Heiloo there summer children! What a summer it’s been! Thanks for tuning in again, especially after the very personal essay I posted last. I promise today’s post is quite a bit more practical and applicable to your finances. If you’re still curious about the financial minimalism series, here are the previous installments:
Whenever I talk personal finance with friends and family, I always end up confessing that what I really want from my finances is to feel cozy feelings. I know, such a weird thing to say, but hear me out: numbers don’t matter; what matters is that I feel calm, secure and relaxed when I think about my bank account. And that I spend with joy and intention, grateful for the exchange my money brings along.
My money makes me happy, but not in the sense that more of it means more happiness. It makes me happy to be able to spend money intentionally on things that make my life better.
With that mindset, you’d think that I spend a lot of time endlessly checking my budget and counting cents. Not true. In fact, having most of my finances on autopilot is what makes the topic not a source of stress and fatigue. It’s like flying a plane: you can use autopilot to get all the way there, but keep an eye out in case of a storm. You can also go out and fly for pleasure, enjoying an intentional loop or beautiful scenery. Here’s how.
Building habits
Habits are like a human version of an autopilot system. Make good decisions once, then build a system to repeat them every day. It’s not just a personal finance trick, of course, it’s the way to get basic needs consistently met: take care of your health, wake up early enough to get to work, reach any goal you put your mind to.
From all the reading and implementing I’ve been doing on this topic, one concept stands out and is applicable to building good personal finance routines: habit stacking. Instead of relying on motivation to get yourself to do something new, you can use an already existing habit and tie a new practice to it. In other words, do it right after.
Could you update your budget every Sunday after you’ve finished cleaning or meal planning?
Could you input a new transaction right after you’ve swiped your card at the grocery store?
Could you log in your spending right after finishing up work and before shutting down your computer?
Could you fill up your savings and pay your bills right after you get paid?
You get the idea. If you have a process in place (brush teeth, then take off contacts before bed), you don’t need to remember to do something when you’re tired and overwhelmed, and you don’t need a lot of willpower to get it done either.
Further reading on habits: BJ Fogg and Charles Duhigg.
When it comes to budgeting, there aren’t even that many habits to build, assuming you already have your bills on autopay where possible. Budgeting sounds like an overwhelming practice at first (keep reading to see why), but in reality there are just 2 things one needs to do consistently:
(Yearly) Make a realistic* plan of all the things to spend money on.
(Weekly) Track your spending against the plan and adapt the plan accordingly.
*Realistic here means you shouldn’t forget your annual local taxes and gifts for the family during the holiday season. It doesn’t mean you need to know exactly how much coffee will cost you for the rest of the year.
💡Also: did you know that I built a budgeting system in a spreadsheet relying on these principles? You can get The Solo Budget here, complete with a step-by-step course on how to set the system up and make it work for you.
The cycle of avoidance
I think you might be avoiding your money. That’s not going to work if you’re trying to get happiness out of it. I also don’t think you will be able to make right decisions or set up a working system if you rely on incomplete information about your financial situation.
Most people have a vague idea about what they need to spend money any given month (rent, food), but tend to forget less regular expenses like vacations, taxes and car maintenance fees. Then they end up overspending when those expenses come up, sometimes going into debt for things that could have been planned and covered just by setting up a good system.
Once debt and the chaos of minimum payments and interest become a factor, overwhelm rightfully sets in. To continue with the plane metaphor: we hit a storm, but we’re still trying to control the plane as though the skies were still blue, only managing to make the situation worse.
The bigger the chaos, the more likely people are to continue avoiding their money, thereby making the situation even worse. I can’t stress this is enough: the first step towards getting your finances together is to stop avoiding your money. Just sit down and make a list of everything you need to spend money on (or get the free template linked below) and you’ll already be on the journey towards an easier financial life.
💡Get the FREE 20 minute exercise that you help you stop avoiding your money and get you started on your financial journey here.
The pleasure of spending money intentionally
At the end of every month I do something I refuse to automate. I do it because I like it, and even though it would be so easy to turn it into a system (or an automatic payment), I decide to take my sweet time enjoying my treat.
I look at my spending plan and add up money that I didn’t spend the way I predicted. Perhaps there were fewer trips to the city this month, and therefore significantly cheaper parking costs. That’s all leftover money.
Sometimes I intentionally make the rational decision of funding other obligatory expenses with that money: perhaps next month there is an unexpected birthday to attend. But many times I use the money for something I really wanted to do, but thought I can’t: donating to a cause I support, get a new backpack earlier than planned, fund a long term goal.
Doing it manually and intentionally is what keeps me engaged with the values or preferences behind the spending. It also makes me feel empowered and in control of my financial choices.
Reflect before you automate
Remember how I said that autopilot works because you can make a decision once and then let a system work for you? Exactly. There are two sides of the automation equation that are equally important:
making the right decision
building an effective system
There’s a also a third factor: the flexibility to change the decision when it stops working for you and the willingness to build a better suited system. Work in progress.
The Missing Money Piece is a newsletter about money culture. Here’s what you can expect every (other) Sunday:
Money mindset tips. Those soft gummies and hard pills.
Personal stories of personal development. Watch me grow up.
Step-by-step budgeting articles — these go with The Solo Budget (get on Gumroad or Ko-fi), the budgeting system I’ve been using successfully for 10+ years. Now available in cute spreadsheet form to other humans.
Quite honestly — the same universal personal development advice you find everywhere, but in my (many times) unfiltered voice.