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Why do we work so hard? We put in the hours at work and come home exhausted. Then we sit down and budget every dollar and every cent so that we have our future taken care of. This is smart.

But then, I get into the habit of checking the spreadsheet budget every other day to ensure we are sticking to it. I scrutinize every purchase, questioning why we needed to buy this or that? I hate wasting things so when we purchase too much food and some of it goes to waste, I get annoyed and frustrated.

Recently, I hit a breaking point when I realized that I made every decision within the mindset of a budget. I was tailoring my life to live within a spreadsheet. I then went back to something I heard Ramit Sethi said a while back:

What’s truly important is… living outside the spreadsheets.

Ramit Sethi

Tracking is a Good Starting Point

Whenever someone asks me about the first thing they should do when starting to get a handle on their personal finances, I always say to track the money coming in and the money going out – your income and spending.

Just like stepping on a scale every morning won’t say anything more than a snapshot of your health, the current available balance in your checking account doesn’t say anything other than what is currently available at this moment.

When we want to lose weight, we track calories in versus calories out. When we want to make better decisions with our money, we need to take the same approach. Create a spreadsheet, and track all the money coming in versus going out.

I started with a spreadsheet because I’m a nerd and like that kind of stuff. But I quickly graduated to an automated, online financial tracking tool like Personal Capital.

This is a starting point. After a few months have been input into a tracking tool of your choice, look at what’s been getting your money. Was there a new handbag or pair of shoes? Was your money invested? Are your expenses greater than your income?

All of these answers are the basic answers that everyone needs to answer to set themselves on the track to a healthy financial life. Then we can design a budget in that spreadsheet to slightly tweak our habits to ensure we are doing what we want with our money.

But after this starting point, we need to let go! Get out of the spreadsheet and live our lives.

Spend Money on What You Want

The purpose of making a spreadsheet with a budget is to set boundaries and buckets of money aside to be spent on specific things. If we are always worried about over-spending then we need to adjust.

Living a life full of worry and anxiety about going outside of the budgeted amount is no better than a life of poor finance. What has happened is that we have swung too far to the opposite end of the spectrum.

There needs to be a happy medium where we check our accounts periodically to make sure we are on track, but not too much where we lock ourselves in a cage. Everyone is different here but I like to check about once a month.

I know this is the right amount for me because I have disciplined myself over the years to know how much I spend and on what. When I first started, I’d update my spreadsheet once a week. That got to be too much for me. 

Guilt-Free Living

This is something that I think some people overlook. Saving money just to save is not the point. We need to give ourselves permission to spend it on things that we want, that makes us happy.

For me, I bought a new golf club last month because I knew it would make me happy and I needed to replace my 13-year-old driver. How was I okay with spending this money?

Because my wife and I have set up a guilt-free line in our budget. This is a budgeted amount of money that requires no excuses or reasons but can be spent on whatever we’d like. We set aside a bucket of money and trust each other not to exceed it.

If she wants to get her nails done 3 times a week for the entire month and it is within the amount, then she can do it, no questions asked. This way we can give each other the freedom to enjoy our personal time while still keeping our combined finances on track.

I call this guilt-free living because each of us doesn’t have to answer to the other about what we want to use that money for. It doesn’t matter if it’s a waste or something productive, neither of us can question what the other does with it.

In a way, this is mini-financial independence and it’s the best feeling in the world! If you are working with your partner on how to structure your finances, I suggest thinking about this strategy. It will alleviate a lot of stress that could come between you two.