Quite simply, rewards feel good. They highlight our achievements and renew our commitment. As kids, we loved earning those gold star stickers, and although that familiar achievement\/reward structure practically disappears in later years, it doesn\u2019t mean that rewards are any less effective in adulthood. By assigning rewards to the milestone of any given goal, you\u2019re creating added incentive and boosting your motivation. When you earn, claim and enjoy a reward, your brain gets an extra hit of dopamine, which in turn increases your focus and drive.<\/p>\n

Get started: Set a timer for 10 minutes and brainstorm two lists: a list of budgeting milestones and a list of possible rewards. After the 10 minutes are up, assign the rewards to your milestones. They should reward your effort realistically and be super exciting to work toward at the same time. When you reach your milestones, claim your rewards.<\/p>\n

________________<\/p>\n

The act of creating a budget contributes to your ability to follow it through. It solidifies your values, it promotes competence and it highlights your achievements as you work through it. Incorporating Prioritize, Track, Reward into your budgeting method of choice will boost your motivation while tackling your personal finance goals at the same time.<\/p>\n<\/div>\t\t\t\t<\/div>\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\n\t<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

There are good and bad ways to spend money, just as there are good and bad ways to save it. Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":10,"featured_media":5174,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","_searchwp_excluded":"","footnotes":""},"categories":[47],"tags":[100,149,105,236,237,238,239],"class_list":["post-5173","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tools-advice","tag-budget","tag-financial-advice","tag-goals","tag-prioritize","tag-reward","tag-save","tag-track"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/5173","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/comments?post=5173"}],"version-history":[{"count":0,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/posts\/5173\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/media\/5174"}],"wp:attachment":[{"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/media?parent=5173"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/categories?post=5173"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.soundcu.com\/wp-json\/wp\/v2\/tags?post=5173"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}