Why I Love Budgeting
Let me start by saying I’m not a fan of the word "Budgeting"—it often carries a negative connotation. For many, budgeting feels restrictive, as if it means sacrificing the things you want and the life you aspire to live. Instead, I prefer to call it a Spending Plan. Why? Because a spending plan is all about intention—deciding ahead of time how you’ll allocate your money to align with what truly matters to you.
For me, a spending plan serves as a roadmap, guiding how I align my spending with my values so I can prioritize the things that matter most. My personal top values are Autonomy, Balance, Family, Health, and Empowerment. Between 2021 and 2023, I faced health challenges that disrupted my overall well-being. Despite having other values present in my life, my health issues began to impact everything. I gained over 40 pounds and often felt fatigued.
I knew something had to change, and it started with evaluating how I was maximizing my resources. When I reviewed my spending, I realized my value of health wasn’t showing up anywhere. Instead, my spending reflected unhealthy habits, like dining out too often. So, I made intentional adjustments—reducing my dining-out allowance and investing in a passion sport: boxing. To stay consistent and committed, I even hired a trainer for accountability. While I could have chosen a less expensive option, boxing felt meaningful to me. It wasn’t just about getting fit; it was about finally pursuing something I’d dreamed of doing as a kid but couldn’t afford.
Having a spending plan isn’t about feeling restricted—it’s about intention and taking control. Many people spend without a plan, often misaligning their purchases with their values. But to live a life by design (one where you’re in control) instead of by default, you need a plan.
Where to Start: Awareness
The first step in creating a spending plan is awareness. Begin by categorizing your expenses from the past 1–3 months (or, for the overachievers, 6–12 months is even better!). Look for patterns in your spending. Common categories might include:
Rent
Dining out
Utilities
Entertainment
Loan payments
If you only track a few months, remember to account for irregular expenses that occur throughout the year, like auto registration, insurance premiums, vacations, or clothing.
Breaking It Down
Once you’ve gathered the data, break it into four categories:
Needs
These are essential expenses you need to survive and are usually non-negotiable, like rent, utilities, and groceries.Wants
These are discretionary expenses that are within your control, such as hobbies, shopping, dining out, or entertainment.Non-Monthly Expenses
These are irregular but expected costs, like auto insurance, registration, vacations, or seasonal clothing purchases.Savings
This includes both short-term and long-term goals. Remember small steps, like setting aside $5 a week, can add up over time.
Creating the Plan
Now it’s time to analyze your spending. Ask yourself:
Where is the majority of my money going?
Are there areas I’m spending on that don’t reflect my values?
As a financial planner, my goal isn’t to tell you to stop spending—it’s to help you identify areas where your spending doesn’t align with your values and make adjustments. Whether you prefer tracking every penny or just looking at broader categories, here’s a simple rule of thumb to guide your spending:
50% of your income goes to Needs
30% of your income goes to Wants
20% of your income goes to Savings
By using this framework and creating a spending plan, you’re empowering yourself to take control of your finances and live a life that reflects your values. It’s not about restriction—it’s about intentionality.
This material is intended for educational purposes only. The information and opinions expressed on any websites linked in this material are from unaffiliated third parties. While they are deemed trusted and reliable, we cannot guarantee their accuracy.
