Walking the Razor’s Edge: How Budgeting Apps Can Help You Find the Perfect Balance

When it comes to money, I’ve found that there are two kinds of people: People who hoard everything that comes their way and people who spend everything. To me, both extremes are equally unhealthy. One lifestyle suggests too much fear while the other too little. There needs to be a balance.

And balance is what I want to talk about. How do you find a healthy equilibrium between security and freedom? How can you get what you want out of life without feeling locked in a cage or backed into a corner?

The answer lies in budgeting, which is probably the last thing you wanted to hear. Establishing a budget is one of the hardest things for most people to do (you’re not alone).

It’s no fun because it’s a reality check.

The majority of people feel imprisoned by budgets because they think it will limit what they can and cannot do with their lives.

This thought process is ironic because budgets help us save for the things we really want. Things like buying a house, paying for your child’s education, or leaving for a vacation to Europe. Although some restraint is needed while you are budgeting, ultimately, the end goal is to let loose and do whatever it is you want to do in your life.

Many people, regardless of what they make, should have money left over after paying their fixed expenses, but they don’t. Each month their bank account stays relatively the same with only minor fluctuations.

The purpose of a budget is to make you more mindful of how you are spending your money. 

In my experience, households are not aware of how much they spend each month on groceries or in general, how much it really costs for them to live the life they are living. They are only aware of how much they pay for big expenses such as their mortgage or car payment. Ask them how much it costs to have two kids in hockey and they have no idea.

When we don’t have an awareness of our true finances, we can’t make educated budgetary decisions.  

For me, when I did the math and tracked how much money I was spending on entertainment each month, like going out to eat (California Burritos – no shame), it was a real eye-opener. After seeing how much money I spent leaving the house for entertainment, I instantly knew I had to reevaluate my financial decisions and figure out what I actually cared to spend my money on. Did I really want to buy a house? If so, I needed to start saving money right then and there (buying is especially tough in Southern CA West of the 5).

You can tell yourself all day that you shouldn’t spend money on certain things, but you oftentimes you will tend to defy yourself no matter how illogical it sounds. It just feels too good to buy things you want, especially if you’ve had an emotional or boring day. (You could even argue that sporadic, chaotic spending  is your brain’s way of trying to maintain emotional health and happiness!)

The trick with budgeting is to take your brain out of the equation. To not let yourself think about it any more than you have to.

You can do this by using a budgeting app on your phone.

It sounds too simple to work, but it does. Budgeting apps are easy to use. You simply input your fixed monthly debts, followed of course by your monthly income, and then how much you want to save. For whatever money you have leftover, you get a set dollar amount to spend each day on discretionary purchases (burritos, groceries, eating out, etc.). The set dollar amount is there to spend each day as you see fit. If you don’t spend it, the total is added to the next day. Spend too much, and the total is subtracted.

For example: Let’s say you get a $30 budget each day on discretionary purchases (outside of fixed expenses such as car payment, student loans, mortgage payment, etc.). On Monday you don’t spend anything, so on Tuesday, your budget totals up to $60 to spend. If you spend $70 at your favorite online retailer and you’ll be at -$10 until it resets on Wednesday, at which point, you’ll have a budget of $20.

Budget apps are essential because it’s impossible to keep track of everything you’ve spent in your head. They take away that stress and gives you permission to spend a certain amount each day. Far too often, we either give ourselves too much permission to buy stuff or not enough…

Apps help establish balance, which leads to a healthier lifestyle overall.

When I started using one, I immediately noticed how mindful I became of my purchases. I knew exactly how much money I had each day and I was more apt to save my money for things I really wanted at the end of the week — like going out for dinner or upgrading my rims on my road bike.

At the end of the day, anything that helps reinforce good behavior should be added to your financial tool belt. After all, sound financial habits are the compound interest in financial planning. The better your daily habits, the better off you’ll be in the long run.

If you don’t try to curb bad habits, you’ll then accept that you’re just bad with money and you will continue to make bad decisions. You may think that one day you’ll make it big and make loads of money (you may very well do that). However, it’s not how much you make but how much you save that matters.

Give a budget app a shot. After all, you’ve always got your phone with you. After 30 days you’re going to see results. Notice I didn’t say, “If after 30 days…” You’re going to see results. Period.

Max Clifford

Author: Max Clifford

Max manages a comprehensive financial practice, where he focuses on providing integrated financial strategies to medical professionals, business owners, and people with occupations in various technology-based fields.

Max is a Registered Representative and Investment Advisor Representative of Securian Financial Services, Inc. and CRI Securities, LLC.

2719099/DOFU 9-2019