Speaker 1: Episode four forty one, how to Thrive Without a Budget.
Speaker 2: Welcome to the Frugal Friends podcast, where you'll learn to
Speaker 2: save money, embrace simplicity, and liver your life. Here your
Speaker 2: hosts Jen and Jill.
Speaker 3: Hey friends. Jill here with a quick apology that the
Speaker 3: audio for this episode will not be to the highest
Speaker 3: standards we're all used to. We were testing our video
Speaker 3: setup and the audio files were corrupted in the process.
Speaker 3: We thought it wasn't worth recording, and hopefully the lower
Speaker 3: quality doesn't detract from all the frugal stuff we're about
Speaker 3: to discuss. Not to fear, we will get our audio
Speaker 3: back up to impeccable shape so you can hear every
Speaker 3: joke and every tip with clarity, and stay tuned for
Speaker 3: some of that video we're testing.
Speaker 1: Welcome to the Frugal Friends podcast. My name is Jen,
Speaker 1: my name is Jill, and I got an email recently
Speaker 1: from a listener asking how I live without a budget
Speaker 1: because I am notoriously not anti budget, but so I
Speaker 1: love budgets. I love thinking of the more spending plans,
Speaker 1: and we talk about this in our book.
Speaker 4: But I don't make a budget, and so how does
Speaker 4: that work for me?
Speaker 1: What do I do instead, YadA YadA, And so this
Speaker 1: is our episode on that.
Speaker 4: And Jill is pro budget. I do.
Speaker 3: I love to have a plan, although I can understand
Speaker 3: all of it too. Like what you've described as far
Speaker 3: as where you've come to with money is you still
Speaker 3: do have a plan. You're just very aware of your
Speaker 3: spending and your parameters that you don't have to be
Speaker 3: deeply in the weeds with it.
Speaker 4: We'll get to that.
Speaker 1: And I'm not the only personal finance expert out here
Speaker 1: telling people to make a budget who does not themselves
Speaker 1: keep a budget. And we'll talk about like the alternatives
Speaker 1: in this episode that other people do. But some people
Speaker 1: will be honest about it like I am, and some
Speaker 1: people will not.
Speaker 4: I'm just put I'm gonna throw that out there.
Speaker 3: We did ask in the friend letter, so if you
Speaker 3: get the friend letter from friend podcast dot com.
Speaker 4: We put a lightning round in every.
Speaker 3: Newsletter that we send out and a lot of times
Speaker 3: they coincide with an episode that we're doing. So ask
Speaker 3: do you make a spending plan monthly? And the majority
Speaker 3: of you, fifty percent of you did say yes, I
Speaker 3: am tracking and planning every dollar. Then the second place
Speaker 3: was sorta depends on the month, and a decent amount
Speaker 3: of you are saying nope, yeah, no final budget. So
Speaker 3: this is really I think this is for all of us,
Speaker 3: but especially you know first.
Speaker 1: Yeah, I mean it's really honestly, if we're gonna be
Speaker 1: honest about it, a lot of the sortas are nos,
Speaker 1: but they just feel guilty about saying no, it's a
Speaker 1: half and half right, and that's a big that's true.
Speaker 4: Yeah, that's big.
Speaker 5: Right.
Speaker 1: And so half of our audience does not keep a
Speaker 1: consistent budget and is it?
Speaker 4: Is it wrong? Can it work?
Speaker 6: Yeah?
Speaker 1: That's what we're going to talk about today. But first,
Speaker 1: this episode is brought to you by the Friend Letter. Yes,
Speaker 1: it's our three times weekly newsletter where we are giving
Speaker 1: you additional things outside of what you get on the podcast.
Speaker 1: On Mondays we're telling you all about the food freebies
Speaker 1: and other freebies that companies, cities, websites are giving away.
Speaker 1: On Wednesdays we offer our little saving hacks or buying
Speaker 1: guides on how to get the best quality products for
Speaker 1: not the lowest prices, but how can we buy affordable
Speaker 1: quality over cheap quantity. And then Fridays we have insight
Speaker 1: into value based funding. How can I become a better spender.
Speaker 1: And that's a lot of the wisdom you're going to
Speaker 1: take with you if you want to move away from budgeting,
Speaker 1: or if you've already moved away from budgeting and you
Speaker 1: want to know how to make.
Speaker 4: It work for you instead of work against you.
Speaker 1: And then the last Friday of every month, we have
Speaker 1: our our budget planning Guide, So if you do make
Speaker 1: a budget, the last Friday of the month is for
Speaker 1: you because it's a reminder of all the things to
Speaker 1: budget for.
Speaker 4: We've got a big.
Speaker 1: Money move that you should make every month just to
Speaker 1: keep on track with your finances. So Frugal Friends podcast
Speaker 1: dot com and sign up for the friend letter.
Speaker 4: It's free.
Speaker 3: If that's the best part of it, absolutely, you just
Speaker 3: get more from us. So to get into this article,
Speaker 3: we're only going to look at once so that this
Speaker 3: comes from Healthy Rich. It's titled you Don't Need a Budget,
Speaker 3: How to manage your money with ease and joy.
Speaker 4: Buy a friend ours Dana Miranda, which is exciting.
Speaker 1: Dana was one of my editors at The Penny Order,
Speaker 1: which is a personal finance website I used to write for,
Speaker 1: and she has recently written a book that will publish
Speaker 1: in December called you don't.
Speaker 4: Need a budget?
Speaker 1: Go figure right, and I yes, And she asked me
Speaker 1: to endorse it, and I did because I think what
Speaker 1: Dana is doing the voice she has in personal finance.
Speaker 1: She's been a personal finance writer for a while, and
Speaker 1: she brings a she fills a gap. Yeah, that's been
Speaker 1: that personal finance has had so healthy Rich is Healthyrich
Speaker 1: dot Co is her website where this article is found.
Speaker 4: And it's great.
Speaker 3: Neither you, nor her, nor others in this space who
Speaker 3: are saying you don't need a budget are saying you
Speaker 3: don't need to be aware of your money or learn
Speaker 3: to manage your money. Well, it's kind of we're getting
Speaker 3: into a little bit of the show with what all
Speaker 3: of that means. Some of it is just vernacular and
Speaker 3: kind of approaches, but I think the overall message here
Speaker 3: is that there is flexibility in the way that this looks.
Speaker 4: But I do like how the article.
Speaker 3: Starts off with talking about what money management is and
Speaker 3: the top five things that matter when it comes to
Speaker 3: managing our money. And this is really helpful for me too,
Speaker 3: just to kind of get that foundational piece again of
Speaker 3: this is really what we need to be.
Speaker 4: Concerned about when it comes to management.
Speaker 3: When it comes to our money, whether or not we
Speaker 3: kind of get into the weeds on a budget the
Speaker 3: way that you might be perceived.
Speaker 4: That's the way that you budget.
Speaker 3: So the five things that you want to be taken
Speaker 3: into consideration when managing money is your debt, so that
Speaker 3: includes student loans, mortgages, credit cards, just kind of any
Speaker 3: any type of debt that you may have that's going
Speaker 3: to need to come into the equation.
Speaker 4: Commitments is the second thing.
Speaker 3: So that includes the things that you have committed your
Speaker 3: money to, like your bills.
Speaker 4: That you're paying regularly.
Speaker 3: The third thing is saving, so this is building up
Speaker 3: a nest egg for either future big spending, unexpected costs, retirement,
Speaker 3: you name it. Saving is a third category that we
Speaker 3: need to be paying attention to. The fourth is spending.
Speaker 3: So this is all of the other kind of peripheral
Speaker 3: things that we might be spending our money on beyond
Speaker 3: just your regular commitments of bills. This would be discretionary spending.
Speaker 3: This would be all of your groceries, your food, your entertainment,
Speaker 3: all of that, and making sure that you have enough
Speaker 3: money to buy the things that you want to do
Speaker 3: and to be able to do the things that you
Speaker 3: want to do. And finally, the fifth category to be
Speaker 3: taken into consideration is income, so where your money comes
Speaker 3: from and the choices that you can make around your income,
Speaker 3: so increase or increase depending on your life goals, what's
Speaker 3: happening in your season. So obviously those first four categories,
Speaker 3: we're talking about money that goes out from us, and
Speaker 3: that fifth final category is the money that comes in.
Speaker 3: And so managing money well is taking these five categories
Speaker 3: into consideration. And I think what we're describing here is
Speaker 3: there's flexibility then in how we manage those five categories.
Speaker 3: Doesn't mean that we can ignore them, but it also
Speaker 3: doesn't mean that you have to have a rigid, strict
Speaker 3: budget that you're looking at regularly.
Speaker 1: Yeah, and so once you have these five categories kind
Speaker 1: of under control, not under control, but like once you
Speaker 1: are satisfied with these five categories, then I don't think
Speaker 1: you need to have a strict budget anymore unless you
Speaker 1: enjoy it. The thing is is on your way to
Speaker 1: getting to these to managing these five categories well, that
Speaker 1: is where a budget is useful.
Speaker 4: That is where a spending plan is useful. We talk
Speaker 4: a lot about having singularity in your goals.
Speaker 1: When you are focusing on a lot of different goals
Speaker 1: at one time, like getting control of your spending, increasing
Speaker 1: your income, paying off debt, YadA, YadA, then you don't
Speaker 1: make a lot of headway in any of them. But
Speaker 1: when you can take a season to focus on one
Speaker 1: goal at a time, and it doesn't have to be
Speaker 1: I focus on this goal only until it's done, and
Speaker 1: then I move on to the next one. That's not
Speaker 1: what we're saying. But when you commit to a season
Speaker 1: to paying off debt, and then you choose another season
Speaker 1: and you're committed to saving and getting your savings, all
Speaker 1: of your savings accounts you know set up and where
Speaker 1: you want to be, and then spending a season focusing
Speaker 1: on your spending, figuring out what you value and getting alignment,
Speaker 1: another season on your income and looking for jobs raises,
Speaker 1: setting up alerts so that when you're not focusing on
Speaker 1: your income, you're still getting you're still catching things as
Speaker 1: they come along. Like you need to be focusing on
Speaker 1: one thing at a time, you get to decide how
Speaker 1: long that time is though, and while you're focusing on
Speaker 1: each one of those. A spending plan has a unique
Speaker 1: is a tool that serves a unique purpose.
Speaker 4: So for debt, we know that.
Speaker 1: It helps you allocate more money to debt intentionally. So
Speaker 1: I think the problem where we're going to go. Her
Speaker 1: next part of the article is why budgets don't work.
Speaker 1: A big problem is that budget culture says that we
Speaker 1: have to be perfect with our budget, that we have
Speaker 1: to do all the things right at the same time,
Speaker 1: but we don't, and that is a big reason why
Speaker 1: budgets don't work. So budget culture definitely, it rewards restriction
Speaker 1: and deprivation, which are unsustainable, and this is unhealthy budget culture.
Speaker 1: If you've experienced any of this, then you've experienced budget culture.
Speaker 1: It ignores the dynamics of income, interests, and spending, So interests,
Speaker 1: I would say it's nonymous with values. It demonizes spending,
Speaker 1: which is the whole point of money. Categorically labels certain
Speaker 1: money moves as good or bad for everyone, and it
Speaker 1: values efficiency and economy over human health, happiness, and wellbeing.
Speaker 1: And we agree with these one hundred percent. And that's
Speaker 1: a big reason. Like I practice values based spending and
Speaker 1: I love it. And because I am so intentional with
Speaker 1: my spending, a budget is less necessary for me, and
Speaker 1: it gets me out of this budget culture that I
Speaker 1: really did suffer with. I've really suffered in budget culture.
Speaker 1: And that's another reason why I don't participate, is because
Speaker 1: of some of the I don't know, like bad feelings,
Speaker 1: bad vibes I get from that experience.
Speaker 3: There can be such a rigidity and astaticness to budgets.
Speaker 3: I still think that there's personally so much room to
Speaker 3: make it what you want it to be. But for
Speaker 3: how budgets are typically understood to be, absolutely this is
Speaker 3: so true. One of the other things that they point
Speaker 3: out is that oftentimes budget it plays into this myth
Speaker 3: of wants versus needs. They describe this so well that
Speaker 3: and we talk about this too in our book, that
Speaker 3: it can be really hard to distinguish between.
Speaker 4: What is an actual want or need.
Speaker 3: Many times within budget culture, one of the first things
Speaker 3: that an expert is going to tell you to do
Speaker 3: is well, figure out what your needs are and prioritize
Speaker 3: those to be spending on food, shelter, clothing, you know, transportation,
Speaker 3: whatever it is that your needs are. But then it
Speaker 3: gets so into the weeds, because how do we then
Speaker 3: define well, yeah, so my need is food, but just
Speaker 3: the food is the food allowed to be tasty?
Speaker 4: How much am I allowed to be able to spend
Speaker 4: on the food? Should I? Am I allowed to have variety?
Speaker 1: Right?
Speaker 4: Like, we can spend so much more.
Speaker 3: Than we actually need to on food, even though food
Speaker 3: is a need. Sometimes it's our category of biggest spending,
Speaker 3: beyond our housing and transportation because of all the things,
Speaker 3: all the extras that we might add.
Speaker 1: On to it.
Speaker 3: And so I think I agree with kind of what
Speaker 3: they're highlighting here that it's not so simple, it's not
Speaker 3: so black and white to just say, well, what are
Speaker 3: your wants and what are your needs and cut out
Speaker 3: some of your wants and only go for your needs.
Speaker 3: It's like, well, but to what degree am I able.
Speaker 4: To meet my needs?
Speaker 3: Which is why again, values based spending is just so
Speaker 3: much better because it's that blend of wants and needs.
Speaker 3: It's the recognition of of our hierarchy of needs. We
Speaker 3: have many different types of needs, not just our safety needs.
Speaker 3: We have this needs, needs for belonging, needs for self esteem,
Speaker 3: self actualization, and being able to allocate some money towards
Speaker 3: all of those various types of needs, maybe to different degrees,
Speaker 3: is important.
Speaker 4: And so we need a whole.
Speaker 3: Lot more flexibility than some of the again rigidity that
Speaker 3: the typical budgeting offers.
Speaker 1: Yeah, I love the conversations of wants versus needs because
Speaker 1: when we think of needs, we think of great depression
Speaker 1: level like bare bones needs, when really, when we look
Speaker 1: at that hierarchy of needs, yes, food shelter, they're at
Speaker 1: the base, they're the biggest, But we do need self actualization,
Speaker 1: self fulfillment, self esteem. If we are not meeting those
Speaker 1: needs in a way that we either spend on them
Speaker 1: or better yet, we get creative with how we meet them,
Speaker 1: so we're not spending, but we are still focusing on
Speaker 1: and recognize them as needs. If we don't do that,
Speaker 1: we'll spend in other places, and we will impulse spend
Speaker 1: to fill gaps and meet needs that these things we're
Speaker 1: buying will never meet, and so we're wasting money and
Speaker 1: we're not really fulfilling the needs. So not only are
Speaker 1: we wasting money, we're not getting fulfillment, we're not getting
Speaker 1: what we wanted from it. And so when you recognize
Speaker 1: that your needs are a hierarchy, then you can more
Speaker 1: easily figure out if you're spending is a want or
Speaker 1: a need. So if it's spending on like doing something
Speaker 1: with a friend. If you know what you really want
Speaker 1: is time with a friend, then you can first ask yourself,
Speaker 1: how can I get creative and meet the true need
Speaker 1: without spending. If it's not a possibility, it's okay. We
Speaker 1: go to spending money and we don't feel guilty about it,
Speaker 1: but we know we're going to get what we want
Speaker 1: from that transaction, right And so then it also helps
Speaker 1: us separate wants from needs with physical things, because so
Speaker 1: often we say we quote unquote need something when we
Speaker 1: really want it. So like I got a laptop backpack recently.
Speaker 1: I had my laptop backpack for six years and it
Speaker 1: is starting to all the fake leathers starting to peel off,
Speaker 1: Like it's basically all peeled off. It looks very gross.
Speaker 1: It still functions as a laptop backpack. Do I need
Speaker 1: a new laptop backpack? No, I don't need it because
Speaker 1: there's still still functions.
Speaker 4: Do I want one?
Speaker 3: Yes?
Speaker 1: Yes, I want a new laptok that looks pretty, functions
Speaker 1: a little bit better, maybe you know, has a few
Speaker 1: more features that this one doesn't, and I want it,
Speaker 1: And that's okay. But so often we will say, like
Speaker 1: I need something because of this, and we'll try to
Speaker 1: justify it to ourselves when really it's a want, and
Speaker 1: we don't want to say it's a want because we
Speaker 1: don't want to feel like the type of person that
Speaker 1: just like we're places things willy neely, like we're irresponsible
Speaker 1: with spending. No, we need to do the difference between
Speaker 1: our wants and our needs that is neutral and unique
Speaker 1: to every.
Speaker 3: Person, and you can spend on both. Yeah, this is
Speaker 3: what we're saying here. You can acknowledge it as a
Speaker 3: want and still be able to spend on it if
Speaker 3: doing this intentionally, not impulsively, and aware of kind of
Speaker 3: all of those money management pieces and strategies. So let's
Speaker 3: get into the second part of the article where she
Speaker 3: kind of gives us specific tips on ways to be
Speaker 3: able to manage our money without budgeting. So again we
Speaker 3: are still we are still managing money, just not with
Speaker 3: a strict budget.
Speaker 4: So the first one is to map your money.
Speaker 3: So for you, if budgeting is creating a ceiling for
Speaker 3: how you can use your money, money mapping is opening
Speaker 3: a door to the outside and discovering the guy's limit
Speaker 3: how you can use your money instead. So money mapping
Speaker 3: focuses on the big stuff, the things that really matter,
Speaker 3: not necessarily on your tiny little spending that happens occasionally,
Speaker 3: your coffee, your little treats.
Speaker 4: That kind of a thing.
Speaker 3: Mapping your money gives you that financial snapshot so you
Speaker 3: can see how it fits into life in a bigger way.
Speaker 3: So a money map will help you to know what's
Speaker 3: coming in, where's it going, what are you working towards,
Speaker 3: and what's free to spend. Personally, this does feel like
Speaker 3: just a little bit of vernacular, right like instead of
Speaker 3: calling something a budget, we call it a spending plan.
Speaker 4: Instead of calling it a budget, she's calling it money mapping.
Speaker 3: Like there is no world where, at least in the beginning,
Speaker 3: we're not going to sit down be aware of our money,
Speaker 3: aware of our transactions, and potentially have some sort of
Speaker 3: document or piece of paper in front of us where
Speaker 3: we are figuring out how is this all going to
Speaker 3: work for my income to my expenses and what comes
Speaker 3: in and what goes out. We have to be aware
Speaker 3: of it if we're going to manage money. Well, you
Speaker 3: just don't have to call it a budget. It can
Speaker 3: be a lot more lucy goosey, and you can focus
Speaker 3: on those big, bigger items again, what's coming in.
Speaker 4: Where's it going? Why are we working towards what's free
Speaker 4: to spend?
Speaker 1: Yeah, I mean it's when you are thinking about those
Speaker 1: five categories of money management and you are focusing on
Speaker 1: one at a time.
Speaker 4: This is a tool.
Speaker 1: A money map, a spending plan, whatever, is just a
Speaker 1: tool to help you reach that goal faster. So reaching
Speaker 1: that goal, you can reach it at any speed, right,
Speaker 1: and so a budget will just.
Speaker 4: Help you reach it faster.
Speaker 1: So if you're trying to reach a goal faster, you
Speaker 1: want to incorporate a budget. If it's just something you're
Speaker 1: kind of breezing with, just like if you feel good
Speaker 1: with all five categories and you're just breezing, then maybe
Speaker 1: it's not a tool that you need to utilize right now.
Speaker 4: So look at it that that way. It's only a
Speaker 4: tool to help you get more of what you want.
Speaker 1: So the second one is use a yes fund, And
Speaker 1: so Dana says her yes fund strategy for money management
Speaker 1: is basically a metaphorical bucket for your spending money that
Speaker 1: has no limit. So this is kind of using the
Speaker 1: psychology that restrictive limits are impractical, because as soon as
Speaker 1: you say you can't have something your brain automatically wants it.
Speaker 1: So let's work with our brain instead of against it
Speaker 1: and create these metaphorical buckets that have no limits. So
Speaker 1: this is a big So this psychological like instance for
Speaker 1: in like this point is a big reason why our
Speaker 1: book is called Buy what you Love Without Going Broke,
Speaker 1: because we realize that as soon as you restrict yourself,
Speaker 1: you want to spend money in alignment with that restriction
Speaker 1: versus your values. So what if we just took away
Speaker 1: the restriction and you can spend on anything with no limit?
Speaker 1: But how can you also do that without going broke?
Speaker 1: And that is the heart behind our book?
Speaker 4: Is this right here?
Speaker 1: So for data, she just kind of goes over the
Speaker 1: metaphorical bucket, and I think our book kind of takes
Speaker 1: this a step beyond that and says, Okay, the way
Speaker 1: that we don't, you know, the way that we can
Speaker 1: operate within this without deprivation is by identifying our values.
Speaker 1: So let's identify what values are. Let's identify how important
Speaker 1: they are based on a hierarchy of needs.
Speaker 4: Let's figure out how we.
Speaker 1: Want to spend within them, how we want to get
Speaker 1: creative without spending, and what we want to.
Speaker 4: Say no to.
Speaker 1: And so that's what buy what you love without going
Speaker 1: broke is all about, is how do we figure out
Speaker 1: which metaphorical buckets to pick so that you can have
Speaker 1: no limit on it, but you're also equipped with the
Speaker 1: tools to acquire.
Speaker 4: Those values without spending.
Speaker 1: And then you're also equipped with the tools to say
Speaker 1: no to all the things that lie outside of the
Speaker 1: metaphorical bucket.
Speaker 3: The next one is to automate everything, which I could
Speaker 3: not agree with more.
Speaker 4: We love automation.
Speaker 3: So whether that's your your credit card payment, now you
Speaker 3: can automate your credit card to be the balance, not
Speaker 3: just the minimum payment.
Speaker 4: Your bills, your rent, mortgage, you name it.
Speaker 3: If it can be automated, we recommend that it takes
Speaker 3: a lot of the decision fatigue out. It takes a
Speaker 3: lot of the needing to be in the weeds with
Speaker 3: your money regularly. And they make this caveat, and I
Speaker 3: think it's a great caveat to have. This is only
Speaker 3: going to work if you do keep a relatively hefty
Speaker 3: amount of money in your checking account.
Speaker 4: This is going to play into your.
Speaker 3: Own knowledge of how much money do you bring in
Speaker 3: every month, how much money goes out every month and
Speaker 3: keeping about that monthly amount within that checking account so
Speaker 3: that you can set it and forget it and you
Speaker 3: don't have to worry about, oh no, is there going
Speaker 3: to be an overdraft fee? Is there enough money happening?
Speaker 3: So again, this takes preparation time. If this is not
Speaker 3: the way that you are accustomed to living, then it's
Speaker 3: going to take some time of being a little bit
Speaker 3: more in the weeds, maybe having things on paper, adjusting
Speaker 3: some various behaviors and outlooks to be able to have
Speaker 3: this level of cushion in your checking account. But then
Speaker 3: it creates the space to be able to be less
Speaker 3: involved with the money on a day to day basis.
Speaker 3: When you know my regular bills that come out, there's
Speaker 3: enough money in the accou out for that continuously.
Speaker 4: M hm.
Speaker 1: I'm going to skip down to number five and that's
Speaker 1: keep a diary temporarily. So coming back to the money
Speaker 1: management part, where a spending plan will help you achieve
Speaker 1: your one goal faster. I think before you keep a budget.
Speaker 1: A budget is not step one, and that's what a
Speaker 1: lot of people get wrong when they're saying, how do
Speaker 1: I start managing my money? You start with a budget, No,
Speaker 1: you don't start with a budget. First, you start with
Speaker 1: a ninety day transaction inventory, which we talk about in
Speaker 1: our book. I just think Dana and ours books are
Speaker 1: like just so like synergistic, which is why I keep
Speaker 1: mentioning ours. But you first start with ninety day transaction inventory,
Speaker 1: and then once you have done that and you look at, Okay,
Speaker 1: this is what I have spent on, this is what
Speaker 1: I'm prone to spending on, this is where I'm prone
Speaker 1: to spend on it, this is the when I'm in
Speaker 1: this kind of mindset or.
Speaker 4: This mood, or I'm feeling this way.
Speaker 1: This is what I spend money on, and you're learning
Speaker 1: more about yourself without judgment.
Speaker 4: First we do that.
Speaker 1: Then we keep a spending diary temporarily. It's because it's
Speaker 1: a lot of work to keep a spending diary, because
Speaker 1: we spend a lot of money, you know, like every
Speaker 1: day and some and it's good to be aware of
Speaker 1: how often you're pulling out your card. That's one of
Speaker 1: the points of the spending diary is to make you
Speaker 1: aware in real time what you are doing and how
Speaker 1: much you're doing it. So it'll take you a day
Speaker 1: or two to do your transaction inventory. And so Dana
Speaker 1: doesn't really give a time period.
Speaker 4: I would say four weeks, like four.
Speaker 1: Weeks one month is a good amount of time to
Speaker 1: keep a spending diary, and she gives a few recommendations
Speaker 1: for how to do that. You can at the end
Speaker 1: of each day look at your bank account credit current transactions.
Speaker 4: You can do it in real time. You can do
Speaker 4: it once a week.
Speaker 1: If that's something I would say, if you're going to
Speaker 1: do it those first four weeks, try to do it
Speaker 1: either in real time or at.
Speaker 4: The end of each day.
Speaker 1: I'm not saying unless you're doing this like longer term,
Speaker 1: to do it every like five to seven days.
Speaker 4: But write it down pencil or pen and paper in
Speaker 4: a notebook you already have.
Speaker 1: Don't buy a new notebook for this on scrap paper.
Speaker 4: That you already have or your notes. Yeah, for four weeks.
Speaker 4: Then once we do this, then we start a budget.
Speaker 1: That's when you can make a realistic budget, a realistic
Speaker 1: spending plan, a realistic money map, whatever. That's when you
Speaker 1: can start to make one that's realistic, that's going to
Speaker 1: work for you, is not going to create more shame
Speaker 1: and guilt.
Speaker 3: Yeah, I'm going to combine six and seven, because I
Speaker 3: think that they go in tandem, and it is get
Speaker 3: to know your money mindset and name what matters to you.
Speaker 3: So first, when we talk about money mindset, you know
Speaker 3: us we love this. We love to start with our
Speaker 3: thoughts and our emotions before we move to our behaviors.
Speaker 3: And so we wholeheartedly agree with Dana on this one
Speaker 3: of understanding where we've come from and where we want
Speaker 3: to be going. So, how we view our money, the
Speaker 3: way that we make it, how we spend it, what
Speaker 3: incentivizes us to spend our money, what just incentivizes us
Speaker 3: in general? Before we can change any money habits or behaviors,
Speaker 3: we really have to understand what's going on in our
Speaker 3: minds around this.
Speaker 4: You've heard us talk about getting curious with ourselves.
Speaker 3: That curiosity can absolutely be blended into that money diary.
Speaker 3: That's how opening the ninety day transaction inventory can really
Speaker 3: help us understand how are we viewing money, how are
Speaker 3: we approaching it? What do our behaviors say about our
Speaker 3: money mindset? To understand ourselves with a very neutral lens,
Speaker 3: that none of us is right or wrong, good or bad,
Speaker 3: It just is. There could be some shifts that we
Speaker 3: might want to make.
Speaker 4: But we don't have to be.
Speaker 3: So concerned about that just yet, but just to understand
Speaker 3: what's our money mindset and then what matters to us.
Speaker 3: As we're understanding what we're spending on, what our money
Speaker 3: mindset is, what are we then seeing is most important
Speaker 3: to us, so that we can then be engaging in
Speaker 3: some of that conscious spending, that values based spending on
Speaker 3: the things that truly matter when we need to spend
Speaker 3: on those things. Again, many times we can meet our needs,
Speaker 3: various levels of needs, not just our safety needs without
Speaker 3: needing to spend money. But that's going to take that
Speaker 3: internal work of what's my mindset, what do I value,
Speaker 3: what's coming in, what's going out. It's going to be
Speaker 3: asking these questions and really getting our bearings around this.
Speaker 3: Before we really can be a little bit more hands
Speaker 3: off with things, we got to put in some of
Speaker 3: this initial upfront work of exploring the way that we
Speaker 3: think and perceive and how that informs our decision making
Speaker 3: and our behaviors.
Speaker 1: The next one for me is pay yourself first. And
Speaker 1: this is what most of your favorite personal finance experts
Speaker 1: are doing. It's the it's the method, your favorite, it's
Speaker 1: the favorite method of your favorite personal finance expert.
Speaker 4: There we go. It's spending on all of.
Speaker 1: Your commitments, paying all your debts, so your mortgage, car whatever,
Speaker 1: paying all your bills, doing all your retirement savings and
Speaker 1: your sinking funds. All that done and automated, sat on
Speaker 1: the same day as your payday if you can. We
Speaker 1: don't do it all on payday. We just like have
Speaker 1: it figured out that it gets done. But getting all
Speaker 1: of that out of there first and knowing how much
Speaker 1: you have left over, and then you can spend it
Speaker 1: any way you want.
Speaker 4: You can spend it.
Speaker 1: Any way you want throughout the month. Once you've paid
Speaker 1: yourself first and you have you have invested in all
Speaker 1: of those categories to manage your money, well, then you
Speaker 1: get to spend whatever's left however you want, down to
Speaker 1: zero and whatever. And so this was really great for
Speaker 1: me to discover and practice because I was the type
Speaker 1: of person that always had to spend down to zero.
Speaker 1: If there was money in my account, I had to
Speaker 1: spend it. And it was when we started paying off
Speaker 1: debt and that money just as soon as we got
Speaker 1: it went to debt or the budgeted amount went to debt,
Speaker 1: that I felt the same way I felt like I
Speaker 1: was spending down to zero. It didn't like pain me
Speaker 1: as much as I thought it would to not have
Speaker 1: that money, And what really paid me was the restriction
Speaker 1: of having that money allocated places and the confusion and
Speaker 1: the decision fatigue. But when it's just it can go whenever,
Speaker 1: then I feel very much more free, more flexible. And
Speaker 1: that's the kind of person that I like to be
Speaker 1: in my money, not in every place, like I'm in
Speaker 1: Asana and I'm very particular in every single thing. I
Speaker 1: don't know why in some places I'm like that, but
Speaker 1: in my money, and I think it's just coming out
Speaker 1: of that budget culture like it was, it affected me
Speaker 1: so negatively that I just want to have a lot
Speaker 1: of freedom in my money.
Speaker 3: Well, that ties in with ten. I'm going to skip
Speaker 3: over to ten. I might make a comment online, but
Speaker 3: avoid restriction and deprivation. We are not about that, and
Speaker 3: that's pretty much what we're pushing back on entirely with
Speaker 3: the typical idea of budgeting is how restrictive and depriving
Speaker 3: it can feel. We've talked a bit in the past
Speaker 3: about how some of the decisions that we need to
Speaker 3: make around our money based on what's coming in and
Speaker 3: what's going out.
Speaker 4: There might be times where.
Speaker 3: There is sacrifice, or maybe we would have wanted to
Speaker 3: do something, but because of all these other goals and
Speaker 3: values that we've chosen to prioritize, we're going to have
Speaker 3: to say no to that.
Speaker 4: But it shouldn't feel like deprivation.
Speaker 3: It might be a sacrifice, and hopefully only for a
Speaker 3: time when we can kind of morph and shift, because
Speaker 3: as we've said, we can value anything, we can love anything,
Speaker 3: but most of us are not going to be able
Speaker 3: to love all of it all at once, value all
Speaker 3: of it all at once. There is going to need
Speaker 3: to be some prioritization that happens here. I think when
Speaker 3: we can do some of that internal work of what
Speaker 3: is most important to me, then we don't have to
Speaker 3: be making these restrictions or depriving ourselves in the most important,
Speaker 3: biggest categories. So we can say really emphatic yes is
Speaker 3: to the things that we've said this is actually most important.
Speaker 4: So it's going to be easier for me to say no.
Speaker 3: It'll feel like a sacrifice, but it won't be ultimate
Speaker 3: restriction because because I am still getting some of these
Speaker 3: other things that are both wants and needs in these
Speaker 3: other categories. Then I can recognize I don't need it all,
Speaker 3: I don't need to collect it all. I'm able to
Speaker 3: say no to this because I know that I'm getting
Speaker 3: this higher priority, higher need met over here with my money.
Speaker 1: Yeah, yeah, you know what, I just really want to
Speaker 1: talk about this like much higher need that's even more
Speaker 1: than a budget, and it's going to help us get
Speaker 1: to all of our financial goals faster. The bill.
Speaker 7: That's right, it's time for the best minute of your
Speaker 7: entire week. Maybe a baby was born and his name
Speaker 7: is William. Maybe you paid off your mortgage. Maybe your
Speaker 7: car died and you're happy to not have to pay
Speaker 7: that bill anymore. That's bills, Buffalo bills, bill clon. This
Speaker 7: is the bill of the week.
Speaker 5: I can in jail. This is Penny from Beautiful Victoria,
Speaker 5: BC on Vancouver Island. My bill of the week is
Speaker 5: that shopping malls are for more than shopping. I recently
Speaker 5: made a spring wreath at my shopping mall that looks
Speaker 5: beautiful in my kitchen. All supplies and instruction were free,
Speaker 5: and I had a wonderful time being creative. I suggest
Speaker 5: your listeners sign up to their local shopping mall newsletter
Speaker 5: to find out more about free events happening at the mall.
Speaker 1: Okay, Penny, that Canada kind of doing it up with
Speaker 1: the shopping mall.
Speaker 4: So I do wonder if Canada is just may better.
Speaker 1: Yeah, but I mean still, we always say, like sign
Speaker 1: up for your city's email, or your neighborhood's email or
Speaker 1: wherever some kind of local email because they'll have free
Speaker 1: events like advertised. Yeah, if you're nervous about signing up
Speaker 1: for a shopping mall email, then figure out where would
Speaker 1: that shopping mall advertise its events, Like which newsletter would.
Speaker 4: It advertise in? And subscribe to that?
Speaker 3: So yeah, yeah, free love free events while you're finding
Speaker 3: them on Facebook local events section. I also know libraries.
Speaker 3: We love we leve a library. They will often do
Speaker 3: events like this, whether it's a crafting event. Sometimes they'll
Speaker 3: even bring in speakers to talk on various topics. They'll
Speaker 3: do something themed around insects that there's an insect of
Speaker 3: the month, fell like a learning time.
Speaker 4: I love the insect of and is.
Speaker 3: It home depot the first Saturday of every month will
Speaker 3: do a craft for kids that's very fu yes, like.
Speaker 4: They give your kid a real hammer.
Speaker 3: Like it's it's dangerous, dangerous and they love it. But
Speaker 3: a free activity, yes, we love free activities. Thank you
Speaker 3: so much Penny for sharing that. If you all have
Speaker 3: a free activity to share with us, whether it's unusual
Speaker 3: or just fun or creative, or you're just out here
Speaker 3: being Bill.
Speaker 4: And you want to tell us about your life. Maybe
Speaker 4: times did an activity and your name is Bill.
Speaker 3: Just any activity through overspodcast dot com, Slashville.
Speaker 4: We can't wait for it, and now it's time for
Speaker 4: ye all right.
Speaker 1: So in the last five years, what has changed about
Speaker 1: the way you manage money? And I'm not even in
Speaker 1: the last what We've been hosting this for almost six
Speaker 1: and a half years. Maybe what's changed about the way
Speaker 1: you manage money? You go first, So in the last
Speaker 1: six and a half years, I have had two children, right,
Speaker 1: and so I think I have become more aware of
Speaker 1: using money now versus hoarding it away for later.
Speaker 4: Yes, the saving.
Speaker 1: I am glad that we decided to focus on our
Speaker 1: retirement savings very strongly before we had kaien Atlas, because
Speaker 1: now I get to have all that money sit in
Speaker 1: our ira and our iras and build compound interest and
Speaker 1: I can feel more permission to spend money now that
Speaker 1: my kids are with me and they are at this age,
Speaker 1: and so that's why I that's one of the reasons
Speaker 1: that I think focusing on individual financial goals in individual
Speaker 1: seasons one at a time is so so so valuable,
Speaker 1: and especially like investing, getting that season in as early
Speaker 1: as possible so that compound interest can just grow for you.
Speaker 1: I think, like, honestly, we spend a lot more money,
Speaker 1: well a higher percentage of our income now because our
Speaker 1: income is actually lower just because with the book we
Speaker 1: have been we've cut out a large portion of you know,
Speaker 1: our income outside of the podcast. And but we're so
Speaker 1: but we're happy, you know, like it's intentional, and I
Speaker 1: do choose intentionally times where I could eat out, I
Speaker 1: choose to eat at home so that I have the
Speaker 1: freedom of using that money elsewhere, like at Disney.
Speaker 4: Yes, that's so great. Would you say that there ever
Speaker 4: was a.
Speaker 3: Time that you were more budgeting and like the typical
Speaker 3: way of a budget in like six years ago, Was
Speaker 3: that the case when you were paying off debt and stuff.
Speaker 4: Before we had kids.
Speaker 1: Yeah, up until when we were paying off debt, it
Speaker 1: took us twenty three months to pay off seventy eight
Speaker 1: thousand dollars of debt. We could not have done that
Speaker 1: in that amount of time, for better or for worse,
Speaker 1: without a budget.
Speaker 4: Like that budget.
Speaker 1: Making that budget every month, keeping up with it every
Speaker 1: week was what allowed us to pay off our debts
Speaker 1: so fast.
Speaker 4: Ye, Like we weren't.
Speaker 1: Making super high incomes. We never broke six figures combined
Speaker 1: when we were paying that off. But it was that
Speaker 1: laser focus on that one goal and then also using
Speaker 1: the tool of a budget to just help with our
Speaker 1: laser focusness, focusedness, yeah focus, yeah right, no word so so.
Speaker 4: Yeah, no, we needed it.
Speaker 1: And then after we did that, we went straight to
Speaker 1: investing and putting as much as we could into four
Speaker 1: to one K and two iras to the point one year.
Speaker 1: Like we only did this for maybe two years. Yeah,
Speaker 1: we only did this for two years. But at one
Speaker 1: point one of those years we maxed out both a
Speaker 1: four one K and two raw irates and that's a lot.
Speaker 1: I actually went my the HR at my work came
Speaker 1: to me and was like you put a hundred, like
Speaker 1: one hundred percent like of out like of max of the.
Speaker 4: Four one k max, Like are you sure? Did you
Speaker 4: mean to do that.
Speaker 1: Did you mean to do like ten or twenty percent
Speaker 1: of them? No, I want to do all nineteen thousand
Speaker 1: for the year. And so, yeah, we were able to
Speaker 1: do that because that's what we were focused on, and
Speaker 1: we knew that doing this now for just a couple
Speaker 1: of years and focusing on it for a couple of
Speaker 1: years would have greater benefit in the future than anything
Speaker 1: else we could.
Speaker 4: I know, it's so great.
Speaker 1: And we knew we weren't like Fire, you know, weren't
Speaker 1: Fire fanatics that wanted to retire in our thirties. Yeah,
Speaker 1: but we did, you know, embed ourselves in that community
Speaker 1: for a few years to get to the place where.
Speaker 3: If that message could be given to the people in
Speaker 3: their twenties. I feel like, and now you don't always
Speaker 3: have the level of income where this is possible, but
Speaker 3: I feel like more people do need to be aware
Speaker 3: of this and that it's you're not necessarily locking yourself
Speaker 3: into doing.
Speaker 4: That then forever.
Speaker 3: Right, you're able to do it for a couple of
Speaker 3: years when you're pretty young and you don't have a
Speaker 3: whole lot of other commitments for your money, it is
Speaker 3: so good, potentially better than really going hard and paying
Speaker 3: off your yet when you're super young.
Speaker 1: Yeah, and it's hard for people in their early twenties
Speaker 1: to recognize that if they do, more power to them,
Speaker 1: more power to you. But I think from twenty five
Speaker 1: to thirty, what a sweet spot. If those five years
Speaker 1: can just be spent paying off high interest debt if
Speaker 1: you've got it, or avoiding it ideally and just investing,
Speaker 1: Like focusing those five years on investing, you will.
Speaker 4: It will be life changing. Life changing. That's cool.
Speaker 3: Yeah, Uh. For me, the things that I've changed in
Speaker 3: my money management, I think there was a time when
Speaker 3: I was doing cash envelope system, although I think I
Speaker 3: had been. I had done away with that by by.
Speaker 4: Six because having cash makes you want to spend it, you.
Speaker 3: Said, personally, Yeah, it didn't really work for me, and
Speaker 3: it was too cumbersome to manage the change and the
Speaker 3: dollars and what to do, and like it wasn't as
Speaker 3: easy to kind of maneuver and strategize the money as
Speaker 3: it is when when it's just kind of more so
Speaker 3: tracked digitally. It worked for me for a time and
Speaker 3: then it didn't end. I moved away from that method.
Speaker 3: I would say, as far as one of those top
Speaker 3: five things that correlate with money management, between debt commitments, saving,
Speaker 3: spending income. I think shifts have happened in all of
Speaker 3: those categories, which has required some shifting in my management strategies.
Speaker 3: So we became debt free I guess about five six
Speaker 3: years ago.
Speaker 4: I suppose maybe five years ago. I should actually do
Speaker 4: the math on that.
Speaker 3: So not having that debt anymore allowed me to then
Speaker 3: focus on investing more, being able to allocate in that direction.
Speaker 3: That's certainly a new thing for me in the last
Speaker 3: five years, and thanks to.
Speaker 4: You, I probably still would not be invested.
Speaker 3: I've never worked for this friendship, this podcast, but yet
Speaker 3: I still you all know this. I still am looking
Speaker 3: at my money bi weekly, so it's not every day.
Speaker 3: I'm not in the deep trenches and weeds with it,
Speaker 3: but for me being able to look at it twice
Speaker 3: a month and know where's the money going. And more so,
Speaker 3: I am very aware of my expenses so I don't
Speaker 3: have to check in with a spreadsheet when I'm out
Speaker 3: pulling out my credit card. I know how much I
Speaker 3: can spend, I know how much things cost me. But
Speaker 3: being able to check in twice a month on it
Speaker 3: is what allows me to know how much can I
Speaker 3: allocate towards my sinking funds or my investment accounts for
Speaker 3: that month, because sometimes we do better in a certain category,
Speaker 3: and so because of that, I'm aware, Oh I can
Speaker 3: move this money over into this account, or oh that
Speaker 3: was a wrong charge and I can dispute that, or oh,
Speaker 3: you know what, let me negotiate this now. So for me,
Speaker 3: having that regular touch point is what I think really helps.
Speaker 3: But I am not super stringent with it, and thankfully
Speaker 3: I have gotten a where it doesn't feel restrictive.
Speaker 4: It's kind of fun to be able to see, ooh,
Speaker 4: what is my money able to do for me? Well,
Speaker 4: thank you so much for listening.
Speaker 1: And I hope that this has been inspiring to you
Speaker 1: to a keep budgeting because you know you won't have
Speaker 1: to do it forever and it will get you to
Speaker 1: your goal faster, or be to not feel guilty because
Speaker 1: you're at a place where you feel confident in your
Speaker 1: finances and you don't have to budget every month, like
Speaker 1: you can do it every other month or whatever feels.
Speaker 4: Right to you.
Speaker 1: Like as long as you feel confident about your money,
Speaker 1: the budget is supposed.
Speaker 4: To help you feel confident.
Speaker 1: You know.
Speaker 4: If it doesn't do that, don't do it. We love
Speaker 4: reading your reviews as well.
Speaker 3: We were so appreciate you listening to us, you leaving
Speaker 3: us and rating a review like this one from Jess
Speaker 3: Rad the best of the best, five stars.
Speaker 4: I have been a listener of We're Girl Friends for
Speaker 4: a while.
Speaker 3: Will out and we'll continue to come back. Jen and
Speaker 3: Jill are honest, informative, and non judgmental. I have felt
Speaker 3: fear and shame with the guy that everyone begins this
Speaker 3: journey with, but here I feel empowered and.
Speaker 4: Like I actually am making progress.
Speaker 3: And even if that progress is sometimes small, finance effects
Speaker 3: can be big and scary.
Speaker 4: But Jena Jill make it all make so much sense.
Speaker 3: Thank you.
Speaker 1: Oh my god, I love the quotes that begins this dream. Yep,
Speaker 1: we appreciate you.
Speaker 3: Just so some of us move beyond cash envelopes and
Speaker 3: into just no budgets.
Speaker 4: And we just let our freak flag fly. We just
Speaker 4: little Harlot. So yeah, speaking of.
Speaker 1: Poor gospel. If you enjoyed the show, please take a
Speaker 1: minute to leave a rating interview. It helps potential new
Speaker 1: listeners know what our show is all about. And if
Speaker 1: you're a Harlot then you know you're in the right
Speaker 1: place because is for you see it's time.
Speaker 4: Frugal Friends is produced by Eric Sirianni. I want to
Speaker 4: say something about money, but what said I do? What
Speaker 4: a We're at a loss for words on this after show.
Speaker 3: I don't have any more like cider stories to share
Speaker 3: with you. So oh well, we're I guess we're kind
Speaker 3: of burying the lead. What did we get in the
Speaker 3: bail this week? We so quickly forget the just goes
Speaker 3: so high.
Speaker 4: And then just if you can't, if you're listening to this,
Speaker 4: you're wondering what our little lion cub is.
Speaker 1: It is the uncorrected proof or galley copy of our
Speaker 1: book by what you Love without Going Broke.
Speaker 4: If you don't know the name of it by now,
Speaker 4: I don't know what to tell you.
Speaker 6: And good news and bad news with folks, So bad
Speaker 6: news for us is good news. Both Jen and I
Speaker 6: when we opened it and we put our gardy little
Speaker 6: hands on this book that we wrote, we were a
Speaker 6: little bit unimpressed with the bulk of it, like it
Speaker 6: was smaller.
Speaker 4: I wanted her to be far far.
Speaker 1: I spent so much time working on this book, and
Speaker 1: that I wanted her to have more pages.
Speaker 4: It's not that thick. It's not that thick, which good
Speaker 4: news for you. It'll be a quick read.
Speaker 1: So also good news for you, it's less expensive than
Speaker 1: every other new book on the market. So books are
Speaker 1: running twenty eight to thirty dollars for a new book.
Speaker 1: Ours is twenty five. Yeah, and it's because it is thinner,
Speaker 1: so you will be able to get through this book
Speaker 1: so fast. And you well, so it's not like paper thin.
Speaker 1: It's still a book, you know, but it's not super long.
Speaker 1: And it is beautiful. And I am holding.
Speaker 4: My book and now you're and your hand is on top.
Speaker 4: Do you want to hold it?
Speaker 1: Oh?
Speaker 3: Yes, it is very fun to have the tangible copies
Speaker 3: you the words come to life.
Speaker 4: But apparently we didn't. We didn't say all that much.
Speaker 4: You know, we don't mince words like we don't. It's true.
Speaker 4: We just say what it is and then we're done
Speaker 4: with it.
Speaker 1: And then it's something our editor had like a problem
Speaker 1: with because we didn't put enough stories.
Speaker 4: And I was like, but I said it. She's like,
Speaker 4: we'll say it in a story and I was like,
Speaker 4: you're still right, you're right. And there are stories.
Speaker 1: About some back to back like, yeah, some from your
Speaker 1: some of your favorite creators on the internet, and it's
Speaker 1: just beautiful. And we didn't get a video of the
Speaker 1: box opening because Travis was like, oh, you got a package.
Speaker 1: And he just opens it up because we have no
Speaker 1: boundaries in our relationship, you know, So he just opens it.
Speaker 4: Up addressed to Jill, but it's mine now, yeah to us,
Speaker 4: it's it's adjust to both of us.
Speaker 1: And so he just opens it and I was like.
Speaker 4: That's my book. What are you doing.
Speaker 1: And he's like, oh, he kind of feels like it
Speaker 1: h's his book too, because he's so like he is
Speaker 1: telling his students, like, go.
Speaker 4: Get extra credit if they buy.
Speaker 1: He's doing some not shady stuff, but shady adjacent stuff
Speaker 1: to encourage his students to pre order the book.
Speaker 4: And they have. They are they probably do need to
Speaker 4: read it. They do, absolutely do. Yeah, it's good for
Speaker 4: it's like a win win win. Yes, we know. Best
Speaker 4: Buy what you Love book dot com