How to Overcome the Most Common Mental Hurdles to Budgeting

It’s funny that the word budgeting has nine letters, because for many of us, it might as well be a dirty, four-letter word.

So much fear does it strike in many a would-be budgeters heart, that many of us opt not to think about it at all.

That’s more than just a cop-out, though – it has a real (and negative) impact on our finances.

Conquering the mental hurdles which prevent us from budgeting well can not only give us greater control over our money, but also over our lives.

Procrastination

If you think the bit about having greater control over our lives sounds like a bunch of new-agey nonsense, you’d be wrong.

According to a study published in The Journal of Clinical and Experimental Psychology, procrastination is often an overall problem of self-regulation, meaning chronic procrastinators can often be easily distracted, disorganized and demonstrate weak planning or goal setting, too.

These are precisely the sort of negative behaviors that can not only cost you money when delaying budgeting – but can also impact your overall life progress.

Like many chronic procrastinators (yes, I’m writing this article as close to deadline as possible), I’ve encountered the inner resistance

to tackling subjects I find difficult or uninteresting. Budgeting, no doubt, can be one of these.

But the study goes on to mention several useful techniques that can help even the worst procrastinators get a hold on their habits, financial or otherwise.

For example, if you find the idea of creating or maintaining a budget overwhelming,

break the process down into smaller pieces.  Rather than give up on one stressfully large project, this allows you tackle it bit by bit – and feel good after achieving the small steps.

For Mint.com users, this process is aided by its automatic budgeting tools. Use the automatic budget (or any sample budget) as a starting point for your own, gradually adjusting it over time.

Once your budget is set and functional, use gentle reminders to help you keep on track, lest your old procrastination habits take over again.

Reminders (such as those on your smart phone’s calendar or on Mint) are an especially important self-discipline tool that can help you achieve your larger goal.

Fudging the Numbers

Okay, so I like to eat out. A lot. I mean practically every day, sometimes twice a day.

If you asked me off the top of my head a few years ago how much I was spending on food each month, I might shrug and say a few hundred dollars.

After all, I wasn’t eating at five star restaurants all the time; cheap sandwich and salad shops were more my style.

After creating a budget and realizing I was actually spending hundreds of dollars more per month than I’d imagined, I realized I’d been kidding myself all along.

I didn’t want to admit my spending weaknesses (or to have to correct them), so I created mental budgets based on imaginary food spending figures.

And then I wondered why my savings weren’t growing as quickly as I wanted or why I wasn’t able to buy other things I needed.

Fudging our budget numbers can feel like it’s helping us avoid the unpleasant reality of our financial habits, but who are we kidding?

We still have to contend with the truth of our bank account. Turning a blind eye to it doesn’t change your bottom line.

What does is taking stock of what you’re actually spending. Keep your receipts and tally your spending for a week.

If you use Mint, check out your spending by category. Know what you’re really spending and take control of it.

Anything else is you deceiving yourself, and there’s nothing empowering about that.

Breaking Your Budget

 Fudging the numbers and breaking your budget share one important mental hurdle: Both are often caused by a desire to feel good now.

We’d rather avoid unpleasant truths or have our splurge today than deal with our budget. When we do so, however, we forego the bigger pleasure down the road.

In a classic psychology study, subjects are given the option of watching several movies over a few days– some light-hearted comedies, other heavier, but excellent movies like Schindler’s List, for example.

Most subjects, it turns out, chose to watch the easy, light movies first and left the heavier ones for later, even when they knew the heavier ones were excellent, award-winning films.

People often want simple, quick gratification and ignore the greater benefits that can be had later.

This is called “present bias” and it impacts your ability to understand that the $5 latte you drink today can cost you much more later.

To change this, maintain a focus on the larger picture.

Psychologists recommend visualizing your goals as clearly as possible. Imagine how you’ll actually feel when you can afford a new car or to retire comfortably.

Then, imagine how you’ll feel years from now when you fail to meet that goal.

Is the disappointment of not being able to retire or afford your needs worth the small pleasure of splurging today?

Often, say psychologists, what we’re actually craving is the feeling of novelty and variety, and splurging is just a cop-out.

When the urge to over-spend arises, seek out new forms of stimulation. Go for a drive or work-out. Call up an old friend, put on some music or practice a hobby.

Do something that will re-set your frame of mind and give you that thrill and the rush of endorphins you’re really seeking.

After all, spending is just a quick fix that’ll leave you poorer – and probably no happier – in the long run.

Janet Al-Saad is the founder of the Five Ten Twenty Club, a website designed to help you improve your finances $5, $10 or $20 at a time.