Well, I’m Not Actually on a Budget. Instead, I Ask Myself These 4 Questions Before I Buy Anything

I know. The blog’s name is Butch on a Budget and I’m an avid You Need a Budget (YNAB) user. But….I really don’t have a budget. At least not in the traditional sense of the word.

Sure, I have a general idea of how much I would like to spend in various categories and I track and categorize my spending regularly. However, you won’t find me checking the budget before a purchase to see if I there’s enough left in the budget line for that month.

Since I’ve gotten my finances under control, I don’t have to worry about overspending on any of my accounts. For the most part, I just spend as much as I want on what I want. The important part is that even with that spending mindset, I still spend below what I make each month.

The secret? I ask myself four simple questions before every possible purchase. These questions help keep my spending well within my “budget” and they make me way less stressed.

If the answer is “yes” to all of these questions, I spend the money, budget be damned. But, if the answer is “no” to one or more of these questions, I don’t spend the money. These four questions (and meal planning) make sure I’m always sticking to my “budget.” This means I’m never left feeling deprived when I decide not to spend money on something.

It’s not necessarily a “no” because it’s not in the budget, but instead, it’s because it’s not a priority.

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Sure, the system isn’t fool-proof, and since I’m still newer on this journey, I’ll occasionally make a purchase that doesn’t pass my four-question rule. But for the most part I stick with it. And every time I don’t stick with it and end up regretting a purchase, it gives me more confidence in sticking with the system the next time.

1. What is the feeling I am trying to buy, and is this the best way to get it?

Often, when we buy an item, we’re actually trying to buy a feeling: love, relief, excitement, or relaxation, to name a few.

When I find myself wanting to spend money on something that isn’t a need or regular cost, I try to pinpoint what feeling I’m seeking from that purchase. Once I’ve answered that question, I can usually decide if this purchase is the most efficient way to get that feeling.

When I’m tired after a long day and want to order take-out, am I really craving that specific food or do I just not want to cook or do dishes? Will a frozen pizza or burrito satisfy that same feeling, or do I really want Indian food from that one restaurant?

If it’s Friday and I’m feeling jazzed for the weekend and want to go out for drinks, do I really just want to socialize and not think about work for a little bit? Do I have to spend money going out for overpriced drinks, or will I be just as satisfied inviting friends over for a game night and drinks at home?

2. Is this worth [insert number] hours of my life?

Time is finite and when we work, we trade it for money. Whenever I want to buy something I have to determine if it’s worth the amount of my time I would have to trade at work in order to purchase it.

If I want to buy something that is $16, and my real hourly wage is $16, it better be worth me trading at least an hour of my time for it. If I want to buy something that’s around $300, I better think it’s worth about half of my week’s work.

When we think about purchases as paid for by our time, it can help put the cost into sharper perspective.

It’s important to calculate your real hourly wage (taking into consideration the hidden expenses of time and money spent on working) to answer this question properly. If the idea of a real hourly wage is new to you, I suggest reading Your Money or Your Life by Vicki Robin and Joseph R. Dominguez — but here’s a brief summary to get you caught up in the meantime.

3. Will I remember this purchase positively in a week/month/year?

We’ve all had buyer’s remorse. We buy something and a few days or weeks later, we actively regret it. But there are also times when we buy things that have no real effect on our lives. They don’t benefit us and we forget we even bought them until we find them dusty in the back of a closet during spring cleaning.

Essentially, you’ve spent your money on nothing — or worse, clutter. And that kind of sucks, right?

This can happen with non-material things, too. We all remember splurging on a fancy dinner out to celebrate a special occasion, and hopefully we have fond memories of the evening. But how many times in the past year have you gone out for a meal that you don’t remember?

Sure, you got food out of the situation, but you probably could have gotten food for half the price, rather than spending extra for an unremarkable meal.

4. Does this spending align with my priorities?

This is a big one. Sit down and think about what you want to prioritize in your life. Is it time with loved ones, travel, delicious food, giving, stability? Whatever it is, write it down. It doesn’t matter what your priorities are, as long as they are yours.

If the purchase doesn’t bring you closer to living in alignment with your top few priorities, consider if it’s worth the investment or how that money could be used instead toward your priorities. Maybe it’s saving for your dream vacation, a down payment on a house, your retirement, a baby fund; surprising a friend who’s been struggling with a check during the holiday season; a fancy restaurant you’ve been dying to try.  

This turns the question of spending from a “yes” or “no” question into a “this” or “that” (and importantly, “why”) question, which is much more fun and useful.

This four-question strategy works for me, and taking control of your money is all about finding a system that works for you. Sure, some of the changes and lifestyle cuts might not feel super comfy at first; that’s why you have to have a strong “why” behind reducing your spending and increasing your savings. You have to keep that why at the forefront of your mind (perhaps by keeping these questions or a list of your top priorities or savings goals on a note card in your wallet).

Once you can master that, the cuts that left you feeling deprived when you were trying to stick to a capital B “Budget” will suddenly become easier decisions that you feel good – not guilty — about. And as you start to watch your net worth grow, you may even find yourself getting excited about not purchasing something, because you know that instead, that money is going towards buying a future of freedom.

PS — The YNAB link is a referral link, which means that if you sign up for a subscription at the end of your free trial, I’ll get a bonus free month. I wouldn’t recommend YNAB if I weren’t enthusiastic about it, and I think you will be, too! You can sign up for your free trial of You Need a Budget here.