The Budgeting Method That Actually Sticks: Values-Based Budgeting Explained | 108

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Most budgets fail, and it's not because you lack discipline. It's because traditional budgeting is built backwards. In this solo episode of the Extreme Personal Finance Show, Chris breaks down why budgets collapse the same way diets do, and introduces values-based budgeting as the fix.

Pulling from research on money scripts (Dr. Brad Klontz) and Ramit Sethi's conscious spending plan and money dials concept, Chris walks through a practical, do-it-at-home exercise: pick five core values, rank them, automate your fixed costs, and spend the rest guilt free on what actually matters to you. Along the way, he shares the data on why 83% of Americans say they overspend, why 84% of people with a monthly budget blow past it, and why a huge chunk of people can't even tell you what they spent last month.

If you've ever felt like a failure for "cheating" on your budget, this episode reframes the problem and gives you a values-first system that's actually built to last.

Bonus: this episode doubles as a preview of the in-person workshop happening at the Benjamins After Dark meetup in the Twin Cities on July 15th.

Contact Chris:

https://heavymetal.money

https://www.facebook.com/MoneyHeavyMetal

https://x.com/MoneyHeavyMetal

https://www.instagram.com/chrisluger

https://www.tiktok.com/@heavymetalmoney

email: chris at heavymetal.money

Resources and Links:

The Heavy Metal Money Mosh Pit 

https://www.facebook.com/groups/heavymetalmoney

The Benjamins After Dark Meetup Group 

https://www.facebook.com/groups/stackingbenjaminstwincities

Values-Based Budgeting Event in the Twin Cities, MN
 https://www.facebook.com/share/1HD5BRCbhk/

https://heavymetal.money/moneyscript

I Will Teach You to Be Rich: No Guilt. No Excuses. Just a 6-Week Program That Works

by Ramit Sethi 
 https://a.co/d/0cTHyZ6B

https://www.iwillteachyoutoberich.com

SPEND ON WHAT YOU VALUE

https://heavymetal.money/spend-on-value/

DR. BRAD KLONTZ

https://www.bradklontz.com

https://www.youtube.com/@DrBradKlontz

Paula Pant at Afford Anything

https://affordanything.com
 

Contact Chris:
https://heavymetal.money

https://www.instagram.com/heavy_metal_money/

https://www.youtube.com/@heavymetalmoney

https://www.facebook.com/chrisluger

email: chris at heavymetal.money

Transcript

SPEAKER_00 0:00

Budgets can suck. It's not your fault when your budgets fail. This week on the Extreme Personal Finance Show. Everyone, thank you for joining me on this episode of the Extreme Personal Finance Show. This is a solo episode where I'm going to be talking about why budgets can suck and it's really not your fault. We're going to actually do this particular podcast as an interactive group session at my in-person meetup that we're going to be doing here in the middle of July. So if you are in the Twin Cities metro area of Minneapolis-St. Paul, uh go ahead and join the Heavy Metal Money Mosh Pit on Facebook or the Stacking Benjamin's Twin Cities group. And uh we're going to have a really fun time where we get um a bunch of people together uh in person and we're gonna go walk through this together. So let's go ahead and get started. We're gonna talk about something called values-based budgeting. Let's go ahead and get rolling. All right. So um what I wanted to start by saying something that might sound kind of crazy, right? Like most budgets are garbage, I think. It's it's not because the math is wrong, it's not because um you're uh you're broken or you're flawed in some way why you can't really use a budget or you hate using budgets. Uh maybe you feel as though they're kind of restrictive, they don't let you spend on what you want to spend on. Um that happens a lot, right? And I know some people actually use what's called uh an anti-budget. They're just they're really against budgeting. And I kind of understand that, right? But the thing is, it's it's because budgets are kind of built backwards. And that's what we're gonna focus on today is something called values-based budgeting. Okay, so let's go ahead and just compare this, for instance. Compare it to like a diet, right? A lot of us, many of us, have been on a diet in some way, right? And the psychology works very much the same way as a diet and a traditional budget. And because of that, they fail the same way, right? So um you start pretty hyped, you're gonna start this budget or this diet. You're gonna start, maybe it's January, you're gonna start a new year, uh, you're gonna turn over a new leaf, right? Maybe it's just uh the next Monday, you're gonna start over. Maybe it's the first day of the month, whatever your fresh start effect that you want to use. I know a lot of people do it. I do it all the time, right? I'm like, oh, I'm gonna do this thing starting next Monday or starting July 1st, whatever it is, right? And so maybe you are super excited about it, you you know, build a spreadsheet or whatever, you set up categories, you feel like a total badass for about a week or like 10 days, right? So you um you slip up at one point, right? Maybe you had a bad week, you had a hard discussion with your boss, maybe you had to fire somebody, like I whatever it is, you had a bad week and an impulse buy, just like a diet. Maybe you bought that pizza on the way home. Oh man, now you're you're over on your macros, whatever it is, right? Same thing with with you know, you impulse buy, you have a bad week, and suddenly what happens is you're riddled with guilt. Most people now they're like down this guilt spiral. It's like you cheated on your budget, just like you would cheat on a diet, which most of us, when that happens, what do we do? Of course, we just quit. We tear the whole damn thing up. And I mean, I I'll tell you, I have done this more times like than I care to admit, right? But if if you are honest with yourself, those of you listening um or watching on YouTube, maybe you've I think you've probably done something like this as well. But the thing is, you're not alone. Like, I don't want you to feel like like it's just you, right? You're not alone. There's crazy data out there. Nerdwallet, in one of their surveys, they said that 83% of Americans say they overspend. Right? They overspend. Their budget didn't work for them. The people that actually had uh a monthly budget, 84% of them say they go over their monthly budget. That's not a small number. 84%? That's a lot, right? And get this when people do go over, almost half of them swiped a credit card to cover it. They didn't use cash they had set aside for that type of thing. They used a credit card. They swiped to cover that overspending. And the crazy part is that Intuit had a different study, and the survey found 60% of people that they surveyed couldn't even tell you what they spent last month, if you ask them. 60% couldn't tell you what they spent. Isn't that crazy? It's it's because it's hard, because it's built on this this different model, and we're gonna talk about it here. So if you ever felt like you're a failure or like budgets don't work for you, I I'd like you to kind of hear this that the system is what's broken. You're not broken, you're not flawed in any way. I think it's the system that's broken. So we're gonna go through this together and figure this out. If you think about the typical budget, it's a list of categories with dollar amounts next to them. The entire framework is really like don't go over this number. That's it. Like, that's the entire thing. But there's no why baked into that anywhere. Like, why are you actually doing this thing? Right? It's like someone handing you a complete, you know, fitness workout plan with zero explanation of what you're training for. You're just supposed to follow the rules, right? Just follow follow the rules and feel bad if you don't follow the rules, right? And that's why I feel traditional budgets most of the time collapse. Because the second life gets messy, and I'm telling you, life always gets messy, we kind of we kind of give up on it, right? And that's why traditional budgets fail. And so this is where I'm gonna look at an altern alternative to budgeting called values-based budgeting. Now, instead of starting with a list of categories, this is awesome, you start with a list of values. So think of things like family, security, adventure, health, right? Health and fitness, whatever whatever is actually important to you, whatever actually matters to you as a human being, your money then follows those values. This is the huge mind shift here, where a normal budget asks simply, where can I cut? This new approach asks, well, what actually is worth my money? That's a completely different question. And it kind of leads to a completely different uh outlook, completely different relationship with your money and with your finances. Now, one dude who really loves this and has proven this out many, many times is Ramit Saiti. And I I love his book, so he's the guy behind I Will Teach You to Be Rich. He built an entire framework around this, what he calls a conscious spending plan. Now, you could peel back the layers. I know that uh a good friend of mine, he has said that, well, all it is is a budget with a different name. I kinda, right? I kind of get where he's coming from. But the thing about this conscious spending plan that Remit Seti has come up with is that you kind of have these four main buckets. You have your fixed costs, your investments, right? So your future self, and then your savings. Then you have your guilt-free spending. Now, the last one is the key here, because he straight up tells people spend that bucket with zero guilt. Spend it freely because it's already accounted for. You took that percentage, right? And again, keep in mind the percentages here, this is just a starting point, right? This isn't like you know, written in stone, never to be changed, right? You adjust it, you adjust these percentages based on your life and your priorities. But the framework itself is separating stuff I have to pay for versus stuff that fuels my life. And again, my friend Kevin, he often says, What's that stuff that fuels your life? That's the move here, that's the shift. And so Remit Safety has this concept called money dials. And I love this analogy because I could absolutely relate to it because I want to turn those dials up to 11 on those things that really matter. And it's super simple, right? Everyone has like one or two categories where spending money actually makes their life better. And I'm talking not just a little better, I'm talking monumentally better, I'm talking disproportionately better, right? Now, for some of you, it may be travel. Um, it's just a thing that's really been on my mind lately. I might start to travel a little bit more, but there's some people that they live for it. That's what dial they turn up is adventure and travel. But maybe family is really important to you. Maybe you want to take care of your aging parents. You have younger children, right? Maybe you homeschool, whatever it is. Maybe you turn it up on family. Maybe philanthropy and generosity is really important to you. Maybe you want to turn generosity, turn that dial up. Maybe you're into health and fitness, right? I just I just went to lunch with some friends the other day. We had amazing conversations about health and fitness, and some of those people were very, very into health and fitness. That was one of the dials they turned up to 11. And for me, I'll be honest, old habits kind of die hard. One of the one of the the dials I like to turn up is music and live shows. Absolutely something that you can do. But somebody else, maybe it's their um, maybe it's their kids' hockey season. You want it, you want to spend time and you're gonna be really dialed into your kids' like activities or sports or whatever they're into. Well, maybe you're gonna turn that dial up on your kids' sports for right now. And again, these can change over time. Maybe it's spending quality time with your partner. And maybe you're saying, you know what, I'm gonna, I'm gonna explore new uh new cuisine by eating out with my partner once a week. And if that's an important value to you, you would spend money on that, then I want you to turn the dial up on that value, right? That's what these money dials are for. Now the move here isn't to feel guilty about that thing, the move is to identify it and get ruthless about just not caring or cutting the stuff that you don't care about or would not care to pay for, right? A good example of this, and I remember I have a blog post about this on spending on those things that you value. And it was something about where I wanted to find a way to get to the airport. I didn't want to pay to park. But then also while I was on this weekend getaway, I spent, you know, $40 on a steak or whatever. And I remember having the conversation about how, oh, you don't really make sense. You wouldn't pay to park, but yet you'll drop 40 bucks on the steak. And it's like, yeah, I value a great dinner, I value a great steak. I don't value spending to park my car in an empty lot. Like, that's not what I value, right? So, again, that's some of the things where again, cut on those things that you don't value, and then being able to spend freely on those things that you do. Now, this is where it gets kind of real. If you followed along the last couple weeks, we talked a lot about money scripts. Money scripts is where we have this financial psychologist and CFP, Brad Klantz. He talked about this research about money scripts that are the core beliefs about money that gets programmed into us early, sometimes even before we're old enough to remember it. And so this kind of is always showing in the background. So you may think you're making a logical decision, right, or whether or not to buy something, but a lot of time it's just the actual like acting out a belief from your parents or your environment that were handed to you decades ago. And this is the research behind money scripts. And just a reminder if you want to take your own money script assessment built on the research from Dr. Klants, you can go over to heavymetal.money slash money script and do your own assessment totally free and totally anonymous. None of your data is being uh retained or captured there as well. And so you can get that money script. But that's kind of the thing, right? Because this is where I think a lot of people get wrapped up in their budgeting because they're stuck in this identity that Dr. Klantz came up with. There's kind of like four money patterns, and one of the patterns is money worship. This is the thing that says, in our mind, well, if I only had more money, all my problems would disappear. And this is the one of the biggest misconceptions I think that happens. Because I people often just think, hey man, if I only got that raise, if I only made more money, all my problems would disappear. And that's just not the way it works. His research actually links the script to overspending and compulsive buying behavior. And the whole point of why I bring this up is because you cannot build a values-based budget if you don't actually know what your unconscious beliefs about money are. You'll just keep funding the same script over and over and over again. And so research has shown that many people in those lower income brackets often have challenges with overspending. And it's because of stress compared to higher income folks. I mean, it's kind of unfortunate, but those lower income people in those lower income brackets tend to overspend more. And sometimes, even like the younger people too, you know, like uh dining out, food delivery are consistently the categories that people often regret most. And here's my take on this. My take is that nobody nobody emotionally spends because it's just a you know, they don't have the willpower, right? It's not because a lack of willpower or because they're a bad person, right? They don't overspend because they're a bad person. They do it because they haven't connected their spending to anything bigger than the moment they're in right now. They haven't connected their money to anything bigger than themselves, some sort of value, some sort of core value that they want to live for. And that's what we're here to fix, right? And so let's go ahead and get practical here. And so, what we're gonna do, uh again, follow along at home. I think this is gonna be a fun exercise. So, one thing we can do is we can actually go through and build a values-based budget. And those of you that are gonna be in town um on July 15th, we're gonna be doing this in person here in Minneapolis. And again, if you want to join, go ahead and join uh the heavy metal money mosh pit. Again, links in the show notes. But to get practical here, let's go ahead and do this. So the first thing we need to do is we need to actually just let's go ahead and pick five things that genuinely matter to you. Now, you can just go ahead and Google like core value list or something, get a list. I have some examples here, I have a I have a sheet right here, and like you look at some of these things, we break it down into some categories, but you're gonna choose five of these, and you're gonna choose five of them, not things that you think should matter in your life. That's the big thing. Be honest with yourself. Uh, these things actually matter to you. Maybe it is um health and well-being, right? Maybe it's your physical health, your mental health, maybe it's um longevity, right? Maybe you want to live a long life. Maybe it's getting enough sleep, right? Is that something that you really value? Maybe it is family and relationships. Is that one of the core values you want to have? Is spending time with your family, spending time with your children? Maybe it is marriage and partnership, spending time with your with your partner or spouse, spending quality time with them. Maybe that's one of the values that you want to turn the dial up to 11 on. But it goes across the board here. We have growth, you know, personal growth, we have um security and stability, we have freedom and independence. Maybe it's creative and identity. Right? If you're someone that is creative, maybe one of those dials you want to turn up is to be creative and express yourself through music or art. Whatever it is, let's go ahead and find five of these core values and write these down. Right? Maybe it is generosity and philanthropy. That's gonna be one of your core values, right? You want to leave a legacy for others. Maybe you're really into uh faith and service to others, right, in your church. Awesome, write that down as one of your one of your core values. So once you have about five of them, I think that's a good number. Write down five. The next thing we're gonna do is we're gonna rank them. Okay, you're gonna put a number next to each of these, and you're gonna rank them like by priority, right? Number one is the number one priority. And this here's the thing though, we need to rank them because you don't have infinite money. You can't just put all of your money into all five of these priorities. We need to be able to define and decide, well, which ones are you're going to focus on. And so, um, you know, it's kind of like our friend Paula Pant says, right? You can afford anything, just not everything. And so we're gonna put real numbers next to each one of those. Okay. Now, one thing that you can do as well is again, if you're doing this by yourself or with your partner, then what you're gonna do is you're gonna take those fixed costs, right? Things like rent, things like your insurance, those things that you know you have to spend for, go ahead and automate those fixed costs if you're not already doing this, because then you're not relying on just willpower to get those things uh paid, right? The boring, the boring shit. Don't you don't have to worry about willpower to make that happen. What you're then gonna do is spend the rest of your budget guilt-free based on the list that you made. I think one of the biggest things too is we need to check back. We need to check back on this list every so often, right? Maybe you're gonna do this every quarter, maybe you're gonna do it every year, every couple years, whatever makes sense to you. Because you know what? What mattered to you at 25 probably isn't gonna be what mattered to you at 35 or 45. There may be a couple, but not all of them. And that's how we're gonna build that value-based budget. And then what I'd like to do then is out of those five, out of those five, go ahead and grab like a post-it note, right? I got post-it notes or an index card or something. Out of those five, let's go ahead and write down the top three values out of your five on that card or on that post-it note. And I want you to do the real ones, not ones that you think sound good. Be honest with you, with your spouse. Be honest. If, for instance, let's say, you know, you want to spend quality time, you know, you're into culinary arts, you want to spend quality time with your spouse, you're gonna try new restaurants. Well, write that, write it down, right? Try new restaurants. That's more honest than financial discipline or whatever generic thing you want to write down, right? And then let's go ahead and share these. So please do this. You can do this right in our group. And if you go to the website, heavymetal.money, go ahead and click on community, join the heavy metal mosh pit, share what your values are, share what you're gonna turn the volume up to 11 on. That's pretty rad. And I look forward to to interacting with you guys. And we're also going to do this again in person. So please, if you're in the Twin Cities area, join our group, man. We have a we have a blast. Every month we we join um a bunch of people from the Stacking Benjamin's or Benjamin's After Dark group as well, in person for lots of great conversations. We get guest speakers as well, and we're gonna do this exercise in person. It's gonna be super fun. All right, so as we wrap up here, again, a budget that doesn't know anything about you is never gonna work for you. That's why aligning your budget, aligning your budget with values is very, very important. People who actually stick to their finances long term are the ones who connected their spending to something real, not just a generic category, but something they value. So stop trying to follow somebody else's rules and start building something that actually fits your life. And thank you so much for joining us. I really appreciate it. Those of you that really find value, please leave a review on Apple Podcasts. We really would appreciate it. And those of you that do leave a review, I have a free giveaway. I got JL Collins' book, The Simple Path to Wealth, that I'm gonna give away to a random person that leaves a review on Apple Podcasts. Pretty rad. Also, like, subscribe wherever you get your podcasts, and on YouTube. Please share with somebody that you know that would find value in this podcast. Thank you, everyone. I appreciate every single one of you that follow along. Have a great one. We'll see you next time on the Extreme Personal Finance Show. See ya.