A lot of parents plan to go on budgets and start being more responsible with money as soon as they learn they are expecting. But what actually works? In this article, we get tips from a financial planner specializing in empowering women in the workplace and in their families.
Brie Sodano, the founder of Sheep to Shark, a financial planning firm, suggests that people need to first take a deeper look at their beliefs about money so they understand the roots of their behavior when it comes to spending and saving.
She also suggests finding healthy financial habits instead of budgets — because budgets don’t work. When you are exhausted, hungry, and needing to make dinner, you aren’t going to find the most cost-effective meal planning tools at your fingertips.
What are healthy financial habits?
Taking time to notice wasteful spending and the feelings/behaviors that cause that wasteful spending. Once you’ve identified these, you can find workarounds that will help you avoid falling into the wasteful spending habits. For example, perhaps you always have to work late on Wednesday night and by the time you get home you are so hungry and tired you decide just to order pizza. Something as simple as putting a meal in the crock pot Wednesday morning or buying a frozen pizza ahead of time, can help you cut wasteful spending because you are prepared for meal planning on Wednesday nights.
In addition, since you’ve saved money by not eating every Wednesday, when you do decide to spend money on dining out, you can put more thought into what you want to eat — not just what is fast and easy — and your spending will bring more joy because it is more thoughtful [1].
Why don’t budgets work?
Humans often set ambitious goals on paper, but while living our daily lives, we realize our budgets are just not realistic. In addition, living on budget can make people feel judged or restricted so they react negatively and break their own budget to get a feeling of freedom.
Instead of making a budget, families can track their finances and reflect about their financial goals and values. When they have financial decisions to make, they are now empowered to choose what is aligned with their goals [1].
How do I track my spending?
Use a transaction tracker like Mint.com to automatically stay in tune with your spending. Use broad categories like Bills + Utilities, Working Capital, Food and Dining, Entertainment and Savings, so tracking your money doesn’t take too much time and mental energy.
Use this data to identify where you are spending money inefficiently.
What’s the best way to save money?
Clipping coupons and buying the cheapest pair of shoes are not the best way to save money. Instead think about all your resources. Every person has three primary resources:
Mental energy — our most important resource!
Time — finite and always ticking away.
Money — renewable.
If you have to go to three different stores to find the best deals on household items you need, it actually ends up costing you more even though the dollar amount is less. You’ve used a significant amount of mental energy and time to navigate three stores, three parking lots and driving in between each store.
