Ever thought that budgeting was only for those stretching every penny? Think again. As your hosts, Justin Gaines and John Proper, we're debunking the myths surrounding wealth and financial management. Our candid exchange is packed with insights and anecdotes that underscore the importance of a disciplined approach to finances – yes, even for the well-off. We'll guide you through crafting a budget that's as dynamic as your lifestyle, showing you how to steer clear of the budgetary set-and-forget trap that can lead to wasteful spending and unutilized subscriptions.
Join us for a journey where we'll dissect the artistry of meal planning, the clever utilization of subscription services, and the transformative power of intentional budgeting on your spending habits. We paint a picture of the subtle, yet profound, behavioral changes that come from mindful financial planning; from lessening the allure of impulse buys to building a vital savings cushion for peace of mind. Ready to achieve that zero-based budget nirvana? This episode is your ticket to financial clarity and the stress-free existence that comes with having your money matters firmly in your grasp.
Ever thought that budgeting was only for those stretching every penny? Think again. As your hosts, Justin Gaines and John Proper, we're debunking the myths surrounding wealth and financial management. Our candid exchange is packed with insights and anecdotes that underscore the importance of a disciplined approach to finances – yes, even for the well-off. We'll guide you through crafting a budget that's as dynamic as your lifestyle, showing you how to steer clear of the budgetary set-and-forget trap that can lead to wasteful spending and unutilized subscriptions.
Join us for a journey where we'll dissect the artistry of meal planning, the clever utilization of subscription services, and the transformative power of intentional budgeting on your spending habits. We paint a picture of the subtle, yet profound, behavioral changes that come from mindful financial planning; from lessening the allure of impulse buys to building a vital savings cushion for peace of mind. Ready to achieve that zero-based budget nirvana? This episode is your ticket to financial clarity and the stress-free existence that comes with having your money matters firmly in your grasp.
Welcome to the Balanced Blueprints podcast, where we discuss the optimal techniques for finances and health and then break it down to create an individualized and balanced plan. I'm your host, justin Gaines, here with my co-host, john Probert.
Speaker 2:
In this episode.
Speaker 1:
John and I are going to discuss the pitfalls that a lot of people think the wealthy use and what it means to be wealthy when you're budgeting, versus what we talked about in our first financial episode about budgeting. I hope you enjoy the episode Effectively. What I'm talking about here is and I was definitely guilty of doing this when I was growing up, and I hear my friends do it and I hear clients do it all the time and it's the misconception that if you're wealthy, you don't have to think about your budget and you don't have to think about your budget and you don't have to think about money. You want to have so much money that you don't have to think about it, and the reality is is that that will never happen. The way you become wealthy and you have less stress about money is because you have a system in place, and not that you constantly think about money, but that you have a way to know where every dollar is going every single time. So in that first episode we talked about a net zero budget and that just means that every dollar is going somewhere. But we also gave a tip in there that I've talked to clients since releasing that other episode and they've been having some issues with it. So the tip was you know, if you don't want to get into the nitty gritty of this dollar amount goes to food and this dollar amount goes to gas because your gas bill and your food bills fluctuate have a credit card that you know. Ok, I can spend $1,000 a month on this credit card, and then you just make sure that that credit card balance never exceeds $1,000.
Speaker 1:
Well, the issue that my clients have been having and I'll be honest, there's been times that I fall into this with my own budgeting is we fall into believing that myth that we don't have to think about our budget. We don't have to think about it because we know that we have a thousand dollars there and it'll all work out, because if you have a system in place, you sat down, you did your budget and you know that you can spend a thousand dollars on there. So that's all you think about and you just keep going. And so what ends up happening is you don't end up actually re-looking at your budget and verifying that your numbers match each category, and then you're three months in and you're running a credit card balance or you're behind on a payment because you wanted to believe that you didn't have to think about your budget. So the number one thing is if you're going to make a budget, that's step one.
Speaker 1:
Step two is whatever frequency the budget is, whether it's weekly, bi-weekly, monthly typically, that's going to line up with how frequently you get paid. But what you want to do is have it so that you have your, your idealistic numbers and then you'll have, you know, a spreadsheet that you can write down. Either write down or even just use google sheets, you know, microsoft excel, any of those and just put in the actual numbers. And what this will allow you to do is go through and audit your credit card statement if you're using that hack, so that you can see that, oh, I bought this subscription, I'm not actually using it.
Speaker 1:
Let me go in and cancel that, because otherwise what ends up happening is we think that this app is going to change our life and help our productivity and we buy it, and then we keep paying for it every single month, even though we really just wanted it for the seven day free trial, and then we were going to cancel it, but we didn't, and now we've paid for three months of it because we didn't realize, because all we were looking at is did my credit card stay within $1,000? And it did, so we're good, but we don't look at the actual expenses, and so that is a little bit of a pitfall that I do find my clients falling into is just thinking that when you're wealthy or when you're set up financially, you don't have to think about your finances, and that is 100% not the case.
Speaker 2:
That's actually a great point too. I've never thought about it in terms of like. That's actually a great point too. I've never thought about it in terms of like, if you're just setting it at $1,000, but normally you would spend $900, you might actually be spending very well, very easily as well. But because I just have this mindset of it's $1,000, I might find ways to spend an extra $100 or close to so it's still under $1,000. Like you said, with those apps, if you don't need them, it's like get rid of them, even if you're under budget.
Speaker 1:
Right, the reason I brought up the apps. I literally just did it last week. Where at the beginning of the month, so I it last week where at the beginning of the month, so I get paid once a month and I get paid in the middle of the month. I should say the bulk of my income for the business comes in once a month and it's in the middle of the month, but I know roughly what that is within the first five days of the month. So last week I was looking at that and just looking at what I need to adjust each category to in order for everything to line up and things were going to be tight. So I was like, oh man, how can I, where can I go to cut expenses? And that's where I went and said, you know what? I haven't done this in a while. Let me audit my credit card statement because I use I use this credit card hack. So I said, let me, let me audit this credit card statement.
Speaker 1:
And I went through and there was like three subscriptions on things that I've been telling myself if you don't use this this month, then you need to cancel this because you're not using it anymore. And I just wasn't doing it. I wasn't going in and canceling it, and so there was probably, you know, 75, 80 dollars of subscriptions that were just being wasted away, because with those in there I was still staying below that minimum credit card balance, or the maximum credit card balance really. And so, by removing these, what it allows me to do is either spend more on something else, eat out, go, do you know, buy some clothes, whatever the case is that I need or the other thing that I do is I have it set up in an Excel document where I put in I have all my monthly payments in there, but then I have the credit card balance, and so if the credit card balance is below what that minimum, that max, is set at, so if the max is a thousand but the balance is at 800, I have another box that, in order to stay at net zero, if I don't have to pay $1,000 on that credit card and I'm only paying 800, there's $200 that needs to go somewhere. It can't just sit there, otherwise we're no longer in a net zero budget. And so I have a separate box that's literally just called money to move, and it'll calculate out when I change all the numbers and it'll calculate out when I change all the numbers and it'll say okay, you have $200 that needs to move. And then what I do is I either move that money into my six month savings, which is in its own separate account. I can have it if you're using the CD laddering approach that we talked about last week. You can look at and move those, move that money into the CD ladder, or you can just put it into an investment account. If you're trying to save up for a house, or you're trying to save up for a car or you make payments, you can move it in there.
Speaker 1:
But what you want to do is make sure that that $200 is earmarked for something, because otherwise it's just going to disappear, because you're going to spend it on something that you're like oh, I have free two hundred dollars. Which brings us to our next pitfall. Is the reason why you want to have that net zero budget is a lot of times what you'll psychologically. What you'll do is, if you know that you spent two hundred dollars less, you'll tell yourself oh, I spent two hundred dollars less last month. I can buy this and it's less than $200, the $50 purchase, and a lot of people will forget that they already used that justification and now they use it five times or six times for $50 transactions.
Speaker 1:
Hundred dollars this month, and you justified it with because you were under 200 last month. But now you're going to be over by 100 this month, accounting for that 200, and you're over by really 300. So you're net over by 100. But that's why you want every dollar to have a job is because if you don't do that, you start to rationalize oh, I was under budget last month, it's no big deal. You end up overspending more than what you were under in prior months yeah, yeah, you're really gonna stay on top of it.
Speaker 2:
I actually just redid mine less, or this morning too, very early morning, um, and it was for that same exact reason of like what things can I just neaten up, like I already do pretty good, so I just wanted to rank, like OK, what things? Like Audible, for example. I think it's a great, great tool, but I'm very behind on my monthly credits, so like I'd love to pause it. It's a different story, because if you get rid of your subscription, you lose all your credits?
Speaker 1:
I was just going to ask you because I've been in that position before. I'm not in that position before. I'm not in that position right now. I actually I just had to buy credits on there, but, um, I've been in that position before where I'm like can I pause this? And what happens to the credits if I pause it?
Speaker 2:
so that's unfortunate so like I've been putting off but I need to go through and be like what are? This is embarrassing, but maybe I'm at 16, like what are 16 books on free credits like I can get. So then I have those locked in, they're in my library and then I can cancel this for the time being, just because it's it's yeah. Once you start to fall behind that much, it's hard to catch up and I want, I don't want to lose those credits, but like that's a good one of, like I need that one to be positive and you're at a yeah, and you're at a threshold.
Speaker 1:
There too, you have 16. I mean you're talking in theory. If you were to go and grab 16 books, you'd have a year's worth of reading.
Speaker 2:
Oh easily. That's why I know, if that's why I know it shouldn't be paused Like I'm past the point where, like, all right, we'll just read two or listen to two a month and catch up.
Speaker 1:
It's like pause it, but yeah, you got to listen to one a week now. Even then, you'll be caught up in four months. You'll have have the four. You'll be caught up in uh five months yeah, because he's fun.
Speaker 2:
but but yeah, I was going through, I was tidying and then I'm also guilty of I actually I do more of the like what's my exact spending and what's my exact making. But I might actually try more of the credit card one, because I'm also guilty of like oh, say I, I don't watch the credit card thousand dollar limit because I don't use that technique, but I might because there might be an expense that would pull me over. But I'm like, oh, it's a one-time expense this month, you know. It's like, oh, it's something I needed, whereas if I had the thousand dollar limit I'd be like, even if it's something I needed, but this, this or that, I could be like maybe push it to the next month if I'm under, so that that might maybe help more, cause I fall into that downfall. A lot of like I need this, it's a one-time thing, but then each month I need this, it's a one-time thing sometimes comes Right.
Speaker 1:
And it's like oh, it's $10. It's funny I never even thought about that that the credit card technique allows you to also see, like your rationalization, there is it's only $10. But with this you would see I've already spent $1,000. So, yes, it's $10. But what could I have cut out? And that's the other thing you could do is you could go and say like okay, I want to buy this one-time thing. Thing you could do is you could go and say like okay, I want to buy this one-time thing, but that means I need to go and eliminate something, whether it's a subscription, whether it's, you know, something that consistently comes up. Another thing that I found that's actually helped our budget for our household quite a bit is I just paid for door dash. It's like the premium. It's a hundred dollars a year and I didn't even know they had a subscription like that.
Speaker 1:
So they have a premium and what it does is so you pay the hundred dollars and then you don't get the delivery charge so we were getting hit with, or we would have been getting hit with, seven or eight dollar delivery charges every time every time.
Speaker 1:
So I said, okay, even if we just use it for our groceries, weekly, $7 times 52, that's $350. It's 350 plus dollars. I'm going to spend a hundred to save 250. Like that makes sense. And then cause? Then I also was like okay, so if I spend a hundred, even if we only use this twice a month, we've saved money. And that's just if we use it for groceries. And that's just if we use it for groceries. That's not if we use it.
Speaker 1:
Okay, we don't want to go out tonight, but we also don't want to cook, let's order something in. And what I've found is so in the past, our grocery bill, we would be over one week and then the other. You know, in month we'd be over one week, pretty much dead on one week and the other two weeks we would be under our budget. With doing this, we've been under budget every week for the past six weeks and that's with tipping the driver, with the fees, and I think what it is is we're no longer buying stuff accidentally. That's already in the house, because you're literally placing your grocery order while you's already in the house because you're literally placing your grocery order while you're walking around the house and meal planning.
Speaker 1:
I think that's the key part, too, is we meal plan, and that was before. Even when we weren't using DoorDash, we were meal planning. We literally sat down and we would look at our calendars and we'd say what night are we out? I'm not going to be there, okay, let's make sure that we put that on the calendar that we're out. What days are we going to be here? Let's plan out meals that we're going to eat together and then we grab some lunches and then overcook meals, so that we have that for lunches as well, and so that I mean, that's a big part to staying on budget when it comes to grocery bills, but I think we're just not buying the extra stuff.
Speaker 2:
Well, you're not walking through the aisles too and seeing like, oh, I really want this, or look at the marketing on that, or, or there's a deal on that, I don't need it, but I mean that's probably yeah, I think there's a lot of stuff that you know.
Speaker 1:
We just grab those other things because we also lump into our grocery budget. So we there's two people in the house we spend 200 a week on groceries. That's what's budget. But that 200 a week also includes, you know, your, your toilet papers, her makeup um, not all of her makeup, but like the everyday using stuff obviously really expensive stuff we don't put in there because we'd be over 200 every time, but um, whole, not other story there but the basic stuff your lipsticks, your body wash, all of that stuff we include in our grocery haul. When we need to get a new shower liner to replace the one that's in the bathroom, which we probably do every four to six months, we take that out of the grocery bill as well.
Speaker 2:
So you guys are $50 each a week.
Speaker 1:
No, $100 each $200 grocery bill, so $100 each a week.
Speaker 1:
Oh, $200 a week A week, yeah, okay, yeah, yeah, yeah. $200 a week, $100 each, yeah, yeah, and so that's the number we use for the budget. And then, like I said, we've been under almost every week while using DoorDash, which is not what I expected. I honestly expected us to be for it to be a little bit more expensive, but we were getting back the time and so a lot of times, like you know, the two to three hours that we were going to end up spending grocery shopping. We use that to clean up the house. We use it a lot of times. I'll use it to work. You know there's all sorts of stuff that we just do. There's times we just sit and relax because we have such busy schedules with our work schedules that it makes sense, but it was. It's honestly been mind blowing to me that we've been able to stay on budget. Ultimately, what we've been under budget the last six to eight weeks. We've paid for the subscription for the year.
Speaker 2:
Yeah, no, that's definitely about it. Like you said, your time alone. I mean the amount it saves there. I also didn't know DoorDash did groceries. I thought it was like just Instacart, so that's interesting.
Speaker 1:
Yeah, doordash, uber Eats does it as well. Uh, I think I ended up using door dash so I was looking into door dash for our liquor store using that. So I was looking into door dash quite a bit and then it was one of those things that we were using and we were going direct to target for their delivery. We were going through uber eats sometimes and through DoorDash other times and shopping for the deals and then I finally was just like you know what? I bet if we just consolidated all of our purchasing power into one app, we would probably be rewarded for that. And that's ultimately what we did.
Speaker 1:
As we just said, let's use this one and let's do it. I think the other benefit there is there's been weeks in the past where, oh, we don't want to do grocery shopping on monday, so we'll do it on sunday, so we'll do it on monday, and then we don't do it on monday, or one of us has an event, so then it's like, okay, we'll sit down, we'll do it on tuesday and you end up eating out those nights and you end up spending more money, and so this just allows us to not ever have to worry about that.
Speaker 1:
You know, at the very the most relaxed and laid back we've ever been about it was we didn't get around doing it on sunday. It was a really nice sunday. We were doing a bunch of stuff around the house, trying to get things out for spring and get the patio set up, and so it just kind of slipped our minds and so we ended up putting the order in at like 8 30 at night, but scheduled it to be delivered while I would be in the office the home office the next day. And so boom, it's done, and we took the 20 minutes of meal plan and prep and do everything, and then when it gets delivered and I step out of the office to walk around a little bit and put groceries away, and then we're back on track and we didn't have to eat out that night.
Speaker 2:
That's a great case of an app work, the subscription doing well. But so then what else? You listed a couple downfalls. Any other ones that come to mind?
Speaker 1:
Those are the big ones that I feel are very easy to fall into. You know, the the main one is is that mindset of just and, like I said, growing up I had that total mindset. I was like I'm gonna be wealthy, so I never have to think about finances, I never have to think about my money, I can just buy whatever I want. And it's so backwards, it's just so not even true. And the crazy part too is when you, I find for myself and even with my clients, when you start budgeting, you start investing and putting yourself up for retirement and doing all these things, you end up not wanting to spend money on all the BS because you just see how much it's helping you and how much it's growing to and how much less stress you will have. Because you have your six month savings now and because you're not in credit card debt, you're just like, wow, this is a much less stressful life and you want to be in that space.
Speaker 1:
You're like you know what? I don't actually need that, so I'm not going to buy it. I don't absolutely love this piece of clothing in the store, so I'm not going to buy it. I'm not saying you can't buy yourself gifts and you can't. You know, splurge here and there, but it's making it. So it's a splurge here and there, not just a constant. I feel like it or I'm depressed, so I'm going to go to a Sheehan Hall or a Timu Hall or an Amazon Hall. I'm going to go spend $100 and feel better about it. That emotional coping mechanism changes and you start to be like you know what that might make me feel good right now, but it's going to make me financially stressed in two weeks when I start doing my budget again and reevaluating things. So let me just not do this.
Speaker 2:
Let me go do something else in its place, which is the importance of doing that budget? Because you never check it, you never get stressed, so you just keep spending.
Speaker 1:
Well, where you get stressed is you can't with the credit card technique. Where you end up getting stressed is if you're not constantly sitting on top of it, you can't cover the credit card payment. And then you're like, oh my gosh, I don't have the money to cover this credit card payment. How did this happen? What happened here? And hopefully you don't justify it and say, oh well, it'll only be a little bit of interest, because it's one time, no big deal.
Speaker 1:
Hopefully what you do is that balance is going to roll over onto your credit card statement and do is that balance is going to roll over onto your credit card statement and it's going to tell you what the balance is and then the interest is going to go in there. So if you had a thousand dollar budget, you now decrease that thousand dollars by whatever your rollover balance was plus whatever the interest was, and now you only have six hundred dollars this month or this. You know whatever the interval is to spend and if you do it that way, you won't end up in the hole as much or as far.
Speaker 1:
But if you're not doing the budget, what I've seen clients do is they go oh, I spent $1,200 this period. They pay the $1,200 and now they missed their car payment because they had the money in the bank account there that day and so they paid the credit card. But then they realized there that day and so they paid the credit card. But then they realized, oh shoot, I had a paycheck coming in two weeks. I had the car payment coming between now and that next paycheck. I just paid that credit card and now the money's not there for the car payment to come out. Now you have all missed payments, which is impacting your credit score, and everything just starts to snowball and everything starts to go downhill really, really quickly with that snowball effect. And so doing, the budget allows you to see the timing of payments and the timing of income so that you can line those things up and make sure that you're not putting yourself in a situation Because I've done reviews with clients where they don't think they have any money and they think they're broke, and the reality is is that if they adjust how they're paying things, they would not be in that situation. But the problem is is that they you know, they've done out their budget on paper and it says they can spend a thousand dollars every period. And they're doing this. They're they're paying a thousand dollars from one paycheck period. And they're doing this. They're. They're paying a thousand dollars from one paycheck. And then their rent comes due between the next, between that point at which they pay the credit card, and their next paycheck. And so now they have to call their landlord and say, hey, I'm going to be a couple days behind on rent. I get paid this day, and they get paid and they pay that money. And so you know, it's just that awkwardness between you and the landlord. You probably get hit, hit with a late fee. And then they're doing the same thing with their car payment.
Speaker 1:
And it's not an issue of not having the money, it's an issue of the timing. And so if you know the timing, you sit down, you see those things. You can say, ok, I can spend a thousand dollars per period, per month, whatever, on the credit card, but I need to pay 250 out of every paycheck so that I have the timing line back up on these. Or I need to pay 500 out of this paycheck and then this one's going to take the car payment and then I'm not going to pay anything, because the rent's going to come out, and then my fourth paycheck in the month or, for you know, if you're getting paid weekly, that fourth paycheck, that's what's going to cover the other half of a thousand dollars on the credit card.
Speaker 1:
Yeah, because of timing. So it's not uncommon, actually, for timing issues to cause budget issues and make you feel like you don't have any money. And it's not because you're living above your means, you're living right at your means, which you know. If you're using a zero0 budget, that's where you're going to be, but your timing is all messed up and so if you get the timing right, then you'll have it where that $0 budget falls right into place.
Speaker 2:
Yeah, that's a good thing to look at too. Good, I think those are some good downfalls. Anything else?
Speaker 1:
Those are the big ones. I think we'll probably wrap it up there, so thank you for listening. We hope you enjoyed the episode and until next time, stay balanced.
Speaker 2:
Thanks for listening to our podcast.
Speaker 1:
We hope this helps you on your balance freedom journey.
Speaker 2:
Please share your thoughts in the comments section below. Until next time stay balanced.