Tuesday, March 13, 2012

Fear of Planning

Please note: This post was previously titled The "B" Word.  I had intended to title it Fear of Planning but talked myself out of it. Regretting the decision, I have restored my original name choice.

Budget. The dreaded “B” word. I’ve often wondered why this word conjures so much fear and resistance. Budgeting is planning, and I have never understood the reluctance to plan. What is there to lose? There are plenty of people who would rather step on a rusty nail than create and follow a budget.  Whatever the reason for the fear, budgeting is just too important and too fundamental to healthy finances to go undone. Failing to plan is planning to fail.
It seems to me there are five reasons people don’t budget:
  • Fear of Poverty: Some are afraid that they will discover that there is just not enough money to meet all their needs and wants. (If that’s the case, you probably already know it – and don’t need a budget to tell you.) But if this is your situation, a budget can help you to be certain your essential needs are met. If the money you budget for food is only spent to buy food, then you probably won’t run out.
  • Fear of Loss: Some are afraid that they will see the “financial truth” and be forced to conclude that a lifestyle change is in order. If you have no money saved and can’t pay your bills, it might be time to sell the Harley, move to a cheaper home, eat out less often, or stop shopping just for fun.
  • Fear of Maturity: Some folks are apathetic, prone to procrastination, or just lazy. (What? Who? Me?) Others are “free spirits” who figure the “universe will provide” for them and everything will magically work out. These individuals are unable to overcome their reluctance to look life square in the eyes and make the tough decisions that adults need to make. Unfortunately for this group, lack of discipline today almost always leads to a lack of options tomorrow.
This man is exhibiting
classic "Fear of Budgeting"
  • Extreme Wealth: Some are just so rich they could never spend it all. You are excused from the budgeting lesson if this describes your situation, but you might want to stick around just in case. Big time sports heroes, movie stars and rock stars file for bankruptcy nearly every day, in spite of their million dollar paychecks. Do you think M.C. Hammer had a budget? Think he knew where every dollar was going? Definitely not, but what he did have was a great big golden shovel with which to dig himself into a giant hole. It does not matter if you earn $30,000 a year or $30,000 a week, you still need a plan.
  • Ignorance: Some were just never taught, never learned, and never possessed the basic life skills needed to sort it out for themselves. We could cure this problem by teaching basic personal finance skills in junior high, and advanced skills in high school. (The cynic in me believes that one of the reasons we don’t teach this is because the ignorance is so easily exploitable for large profits. More on that in a future post.)
If you recognize yourself in any of the above examples, be assured I’m not trying to beat you up or tear you down. I’ve experienced several of these fears myself at one time or another. That said, this is a process that requires some honesty and self-reflection. You need to identify what is holding you back so you can move past it.
I believe that most people who avoid budgeting do so because, above all, they fear that some kind of SACRIFICE or PAIN will come. In my experience, there are no real sacrifices or pain that come along with budgeting - only decisions. After looking at my budget, I may CHOOSE to give something up, but when doing that I am usually trading it for something else. Often, I am trading little wants for big wants. A loss here is a gain over there. For example, what if you eat out much less, but doing so allows you to rent a beach house for your summer vacation? What have you lost besides maybe a few pounds? Not much. What have you gained? A week by the shore your family might never forget. Good trade.
A budget is just a spending plan, which means that you tell your money where to go instead of wondering where it went. That’s not so scary, right? 
If you do not believe that a budget is something you need to do, try these little tests. First, next time you receive your credit card statements, see if you have been charged interest. If you have, that means you are spending more than you earn, and using the credit card to finance the shortfall. If this is you, then you definitely need to start budgeting in earnest. Overspending your income is not sustainable. Second, check your savings account balances. Are they growing? If not, then you need to budget so that they can.
Remember that your budget is your budget - ultimately, you are in charge. Do what you want with your money, but do it knowingly, with thoughtful awareness, eyes wide open, lights on!
I believe that eliminating debt and building wealth are the personal responsibilities of every adult, and it is impossible to get serious about either without a spending plan. Do yourself a favor and jump this hurdle. Overcome the reluctance and fear! You have nothing to lose, and much to gain. I believe you will discover, as I have, that it is worth the effort.

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