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247 Why budgets don't work... and what does

August 30, 202316 min read


Does life these days seem to be a never-ending list of bills to pay? With our stress levels rising more and more, it's time to look at the REAL reasons we do what we do...

Budgets don't work... but I'll give you a strategy for what does.

Show Notes

  • [01.35] Understanding the REAL reason: unpredictability!

  • [04.44] The problem with budgets

  • [09.21] Understanding patterns

  • [13.07] Mindfulness

  • [14.54] The steps of the forecasting system

  • [24.03] In summary - embrace the process!


“There is never a human being whose expenses are the same every single month.” – Lisa Linfield

“In all the examples that I look at, there actually is enough money in the entire year period.” – Lisa Linfield

“First and foremost, your money is more predictable than you think. Secondly, that within a year these same patterns are going to repeat themselves.” – Lisa Linfield

“You have to know your patterns in order to be able to know what’s going to happen in your expenses.” – Lisa Linfield

“If you embrace this process, you are absolutely able to do it. All of us are able to do it.” – Lisa Linfield

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Here’s the challenge most of us experience - Every month feels like groundhog day – the money comes in, and before you’ve been able to slowly sip that cappuccino, it’s gone… and there’s still another two weeks to go.

In this episode I’m going to take you through the surprising thing that causes every one of us stress (and it’s not what you think)… and the secret to changing that one thing so that you can experience stress-free money.

I’ll tell you why budgets don’t work, and introduce you to … a nifty thing you didn’t even know would solve all your problems!

Once you understand the reason why money causes stress, you will be able to change your money… and build a solid foundation you can trust for your financial free

The problem…

Life these days seems like one never-ending cycle of people asking for bills to be paid.

The plumber for the leak, the car shop for the service, the grocery store for the delivery, the garden service, the school… everyone keeps asking to pay, pay, pay.

And I don’t know if you can relate, but it sometimes makes me feel like I’m being torn to pieces – like everyone just wants a bite of me!  And that feeling makes us all feel unbelievably stressed.

Every month feels like groundhog day – the money comes in, and before you’ve been able to slowly sip that cappuccino, it’s gone.  And you’ve only made it through the first half… there’s still another two weeks to go.

And then the juggling begins.

The story of Bob and Mary

We were about an hour into me presenting back to them their financial plan presentation.  It was a cold winters night and it was just going dark.  We were in their outside cottage where they worked, the fireplace going and because it was loadshedding and there was no electricity, we had candles and two battery powered lights on.  We’d had some quite stressful talks about their spending, when Bob said…

“It just feels like no matter how hard I work, or how many pay rises I get, we never seem to be able to go a month without some unexpected expense derailing our plans to get ahead and start saving.  And it makes me feel useless. And you want to add children onto this?”

And there it was. It was then that each one of us knew that we were on truth territory. We had just uncovered the real reason Bob kept putting off having kids. The stress of not having a stable, predictable financial situation, despite him being employed by a bank and earning a good salary.

Which makes me wonder, how much is your financial stress stopping you from doing the really important things in life – building true joy in your current and future relationships?

The real problem… unpredictability

Now I want to tell you the real secret behind the stress… it’s unpredictability.  It doesn’t matter how many people’s money I do, there is NEVER a graph where expenses each month are constant.  Graph after graph after graph keep highlighting these months of stress – whether your income is the same each month, or not.  On average people spend more than half the months of the year at least where their expenses are more than their income.  Regardless of the how much they earn. 

The rest of the months are spent paying back the debt they’ve put on their credit card, and seeing the interest charges add more costs.  Which causes more stress.

And so it’s that never ending cycle of over-spending, trying to pay back, just getting your head above water and then being dragged under, that cause one to feel like it’s never ending. And if your income is unpredictable too, it causes even more stress.

But here’s the thing.

In most cases, with a few tiny tweeks and some time, they actually have enough money to cover the expenses when you look at a total year.  The problem is the individual months are famine and feast.

So it’s not more money that’s needed, although that’s always nice, it’s more consistency of expenses… and putting in place a system that facilitates that.

And this is my big gripe with a standard budget…

It forces you into setting yourself a target of a single monthly number.

I look at people’s money where the difference between their lowest month and their highest month of spend is R40,000 (or $4,000 spending equivalent) and the budget is set at say R60k per month.  But that misses the fact that there are these low months at R40,000…. Most months at 55,000 and these peak months at 70-80,000.

It’s bizarre, our money just doesn’t work that way, our lives just don’t work that way.  Expenses are NEVER flat.  EVER!

So to set yourself one monthly number – you will NEVER stick to it.  You’ll be left with too much money in some months, that you’ll end up spending because it’s there… and too little money when you need it most.  It just doesn’t take into account behavioural economics.  We are human creatures.

But that’s also what is the secret sauce…

Creatures of habit

You see, we’re all actually creatures of habit… so we tend to follow a rhythm over a year.  If you have kids or grandkids at school, that rhythm is pretty much set by their school calendar… and if you don’t, your rhythm is probably centered around avoiding kids! But for all of us, birthdays, holidays such as Easter, Christmas or Thanksgiving and even the key times at work cause us to spend money differently.

The ‘gogos’

Now as many of you know, I teach home helpers or domestic workers about money. And when I ask them what their most stressful time of the year is, it’s always January, or Janu-worry.  The reason they tell me, is that going home for Christmas, all the food, all the presents, all the parties costs too much money.  And straight afterwards in the Southern Hemisphere is “back to school”.

And so I ask them… did Christmas and back to school happen last year? Or the year before? And they all start to giggle… and then I ask… “Now here’s the question… will Christmas and back to school happen again this year?  And funny enough, they seem to think it will.

And it’s that rhythm of our life that holds the secret to stopping the stress.

Because it makes us able to predict, and so put in place systems that change our life and make our money less stressful

The hero

If I’ve managed to convince you that

1.     Your money is in fact more predictable than you think

2.     Within a year, the same patterns will repeat themselves

3.     Generally, you are not as short of money as you think you are

Then, it stands to reason that there is in fact a way you can have Stress-Free Money.  It’s about smoothing your income and expenses so that each month is more predictable.  I know, I know, life doesn’t work like that… but that doesn’t mean you can’t create a system that smooths it out!

Now this is where I’m going to introduce an unlikely hero into our story… Your Money Planner.

1.       It all starts with understanding your spending patterns

So what does your pattern look like?  Is it smooth with occasional spikes… or feast and famine… or do you have a tight first half (as you pay back the Christmas debt), and then let loose in the second half – only to need that first half to be rations again… or is your problem bumpy income which means you’re always having to live way too tight?

I know it takes a while to set up, but once you can see your patterns of spending in relation to your income, it will enable you to step back and come up with a plan.

So my recommendation is that you start building a rolling 12 month view of your expenses by category.  You can use tools such as 22 Seven, Mint etc which enable you to track your money from all your different credit cards and transactional accounts in one place, and will learn how you categorise transactions so that you don’t have to… and then you can download them to see your patterns.

Now obviously the best thing is to dig back 12  months and categorise that… it truly is the absolute gold standard… and I believe will bring great return on your investment of time.  But if you can’t, start with the last three months, and then just set aside an hour a month in your diary where you update what the month looked like.

What categories do you use?  I am very strict on separating needs vs wants.  The reason for that is that

1.     It gives us the first goal you have to achieve investment wise by the time you stop work – because that’s the level at which you never have to rely on someone else to pay for you.

2.     It begins to show you where you actually can trade back on expenses so that you can choose to spend on the things that really bring you joy.

Pre-retirement people generally have 6 categories

·        Needs

·        Children

·        Save

·        Wants

·        Explore and Give

·        With a 7th being debt if you are needing to repay short term debt

By the time you get to retirement, the category of save disappears, and the category of children and debt, including your house should have gone too.

I also separate those between repeating and variable costs… those that come in every month come what may… and those like medical bills or gifts or holidays that don’t.  

I have just redone my entire free tracker download – based on the feedback of many clients - which enables you to start at any month of the year, categorise your spending, draws a summary and graph of your expenses by category, and then supports you to do step three… which is forecasting.

But before we get to step 3…

2.       Use the tracking process as a tool of Mindfulness

The minute this exercise becomes one of beating yourself up, judging your partner for their spending, or allowing that critical spirit to rear up, you’re going to resist it every single time. 

So you need to be highly disciplined about your thinking… each time there’s a but… shut it up.  Each time there’s a spend that you know you “shouldn’t have”… stop that thought.  Just focus on mindfully observing your thoughts… how do you justify your spend… what are your excuses, what spend irritates you, and most importantly, what are your real values… not the ones you say you want to hold, but the real ones you live.  I chat about that in Episode 147 of my podcast “The powerful insight of your bank statement and calendar”.

You can only ever change your money when you change your thinking.

3.       You then need to understand what the months and year ahead look like

We call this forecasting… Now don’t worry at all… this isn’t some hectic exercise.  Because we are all creatures of habit, you already have 90% of it done.  So

1.     Start by using last year’s actuals – you’re a creature of habit… so next year has more chance of looking like last year than we’d all care to admit.  If you have only done a few months… copy and paste those few months into the next two so you can track what it may look like

2.     Then make adjustments you know are going to happen – so if your rent or mortgage went up by 400, then put that new number in… and if you know the car is going in for a service, or the child needs teeth work, or the new high school is more expensive, put those numbers in.

3.     Be realistic not hopefully optimistic.  You can only make the changes you need to make when you can face the hard cold truth head on…. Or see that in fact there will be enough money for the holiday you want.

As I said, the reason I don’t like budget’s is that they assume you can distil your money into one monthly number… an average figure.  But as I said, our expenses are never a straight line.

It is all about the forecast… the ability to constantly be readjusting your path forward based on what comes up, what you want to do as a family, and how you get to reflect your values… and by being able to plan ahead, it enables you to make the crucial decisions you need to make.

4.       Track your actuals against your forecast –

and keep reforecasting each month… this is the most important mindfulness step, as does a few things

a.      It starts to train your brain to look ahead and predict what is coming

b.     It trains you to get better at estimating what things cost

c.      It makes you more mindful of what you spend and what things actually cost

d.     It gives you a heads up when things are going to get rough.

I remember when we were in the middle of renovating and moving into our first house together 17 years ago – the quotes kept flying in to such a point that we almost became numb to them… and agreed to costs because, in the grand scheme of things, they were small compared to the costs of the building and things like curtains.

I’ll never forget one trip we were taking to see my godfather about 5 hours away, and for some reason – it must have been that a bill came in – I took out a piece of paper and started to scribble down when all these quotes would become due. 

And I nearly stopped breathing when I realised that whilst things all looked fine then in February, in May we wouldn’t have enough cash to pay the bills because the bonus we were relying on came in June.

With three months to go, I could start making plans, change things around, delay things… but if I’d just stumbled across that problem in May, I’d have had no time to make a change… no time to save… and would just have ended in stress and debt.

It’s in the forecasting, in the tracking, in the mindfulness, and in the ability to correct course that you truly start to change your money stress.

The way I’ve built my expense tracker is that the forecaster automatically inputs it, and there’s a slot for changing the numbers.

5.       Start stashing the cash

I am a big fan of at least one if not more savings accounts to stash the cash for your needs in the year.  We have a holiday account, a car savings account, a maintenance account for cars and houses, a clothing and gifts one and then a general one.  I call these expense smoothers… and talk in detail about them in Episode 234 – How to close the gap between budget and reality.

I always use the example of Christmas holidays… when people budget they tell me Christmas costs (using round numbers), say R12,000.  So therefore they put R1,000 in the budget per month.  But if in October I ask them whether they have R10,000 saved for those 10 months, they look at me as if I’m nuts.  Thing is, they’re going to spend that R12,000… they’re just going to use debt, and instead of costing R12,000 it’s going to cost R14,000 with extra payments – but more importantly, a whole lot of stress.

Every one of us, when faced with money in our account, will spend that little bit more.  It’s human nature, and in fact, it’s known as Parkinson’s law… something I discussed in detail in Episode 208.  That leads to challenges in times like holidays when we actually need the cash.  By taking that money out of your account at the beginning of each month, you end up reaching Christmas with what you need in cash, enabling you to save first and spend later… not spend now, and pay the bank interest.

So friends, truly, embrace the Tracker.  It’s free on

1.     Collect as many months of spending as you can

2.     Observe with mindfulness the money story you tell yourself as you go through your expenses

3.     Forecast forward, using your actual history and what you know is coming soon

4.     Track your actuals and Change course if you need to

5.     Start stashing the cash.

Download that tracker on

Lisa LinfieldChristian MoneyPodcastBusiness OwnerEntrepreneurbudgetfamily moneyforecast
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Lisa Linfield

Lisa Linfield is on a God-given mission to free 1 million women from the weight and stress of money. She's a CFP, founder of a wealth management business, and podcast host of Working Women's Wealth

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