When it comes to your budget, the less bias there is, the better the budget will be. Meaning, you’ll want to approach your budget logically. Emotions can cloud your judgement and lead to delayed progress.
While it’s not always easy to put emotions to the side and look at things logically, it’s an absolute must when it comes to budgeting. Not sure how to remove bias and emotion from your budget? Don’t worry, I’ve got you covered. I’m walking you through how to remove bias from your budget, so you can approach it with logic and reason.
How to Remove Bias from Your Budget
#1 Start with the basic numbers
The one thing I love about budgeting is that it’s completely logical: The numbers don’t lie. You can’t argue with the facts.
To remove bias from your budget, list out your basic numbers, including income and expenses. How much money should be coming in over the course of the month? How much should be going out? When you have the basic numbers written out, you can easily see if they’re realistic or not.
If you don’t make enough income to cover your monthly bills and expenses, you’ll never get ahead. Something will have to go.
If your income covers your bills and expenses and leaves you with money left over, you have a profit. This profit can (and should) be allocated to helping you reach your goals. There’s nothing like solid numbers to work with as a starting point!
#2 Think about how you typically spend your money
After your basic numbers are defined, think about how you typically spend your money. If you do have a profit each month, are you actually seeing it? If not, then you’re probably spending the surplus. Coming back to the logical side of budgeting, ask yourself if how you spend your money makes sense:
- Do you often spend without a game plan?
- Are you an emotional spender?
- Do you stick to your spending limits (and have you actually set them)?
When trying to remove bias from your budget, you need to get clear on how you typically spend your money—regardless of what it’s spent on.
When you get clear on your spending habits, you can start pinpointing how logical (or illogical) your habits are. Once you know better, you can start doing better.
#3 Be realistic with your new budget allocations
As I stated, once you know better, you can start doing better. That starting point comes in the form of allocating your budget categories. Now that you can clearly see where your money is going, it’s time to determine if it should be going somewhere else. As you map out what should be happening with your budget, continue to take that logical approach.
It’s not logical (or realistic) to remove all discretionary spending from your budget. On the flip side, it’s not logical to give yourself hundreds of dollars to spend on fun when you only have $100 going to savings.
Find the middle ground. It’s all about trial and error when it comes to budgeting.
#4 Identify your spending triggers
We all have different things that trigger us to spend money, especially when we shouldn’t. Some people get stressed out and head straight to Amazon prime. Others get excited and head to the department store.
It’s important for your budget that you identify your spending triggers. When you know what causes you to “not care” and spend when you shouldn’t, you can actively seek to avoid those things.
Not sure where to start when identifying your spending triggers? Start with mindfulness: Any time you go to spend money, ask yourself if the item you’re purchasing is budgeted for or not. If it’s not budgeted for, go deeper. Ask yourself why you’re buying the item when you didn’t plan or budget for it.
This practice will take some getting used to, but the more awareness you bring to spending, the better understanding you’ll have.
#5 Have a game plan for handling things that trigger you to spend
Once you’re able to identify your spending triggers, the next step is to handle or avoid them! If certain people always cause you to go over budget, then delay plans until you can afford them. If stress or sadness triggers you to spend, find alternative ways to handle those feelings.
It’s not always going to work out as planned, but that doesn’t mean you can’t make positive strides forward. Prepare a plan ahead of time so you’re not caught off guard when the situation pops up. Trust me, something will always pop up.
#6 If all else fails, seek an unbiased party to help
Lastly, if nothing seems to work or you can’t control your spending, seek help. Work with a therapist or coach. When your spending is tied to past trauma or emotion, a therapist is a great way to start. If you just haven’t found the discipline or accountability to stick to your budget, a finance coach can assist.
I work with clients to help them create and stick to realistic budget plans. A lot of times, having accountability until they’re on the right track, is all my clients need to get the ball rolling and see progress with their money.
If you need some assistance, schedule a free financial focus call with me and we can chat about it! Everyone is capable of sticking to a budget. You just have to believe it and then achieve it!
Related: 7 Signs You Need a Finance Coach
When I talk about removing bias from your budget, I’m ultimately referring to emotion and judgement. Your budget should be approached from a place of logic and reason, not emotion.
While you do want to make sure you factor in the things you enjoy, it’s important to not go overboard. Do you approach your budget with logic? How have you made your budget as unbiased as possible? Share your experiences in the comments section below!
The CGS Team