Welcome back to my Beginner Budgeting mini-series! I’m excited to share today’s topic with you.
If you’re returning, here’s a reminder of where we are in the series:
- Know how much money you make.
- Track your expenses.
- Assign every penny a destination.
- Start. Right. Now.
- Be Flexible.
Today’s topic is less about implementing practical tips and strategies, and more about confronting the unrealistic mindset we often adopt regarding our money.
How many times have you begun a sentence like this:
“Starting tomorrow, I’m going to…”
Or made a similar statement about the future:
“Next week, I’ll have more [time/money/energy/other desired resource].”
“Next year, I’ll finally be able to focus on…”
“I’ll be able to start fresh on Sunday.”
“Once [x] changes, I’ll be able to…”
Too many times to count? I hear ya.
I frequently put off until tomorrow what could get done today. Count my chickens before they hatch. Anticipate that success is right around the metaphorical corner. Believe that the future will hold more promise than the present.
I live in the future more often than I’d like to admit.
In the world of psychology, this way of thinking is referred to as the optimism bias. It is a cognitive bias that essentially causes us to believe that the future will be better than the present.
The optimism bias can, and often does, lead us to make decisions in the present that underestimate the probability of something negative happening in the future.
“No thanks, I don’t need any sunscreen.”
“I’ll get that seat belt fixed this weekend.”
“I’ll open that retirement account as soon as I get a raise.”
“I’ll start paying down my credit card balance right after this shopping trip.”
Now, in all fairness, the optimism bias isn’t all bad. In fact, it can actually do us a lot of good. For instance, it motivates us to pursue our goals, because we allow ourselves to believe that there’s a possibility we can actually achieve them.
But when we’re talking about money, we need to be extremely careful with how we allow the optimism bias to infiltrate our beliefs and choices.
If we want to have control of our money, and actually have it be available when we need it, we have to start caring right now. We have to begin our first budget right now. We have to freeze our spending on unnecessary purchases so that we can make the responsible choices that will ensure our financial security and independence. And, you guessed it, we have to do it right now.
When we put off responsible financial behavior for a future date, we are only hurting our future selves.
Because guess what?
Our cars will break down.
We will retire one day.
We will experience undesirable events in our lives.
Because that is life.
When it comes to our money, we have the dual responsibility of considering the present and planning for the future.
So, how does this all fit in to starting a budget, you ask? Well, essentially, it means that there is no time like the present.
If you’re just starting on your path toward financial freedom, don’t wait until the 1st or 15th of the month (or whenever you typically get paid) to begin. Start right this minute.
In fact, you can base your very first budget off of the amount that is currently sitting in your bank account.
If you are starting this process on the 29th of the month and have X amount of dollars to get you through until your next paycheck, allocate that amount in an appropriate way.
Will you need to buy groceries or gas? Pay for childcare? Figure out what you’ll need to spend money on and write it down somewhere. Then, don’t spend that money on things that fall outside those categories.
When it comes to starting a budget, there is no better time to begin than this moment. You don’t need to wait until the beginning of a new day, a new week, a new pay period, or a new year. With that approach, you’re living in the perpetual future, and assuming that it holds more financial promise than the present.
With any luck, it will. But none of us are guaranteed a better financial situation than the one we are currently experiencing.
So stop putting off until tomorrow what you can get done today.
Stop allowing your financial decisions to be governed by some hypothetical future scenario.
Stop counting those chickens, already!
And start. Right now.