Ep. 28 Why Budgeting Doesn’t Work for Most People

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Is budgeting killing your freedom? Or is it the key to finally getting out of the paycheck-to-paycheck cycle?

For a lot of people, budgeting feels like handcuffs.
Like punishment.
Like you’re being told you can’t enjoy your life.

But what if budgeting isn’t the problem? What if it’s how you’ve been taught to do it?

In this episode of Net Wealth Nest, we break down:
- Why budgeting gets such a bad reputation.
- How restrictive, shame-based budgets actually create more stress.
- The difference between budgeting as punishment vs budgeting as a roadmap.
- How value-based budgeting lets you spend freely on what matters and cut out what doesn’t.
- Why a budget should act like a GPS, not a set of rules.
- Simple systems and automation that make budgeting easier (and honestly… kind of fun).

If you’ve ever felt guilty about spending, anxious waiting for your next paycheck, or overwhelmed by “perfect” budgeting advice... this episode is for you.

Budgeting doesn’t take away freedom.
It tells your money what kind of freedom you want to build.

👉 If this helped you, please like, subscribe, and leave a review. It’s how we reach more people who need practical, judgment-free financial education.

#Budgeting #PersonalFinance #FinancialFreedom #MoneyMindset #PaycheckToPaycheck #BudgetingTips #ValueBasedBudgeting #FinancialLiteracy #MoneyStress #WealthBuilding #SmartMoney #NetWealthNest

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Transcript

Jim 0:00

Is budgeting, killing your freedom? Many of the people I talk to when I talk about budgets with them, they feel like it's restricting their lives. However other people say, it can help them create freedom. Today we're gonna talk about how to build a budget so it's not killing your freedom and is actually providing you a path to the freedom that you desire. Thanks for joining Netwealth Nest today. Let's get into it. So most people when I talk to them and talk about budgeting and hey, let's build a budget, and that's usually the first step in trying to get them outta that paycheck to paycheck cycle. They're like, I hate budgets. It's, I'm just restricting my life. It feels like I'm handcuffing myself and not being able to live the lifestyle that I wanna live, and I, I get it. That's kind of how we've been taught about budgets most of our lives is like, if you're struggling with money, you can't figure it out. Oh, do a budget. Make sure you're doing your budget and, and get all that junk out. Stop going and buying coffee. uh, eat Ramen noodles. Like we've been told all these things, the, the bean and rice stories, like all of those things. And so people, most people view budgeting as a restriction on their life. But my question to you is budgeting the problem or how you've been taught and maybe how you're doing it is that the actual problem. So let's talk about why budgeting gets a bad reputation. often, when people are building a budget, it's kind of a punishment. It's, I'm struggling, maybe I'm missing payments on my bills. Maybe I am really just barely squeaking by, or maybe I'm just. continuing to push myself further and further into debt and I need to stop doing that. That kind of leads into shame-based tracking is, here we go again. I haven't figured this out. Now I've gotta track everything and figure it out, uh, and try to. To get myself outta maybe the hole or try to get myself outta this stressful situation that I'm in. And a lot of people, when they budget, they start to build complex systems on how I'm doing a budget and what I'm, what I can spend on this, and how do I cut all this stuff out, and where do I cut from and how do I do all these things? And the budgets really start to focus on the restrictions. What can't I do? Instead of priorities, what can I and what do I want to do? And so when you start thinking about budgeting, the goal should be, how do I go from chaos to freedom? How do I have choice? How do I have some flexibility? How do I have a gap? Or how do I margin between what I'm making and what I'm spending and not having a budget actually can create stress in your life. There are always surprise expenses that you haven't probably built in or thought about. you start to feel guilty about some of your spending, especially when you get towards maybe the end of the month or before a new paycheck where you're like outta money or you're down to the last few dollars in your account and you're like, oh, why did it last week? I spend on this and now I feel guilty about it. Shouldn't have done that. And there's constant anxiety in that paycheck to paycheck lifestyle. that next paycheck's gonna come, but man, I'm building up bills even before it comes. How am I gonna figure this out? Where I'm gonna be able to pay all my bills or how do I, you know, I'm just putting more on a credit card or I'm building more debt when I should be working my way out of this. And so what I like to say is we need to stop thinking about budgeting as a, a restrictive process and more of a roadmap. A GPS, you know, if you think about it, of I have a plan to get from point A to point B. And my budget is my GPS to help me get there. It's gonna identify the roads that I should be traveling on and the roads I should avoid. Is there construction? I should stay away from. All of those things I get to identify in my budget. And then I use that as my roadmap, my GPS to get me to my end point. And so as you continue down that road of thinking about your budget and redefining it the right way. Your budget should be telling your money where it's going to go before it gets there, or with a lot of people before it even disappears outta your account because of mindless spending. And this is where value-based budgeting can really help you get down that path faster with less effort and feeling better about how you're doing it. And so. The first thing I would say in value-based budgeting is you need to identify your needs. You need to identify. What things you have to have to survive. And those are gonna be things like your housing, whether your situation is, whether you're renting or you own, your transportation. Kinda same thing, whether it's personal transportation or public transportation or a mix of both depending on your situation where you live. and then it's gonna be a couple other consumable like things. Food is a great example of that. You need food to survive. and then probably some sort of smaller like. Personal care and clothing budget, right? things like a haircut for example. And Then, you know, of course you'll need clothes over time. And I'm not talking about, designer clothing and all the accessories you go, I'm talking about like more just your day-to-day things that you would wear to, to get you by. Once you've identified those, you're kind of moving into the wants section. And that's where everybody's kind of spans and or if they're like doing like restrictive budgeting or they try to slash as much as they can and going to either extreme is not sustainable. So it's about finding the balance in the middle and defining value to you. I'll give you an example. Um, I've had, I've talked to a few people where one of the, like one of the individuals just really enjoyed a good cup of coffee. Every morning on their way to work, and they would stop at this local coffee hut and it was, you know, five or six bucks for the coffee that they got, which is not cheap. And you could make that coffee at home potentially for much, much less. But that was something that was just the pep in their day, it helped them get out of bed. Like, it just felt good. It was something where like, I love this place. It's a local place. I like the people that are there. I love the coffee. you could tell they had some energy behind it. They brought some value and joy into their life. But as I'm talking to that same person, they're telling me that, you know, 3, 4, 5 times a week when they're at work, they go out to eat at lunch. And, and it's not the same place. It's random. Sometimes it's fast food, sometimes it's local eatery, whatever it might be. They're going out to eat and they're spending that money. And when I ask 'em, I'm like, if I had to ask you which was more important and what brought you more joy? they sort of told me the coffee place they like, they just enjoyed that experience every day on in the morning on their way to work. And the going out to eat for lunch was just honestly out of convenience. And they weren't planning ahead, on what they were gonna do for lunch. but they were spending sometimes hundreds of dollars a month on going out to eat for lunch when they could limit that by just packing their lunch. And they identified to me like, yeah, don't, it's. It doesn't really bring me joy. It's just something I do great. We've now identified something where you can freely spend something that matters to you a lot, and then just ruthlessly cut out the other stuff, right? that lunch doesn't mean anything to you. Half the time you're doing it by yourself What if you just prepped all your lunches for the week, brought your lunch with you? they said they had the opportunity to do that. There was a ability to store the food. Do that. There's nothing wrong with that, but why are we spending all this money on something that doesn't matter to you, And so that's where the value base comes in, is what brings value, what doesn't build the value into your budget. Cut everything as else out as ruthless as you can, especially if you're living paycheck to paycheck. And then understand that the budget's going to change. There could be an aspect where, maybe the same individual, all of a sudden some of the people that work at the coffee shop, leave and so they don't get that same interaction that they used to have. Or maybe they change the type of coffee that they're offering or how they do it and they don't like it as much anymore. Maybe for lunches, all of a sudden their colleagues start to go out and they really enjoy spending a half hour, hour, whatever their lunch break is. With their colleagues chopping it up and, and having fun and hanging out during their lunch break. So maybe down the road we need to flip flop that. They're like, Hey, I really enjoy going out for lunch. and that's actually starting to mean more than me, than the coffee in the morning. Great. Cut the coffee out. Boom, we're done. Make coffee at home, do your thing and go spend time with your colleagues. Just build it into your budget. But there's probably some opportunity where you can't have or need both, right? or really do you want both? would you rather just stop throwing that money away in something that doesn't matter to you? I also see this a lot with subscriptions, and that's a great example where people will tell me all the entertainment subscriptions they have, Disney plus, Hulu, ESPN, they've got Peacock, they've got Paramount, they've got Apple tv. They've got Netflix, like the list goes on. And some individuals will have 4, 5, 6, 7 subscriptions. And then I just ask 'em questions like, I'm like, well, what do you watch the most? Oh, I'm on Disney plus the most, maybe I have kids, or, or, you know, I, I love Marvel, or whatever it might be. and I go, well, how often do you watch another show on there? Well, just when they release a new, you know, season, I kind of binge watch this season of this show or whatever. And, and that's typically all I have it for. So. what are we, what are we doing? Like, why are you paying for it? Like some people I've, I've worked with have cut 40, 50, $60 a month out of their budget just by doing subscriptions that half the time they're not even using in that current month. And so again, the whole part of that value-based budgeting is where are you identifying the value, the joy, the personal priorities for you? Whether that's entertainment, whether that's going out to eat, whether that's a morning coffee, whether that's how you spend time with, a significant other or your kid, whatever it is. Like where are you identifying those priorities? Those go in your budget and you're gonna build those in. And then everything else is just kind of like, eh, you're just ruthlessly cutting out. And then again, understanding that's probably gonna evolve over time as your lifestyle changes. And so let's talk about some simple budgeting that quite frankly just doesn't suck. introducing systems and automation into your budget. Sounds awful. When you say it, it sounds like a job, but it can be a lot of fun, especially when you start to introduce systems and automation that benefit you in the future. And so think about some high level systems First and foremost, after you've built your budget, you should also have a portion of that that is going to savings if you don't have an emergency savings yet. And if you have built up your emergency savings, the next step is to grow that into investing, actually growing your wealth long term. so. after you have your fixed expenses, setting up those automations to automatically pull a little bit of money or maybe a lot of money. If you've identified some great areas you can cut in your budget, into your savings account to build an emergency. Or again, like I said, if you've already gotten that emergency fund built, like how do you pull money into your. investments to build wealth, for your yourself long term. how dare you? Setting aside automatically some flexible spending, some no guilt spending. So maybe you, like to go out to movies every once in a while, whatever that means. Like do you have some nogi spending that you, but building in that automation where maybe you have a main checking account and then you have like a flexible spending account. Or if you set up any type of savings or investments, those should be in separate accounts for you so that you can automate as you get paid, you automate amounts of money that automatically come out there, and most people are like, oh man, that feels restricted. But what I will tell you is because you're paying yourself first in a lot of those areas, you start to see those accounts go up. It's that dopamine hit of, oh my gosh, I'm really doing a great job taking care of my finances. I'm really doing a great job investing in my future self. I'm really doing a great job building wealth. All those things actually start to become fun and fun to watch. As you start to do that and as you start to grow it. We're not trying to be perfect here. We're not trying to get every single dollar, that we don't spend into investments or into savings. We need some room for flexibility. And so make sure you understand that it's not gonna be perfect. There are gonna be months that are better than others. But automating all of this will help you stay on the path. And so what I'd love you to take away is just remember, like budgeting doesn't take away freedom. It tells your money what kind of freedom you want to build. And so I would just challenge you to think a little bit differently about your budget. And if you don't have a budget, please go out and build one. If this has been helpful, like and subscribe to our YouTube channel as well as our podcast. leave us a review It's how we get in front of more people and how we can help and bring knowledge and mindset and actions to more people around their finances. Thank you so much for joining today. My name's Jim. Bye everybody.