If you’ve ever wondered how much you should be spending on the different categories of your budget, you’re not alone.

This is one of the top questions my clients ask me when we first start working together.

In this episode, let’s talk about why following what you “should” do often leads to undesired results and a better way to decide how much to spend on your budget categories.

Topics Discussed

  • the implicit belief underlying the question of how much you should spend
  • guidelines for managing your money
  • why many people don’t follow the budgets they create
  • an exercise to explore the rules you believe about money
  • what to consider in creating your budget
  • what happens when you let go of all the rules about money

Listen to the Episode 

Work with me

If you’re ready to learn the mindset and strategies to master your money, let’s schedule a call

Connect with me

Social media: Instagram and LinkedIn

Email: hello@rhothomas.com

 

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Lightly Edited Transcript

Hey friends. Welcome back to the show. I hope you’re doing well and having an amazing day so far. Today we are talking about how much you should spend on the various items in your budget. This is a question I get a lot when lawyers first come to work with me. Often they’re looking for me to tell them what to do and exactly what to spend on in each area so when we work together, one of the first things we do is look back over your previous spending. People think they know how much they’re spending but more often than not.

They’re actually spending more than they think. So with the look back, you can see how much you’ve actually spent where you’re actually spending your money and then decide if you like that. If not, now you have that information so you can tweak your spending. So it’s more in line with what you want to be doing.

Oftentimes when we are doing that work clients will ask me something to the effect of how much should I spend on X or Y category, or one client even asked me how much should I be allowed to spend on X or Y? And my question back is always how much should you spend on x or y or how much should you be allowed to spend? When you’re asking how much you should spend. You are implicitly believing that there’s a right amount out there, which goes back to what we talked about in episode 95 about letting go of what’s quote unquote, right. In this case, thinking there’s a right amount will keep you from deciding what the right amount is for you. Because you get to decide how much you spend on x. Or y. There really are no rules, personal finances personal. You’re in charge of your money and you get to decide where you spend it or how you’re going to use it. And let me be clear, I’m not advocating that you just spend everything you have or spend beyond your means. But within that you get to decide how much you spend on different things and how you allocate your money across the different categories of your budget. I can give you guidelines like spend less than the amount you make in the month, prioritize your financial goals focus on one at a time. Keep your housing cost around 25% of your income. But they’re just that they’re guidelines, right? They’re not black and white rules and you’re not necessarily wrong if you don’t follow them. Although in my experience following those guidelines does make achieving your goals a bit easier and smoother.

But even if I give you guidelines, even if you get other people’s opinions from articles online or from family, friends and colleagues, ultimately it’s your money and you’re the boss. So when we start thinking about what we should be doing with money, and you approach your finances from this place of should, that’s when it starts to feel less like a choice and more like something you have to do. Right this obligatory thing. That’s why so many people don’t follow the budgets. They create. If you create the budget based off of what you should be doing, rather than what you want to do it probably doesn’t feel very good to follow that budget.

It goes back to when we talked about approaching your finances from this perspective of deprivation back in episode 76. And what you have to do and what you have to give up in order to be good with money. It’s not true, right? It’s always a choice to improve your finances or manage your money in a certain way. But when you’re creating your budget from what you think you should be doing and how much you should be spending, then it doesn’t feel like a choice. You’re not creating it based off of what you want. You’re creating it based off of whatever rules you have in mind from wherever you’ve picked them up

an exercise that might be helpful for you like I just did this with one of my clients, but you might list out all the rules you have about how to manage your finances. And you might be surprised at what you find. Like when she did this. She had some rules that kind of conflicted with each other. And some that didn’t make sense and some others that didn’t line up with the way she wants to manage her money. So look at all the rules you’re operating from, with respect to your finances, and decide if you like them and if you want to keep them because all of them are 100% optional.

You always want to approach your finances and create your budget, keeping in mind the truth that you are the boss of your money. You are the ultimate decision maker. And so you get to decide where you’re going to spend it, how you’re going to use it, how much is going to each place, and what you decide might be different from what someone else decides and that’s okay. But you want to think about what you value and what’s important to you, including whatever financial goals you have, and then align your spending accordingly. Because if you don’t, that is a recipe for blowing your budget and overspending and not being able to make progress on your goals when you think about what’s important to you and what you value and you create a budget from that place, then you are much more likely to follow it. You’re much less likely to blow it or ignore it. Because you decided what you want to do ahead of time. You made intentional decisions about your money thinking about what you want, not what you can’t have not what you should do, not based on what anyone else thinks, and that is a much more empowered and motivating place to approach your finances from. So at the end of the day, if you take nothing else from this episode, I want you to remember that you are the boss when it comes to your money. You get to decide what you’re going to spend on there are no rules, as long as you’re spending within your financial means and you’re able to make progress on your goals. It doesn’t matter what you do. You can take all those rules that you’ve picked up over the years, the things you’ve heard from your parents, the things you’ve read that say you have to do it this way or that way, and just throw it all out the window. You get to decide and when you can let go of all the rules, all the conditioning all the shoulds around what you should be doing with your money, and how you should be managing your money. You’ll manage it in a much better, much easier way. And you’ll be able to make the kind of progress that you want to make with your finances, without all the stress and pressure that you’re feeling now. So if you are ready to let go of all the rules about what you should be doing with your money, and create a money system that works for you and allows you to achieve your goals with more ease and less pressure. I invite you to work with me. So head to rho thomas.com/call and schedule your free consultation and then let’s go from there. All right, so that’s it for this week’s episode. Come connect with me over on social media rho Thomas on LinkedIn and at I am rho Thomas on Instagram, subscribe to the show and leave a rating and review all of which helps the show and please think of a friend or two who that benefit from this information. And share it with them. As we close out friend, I pray that you examine all the rules you have around money and decide whether you want to keep them. I pray that you recognize that you are in control of your finances, and ultimately that your voice is the only one that matters and as always, I pray that you continue to take steps to regain control of your time, build wealth, and live the life of freedom and choice you deserve. Talk to you later.

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