Fall clothes has me thinking of budgets again (with audio)
Is it time to make the emotional commitment?
As fall approaches, I find myself tempted to blow my budget on sweaters. This happens every year. At least I know it happens and adjust my budget to suit.
So why am I thinking of budgets now? Part of the reason is what I wrote above but another reason is the recent swathe of ‘how to deal with inflation and rising prices’ articles out there.
If you’ve a long-term subscriber of this newsletter, you know my feelings about budgets. I love them and have one but every so often I fall off it and have to get back on that horse, so to speak.
This is one of those times so I thought I’d reach out to Carrie Hayes, founder and owner of Better Budgets about how we can connect emotionally to budgeting and really make it work for us.
Renée: Hi Carrie, thanks for doing this. Let’s start with a quick background. You finished your Masters in Digital Media, then you launched Better Budgets. Why did you focus on that area particularly?
Carrie: I think there are a lot of professionals covering the other areas of personal finance. Financial planners and accountants have covered tax, they've covered investment advice, but there's really nobody in the niche that is focusing on budgeting. So it’s about taking what people earn and making sure it's as efficient as possible and it's really being directed towards their most important goals.
Renée: There's a lot of information out there about how to create a budget, how to stay on the budget and how to maintain the budget. What do you offer to your clients that either complement that or actually get them to build and stay on a budget?
Carrie: You're totally right in pointing out there's a lot of information out there about personal finance, but coming to this from the perspective of an artist and designer, I found a lot of that maybe a little bit boring and intimidating.
It just wasn't catching my eye. So I wanted to go out and make budgeting fun and that's why I went and got my masters of digital media. I studied emotional engineering, so how to build emotional engineering and habits into budgeting to make sure that people are actually following through their budgeting and that process is fun, connected to their deeper why.
Renée: First you have to tell me what is emotional engineering and then I want to hear about how that relates to budgeting.
Carrie: Emotional engineering is creating products and services that work with our habits and emotions instead of against them. If we're ever going against the grain of what we really want to do or what our emotions are saying to us, we tend to resist it and this is why most people fail when they set a new year's resolution to eat healthier, lose weight or save more money.
So emotional engineering works with them and kind of co-ops or leverages those existing habits and emotions to achieve the outcomes you're looking for.
Renée: So how does that work with budgeting?
Carrie: Some of the core basics are making sure you're connecting your budget to your deeper why.
One of the first things people do is they put in their money obligations like pay the internet bill, the phone bill and my rent and my mortgage. None of that is compelling or exciting.
We're already leaning away from our budget or doing the budgeting. So we do dream planning, thinking of the reasons why and actually putting that in the budget. Even if they're putting $10 towards that every month, that's a good reason for them to keep coming back to the budget.
Renée: But how do you keep them connected to the actual obligations themselves?
Carrie: I use gamification to bring people back and the other way is when people start to budget, they start to have a sense of control over their finances [which] is hugely motivating.
At a point it becomes self sustaining. I don't have to give them a call and say, ‘Hey, did you do your budget’, they start to realize the value of that and the control it gives them over their life and their time.
This interview was edited for length but you can listen to our entire conversation below. We talk a bit about FIRE, capitalism and what can be done if you’re already budgeting up the wazoo but can’t find more money.
This week’s readings:
I wrote an article about why we need a f*ck off fund. I interviewed Paulette Perhach, the author of the original article about this. Why you need a f*ck off fund. (MoneyWise)
Women Who Stay Single and Don’t Have Kids Are Getting Richer (Bloomberg)
Would You Take Out a Loan to Buy This Week’s Groceries? (New York Times)
Rents are so high in Toronto that students are living in homeless shelters (Bloomberg via the Financial Post)
We’ll find out September 7. Bank of Canada expected to push interest rates into restrictive territory (Reuters)
It’s the second anniversary of The Budgette. Not bad for a newsletter I spite-started during the pandemic. If you want to understand more about why I write it and my feels about money, check out this interview I did for MoneySense magazine.