A Budget is Not a Constraint

Photo: Philip Brewer

When people resist the idea of budgets, the most common reason is that they view the budget as an unwelcome constraint. That's completely wrong. A budget is not a constraint. A budget is a tool for maximizing pleasure and satisfaction.

That's not to say that people don't operate under constraints. Everybody has limited resources. Everybody has limited time. Everybody operates with a whole constellation of other constraints: legal, moral, and social, from old obligations to family expectations.

My point is that the constraints don't come from the budget. They come from the real world. A budget is a tool for managing your resource use in the face of those constraints.

What a budget does is let you plan how to allocate your limited resources, so that your expenditures align with your values. If you do this without a plan, it's very easy to slip into a situation where your spending doesn't match your values: You can't afford dinner out with your friends because you bought a book (or vice versa).

Unless you make a plan, you find yourself at each decision point with nothing to go on but intuition. It can work to make these decisions purely on intuition--indeed, most people do just that. But unless your intuition is keenly attuned and your resources are abundant relative to your desires, you can do better with a budget.

Creating the right budget is an iterative process. Nobody knows the future, and even people who have a firm grasp of their values will find boundary cases that pose hard choices. So, don't expect your first budget to be perfect. On the other hand, if you've created your budget thoughtfully, then don't pitch it aside the first time it doesn't match what you feel like doing.

When you first start following a budget, you'll probably find yourself exceeding certain budget categories. That can happen for two different reasons: Maybe it's transient urges that lead to overspending, or maybe it's the budget that does not reflect your true values. In the latter case, adjust the budget. In the former, use the budget to help you put the money where it gives you the most joy.

Once you've lived with a budget for a while--once you've found the rough spots and smoothed them down--it can be a source of considerable tranquility. You can be confident that, in your spending, you're living your life according to your values.

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Andrea Karim's picture

Hi, Philip! I'm still struggling to use a budget, but this is an interesting way to think of it - a tool to make me happy, rather than a burden to weigh me down.

Guest's picture

This is an excellent piece. I'm glad to see you here on this site. Thanks for sharing those thoughts - it almost makes budgeting seem downright Zen.

Guest's picture

As someone who is struggling to devise a workable budget and live within it, this piece really put things in perspective. Thanks so much for writing it.

Guest's picture

Hey guys,

I just wanted to let you know I recommended ad quoted this entry heavily in my most recent post on Echo Boomer Finance. Thanks so much for writing it, it said a lot of the things I wanted to in a much better way.


Guest's picture

My wife and I started living with a budget about a year ago. It was rough at first, but we love it now. When I tell friends of mine, with money problems, to develop and live on a budget they act as if it's too much work. Now I have a better way to frame the strong points of living within a budget. Thanks.

Philip Brewer's picture

Thanks, everyone, for the kind words. I'm glad I could start with a piece that seems to speak to so many people.


Guest's picture
Mike Kenyon

I've been using PearBudget for the past two months, and it is the simplest spreadsheet possible. All it asks for is 10 minutes a week, and it has helped me enormously. I no longer buy a small $2.50 jug of chocolate milk because I've realized just how much it adds up.

Link: http://pearbudget.com/

Guest's picture

I'm in the process of trying to get my husband to budget and understand why. I'm going to email this to him! Perfect! Thank you.

Guest's picture

I actually get excited when doing my budget because through my quest to being debt-free, I always see how much money I have left to pay off stuff. It's me giving my money a plan, instead of it putting on steel toe boots and walking all over me!