There are two ways to squeeze your budget.
With either one, you need to start out with the very basics. You need to know how much money you bring in every month. But from there, the differences couldn’t be more pronounced.
You can squeeze more into your budget.
Once you know how much money you have coming in every month, you’re off to the races. If that’s your total, then all you have to do is make sure every purchase, payment, savings contribution and impulse buy will fit into that number.
Sure, the end of the month might be tight, but right around the corner is a fresh new month with a fresh new infusion of cash to see you through.
This is the approach that leads to conversations that boil down the decision to buy a used car or lease a BMW to the size of your monthly payment.
If the BMW monthly payment is only $100 more than the payment on that used Toyota, then why not squeeze that extra $100 into the budget? You’ll be much happier driving that BMW anyways – never mind that your payments will last for three additional years.
It’s the approach that turns conversations about how much house you should buy into conversations about the size of your monthly mortgage payment, and the one that leads you to stretch just a little bit further beyond what you thought was your budget.
In the grand scheme of things, what’s the real difference between a $1600 a month payment, and a $1750 a month payment, if it means you can get the house you fell in love with? It’s only $150, and you can probably squeeze that into the budget, no problem.
It’s also the approach that can so clearly explain where newspapers and magazines can find double income couples who bring in six-figure incomes and feel like they’re the working poor. This approach – squeezing more into your budget every month – is the perfect recipe for lifestyle inflation, because every time your income jumps, you’ve now got room to expand.
To stretch out.
To move a little bit closer to that elusive dream of feeling like you have enough.
It’s also an approach I know well, because I lived it. For years.
When I started my career, this is how I framed every budget decision. Could I make it work? Could I squeeze it in? Some things, like a gym membership, got the A-OK and were shoehorned into a tight monthly budget. Others, like car payments and insurance, just wouldn’t fit, no matter how hard I squeezed, so they weren’t added.
But man was it stressful.
Even living within my monthly total and not going into debt, I spent all month, every month in a mindset of total deprivation. All I thought about was what else I could add, if only I had a little more room for squeezing things into my budget. I was so hyper-aware of how tightly I had stretched my budget, that unexpected extra expenses sent me into tiny panic attacks.
And then I discovered the second way.
You can squeeze more out of your budget.
And no, I don’t even mean getting rid of money you’re spending on recurring expenses or anything quite so tactical. This approach isn’t about the budget-Tetris of making sure you’ve got everything balanced juuuuust right to make it through the month.
Instead, it’s about focusing on what your money gets you.
About focusing how your money can get you the most of what matters to you.
When you’re focused on squeezing more out of your budget, you don’t start with your monthly income figure.
Instead, you start with your goals and what you want your life to look like. Sure, your monthly income matters – spending more than that will get you in trouble if you keep it up month after month. But beyond that, you’re free to focus on what really matters to you, and ruthlessly cut back on spending that doesn’t align with those goals.
When you’re focused on squeezing more out of your budget, you’re not optimizing for money spent, you’re optimizing for the more important things. Things like laughter, and love, and friendship, and health, and family. You’re focused on the things that really matter to you, whatever they are.
This is the kind of approach that sees people taking radical steps like a two-year shopping ban, or living in a camper van, or wearing the same thing to work every day, because spending on shopping, or a house, or a varied work wardrobe doesn’t bring them joy or get them closer to their goals. These steps, as radical as they can seem when you’ve never looked at them any other way, actually free up heaps of money to do the things that really matter, whatever those are for you.
Yes, I said heaps of money.
While this approach isn’t about cutting expenses, it’s also the absolute most pleasant way to drastically cut down your spending that I’ve ever found. If you look at your monthly budget, and really ask yourself which items bring you joy, I bet there are several pretty big ones that you can identify right off the bat that don’t fit the bill. (Ahem, like my recent decision to opt for a cheap cell phone plan.)
As I’ve gotten used to this approach, even as I aim to save for multiple big goals at the same time, the way I feel about money has changed dramatically. An invitation to a nice dinner out to celebrate a family birthday – that once upon a time would have been one of those unexpected expenses that sent me into a tailspin – is now a joyous opportunity to spend time with people I love, and I don’t even think twice about it.
This kind of free-spirited, low-stress approach to spending would have been absolutely inconceivable to my previous self, as focused as I was on squeezing things into my budget.
Things feel much more spacious on this side of the fence.
So if I could offer just one way to change the way you look at your money, it’s this.
Stop trying to squeeze more into your monthly budget. It’s a recipe for stress and fear and head-burying-in-the-sand when unexpected expenses come up. No one ever had a good time living on a razor’s edge.
Start trying to squeeze more out of your budget. More love, and laughter, and happiness, in whatever shape that takes for you – and be ruthless about cutting out expenses that don’t make you happy.