Why keeping a budget is just like getting a raise

 

I want you to keep track of what you earn and spend.

But why? Is it a deep-seated need to assign homework? No way. Do I want you to become obsessed with your budget and spend hours and hours on it? Hardly. Do I want you to care about this stuff as much as I do? Probably not possible. I just believe that by taking control of your money, you can take control of your entire life.

But even if you don’t follow me on that, I believe that doing this can also give you an immediate raise.

There’s gold in them thar couches

When you keep track of your money, you’ll find that you have more than you did. It feels like you got a raise, because that’s kind of what it is. Call it “budgetary couch fishing.”

Here’s how it works. You write down everything you spend in a given month. Divide it up in to categories. The categories you choose are up to you, but things like “food,” transportation,” “household,” are good. I recommend writing everything down each day, but if you can keep things in mind, every couple of days or every week is fine. At the end of the month, you sum up each category to see what you spent.

That’s all you have to do. At the end of the month, you are most likely going to have more money than the previous month when you weren’t keeping track of things. Instant raise!

(For those who think that every day is a lot, I can say that it takes about as long for me to load up the file on my computer than it does to update it. This isn’t a high bar I’m talking about.)

Why does this work? Here are two reasons, either or both that may apply to you:

  • Your spreadsheet, notebook, or whatever device you use, becomes a kind of accountability partner. Do you really want to write down that you spent $50 on alcohol over the weekend? It will force you to ask yourself in advance if you really need that thing, or to buy that extra drink, because you know you’re going to have to “tell” your notebook about it. And when you sum up those categories at the end of the month, you’re going to be confronted with what you did all month. Those sums can be a bit hard to handle. So writing things down keeps you a bit more conservative in your expenditure.
  • Even if you’re not cowed by your notebook accountability partner, it is true that money is much less likely to fly out of your hand if you are watching it. This is sort of like an “economic uncertainty principle” where the act of observing a budget changes the budget itself. It might feel like magic, but just like the regular Uncertainty Principle, it works even if we don’t quite understand it.
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But don’t take my word for it

Don’t believe me? Fine. Like I tell everyone who I coach, prove me wrong. Try it for a month, and see if you don’t just find that you have more than you thought you did. It seems unlikely, I know, and your results may vary, but I bet you that when you look between the couch cushions, you won’t come up empty-handed. Try it and see.

But enough about me: do you keep track of your expenses?

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