Becoming Empowered: Building a Realistic Budget - The Flex | Flow Way

Becoming Empowered: Building a Realistic Budget - The Flex | Flow Way

Feb 13, 2019 6:30:00 AM
Photo of a red wallet

Almost 1/4 of American adults cannot cover their current month's bills in full. Read that again! Now I know there are a ton of things that go into that… low wages, racial inequity, people with disabilities, and more.

Adjusting for that, I think it's still fair to say that millions of people have a problem with the "B" word. Budgeting.

Did you know that the English word budget comes from Old French “bougette” and from Latin “bulga” meaning a ‘leather bag, knapsack’?

It started as a way to carry all of a person’s money. Literally, a coin person. Nowadays, a budget feels diminutive to our ego.

It can feel embarrassing in the US to have to say "I'm on a budget." If you're friends don't say "I'm on a budget" when you go to brunch, then it makes you feel certain way, right? You know that you could be making just as much income if not more than your friend, so why do you have to budget, and they don’t?

Please take a slice of humble pie, before we get too worked up. The average household in the US makes about $44k per year. One month of those types of wages in other countries would be legendary.


So, how does one set up a real budget that you can stick to? I use a FLEX | FLOW | FUNCTIONAL model. 

Image reading "Flex Flow Functional" Start with what I call "FLEX".


It's your allowance money. If and when you spend it all, don't worry about it at all! It allows some freedom with limits. No guilt or shame. The key is to set a number and stick to it though.


The weekend brunch budget may be $200 per month. If that’s the only thing you want to spend money on, then you're set! A lot of our clients include, movies, sporting events, going out to eat, random shopping and more. Basically, all of the things we like to do with money but now with a ceiling.


The next bucket is "FLOW".


These are the ones that typically catch us off guard! I know its Valentine's Day coming up soon. What if you didn't have a significant other back in December when you did the budget? How do you account for the money you will spend? Mother's Day? Father's Day? Your friends birthday? A random trip that you were invited to as plus one because your college roommate just got a divorce and invited you instead of her ex-spouse and you feel obligated?

These are the budget crushing expenses that we don't plan for well enough. What I've learned to do is to add up a guesstimate of a total for all of your irregular expenses for the next year, and then divide by 12.

 Examples include: Birthdays | Holidays | Back to School Shopping | Trips | Car Tabs | Car Maintenance | Home Supplies. Go out 12 months, plan into next February so you're ready for Valentines 2020!


Last, but not least, we have "FUNCTIONAL" expenses.


These are all of the regular, predictable bills. Rent, cable, cell phone etc… We've talked in other posts about averaging your utility bills as well to make them more of a fixed expense.

The key with this type of budgeting is to know that it will evolve. We used to put gas and groceries in FUNCTIONAL, but we found that they never really were the exact same each month. We had more of a range, so we moved them to the FLOW bucket.

The biggest key is to plan ahead for the expenses and make some key decisions about what you can or can't afford. Really think about where your values lie with money. For Valentine's Day, some people may spend hundreds or even thousands to show their loved one how much they care. Some people may spend $0, but as a couple you're looking forward to the well planned cruise.

Regardless of your goals or intentions around holidays like Valentines Day, the best way to plan for or around it is to plan as if you're ready for all the ups and downs of spending through the year. Stay ready, so you won't have to get ready.

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