Visualize What It Costs To Be You
What would happen if you could see and feel your budget?
Real Life Example:
“Budgeting is not fun for me.” This phrase came up while working with a client couple recently. The client was simply expressing that looking at numbers was a draining activity for them. Their partner was more into numbers, organization, spreadsheets. This division of labor or interests is common in couples. But c’mon, is budgeting fun for anyone? I think not.
Budgeting is a set of constraints, and most of us don’t like being constrained. I prefer not to talk about budgeting, and I find the work of budgeting – literally setting spending limits by category – to be complete drudgery.
Most budgeting methods and tools drive you into unnecessary levels of categorical detail, which for many people is draining, overwhelming or unmotivating. Take a look at the default categories in Mint (an online budget tool), for example. Do you really need to distinguish between Coffee Shops, Fast Food and Restaurants? How about we just call that Dining Out? There’s a better way to do it.
Learn What it Costs to be You
Do you know what it costs to be you? Can you say out loud how much you spend per month or per year? This is a gap – or a struggle – for many people. Budgeting is annoying, but the tracking part is essential.
Track: If you already track – regardless of method – great! If you don’t, try using an online tool (Mint, YNAB, Tiller) to aggregate and gather the data for you. Enter bank accounts and credit cards, because that’s where your spending lives. Pencils work also. 🙂
Categorize: Make a list of ten or less categories and write down your spending in each category for 3 months. If you’re using a tool, run a report or summary. Here’s a starter set of categories:
Bills and Utilities
Health and Fitness
Personal / Family / Shopping
Gather 200 Widgets. Do you have any blocks? Poker Chips? Bucket of pennies? Legos? Grab something physical that you can use to represent units, something that’s uniform in size. You’re going to want 200 of them. Post-Its® work also.
Assign a Widget Value. Total up your monthly net income – the amount of cash that deposits to your bank account each month (after taxes, etc). Divide by your quantity of widgets. If your monthly net income is $5,000 and you have 200 widgets, each widget is $25. Your widgets will gather or pile up like buildings in a small city. (Stay with me with my silly metaphor, please).
Build your Money City. Stack or group your widgets into your categories. If you spent $2,000 on housing at $25/widget, that’s 80 widgets for housing. When you’re done, behold your Money City. You now have a physical, visual representation of your spending in front of you.
Is That Our City? Do I want to live there? Look at your city (example below). What do you see? Most people see something they like or don’t like, something they want to adjust. Do you wish that one tower was smaller? Would you prefer that strip mall was larger? Did you run out of widgets or do you have extra widgets? If you want to change something, why? Are you spending on what’s important to you, what you value?
Visualizing your spending – visualizing what it costs to be you – will increase your overall awareness of your spending patterns. The awareness, and the experience of looking at the widgets, often sparks the best conversations about whether and how you should change something about your spending. It’s more fun, and more effective than traditional budgeting.
Can’t find any widgets in your house? Try these blocks tailor-made for this exercise.
As always, drop me a line to let me know what you think or give me a real life example to write about. 🙂