How to Actually Stick to a Budget

The behavioral and psychological components behind overspending

There is a ton of information now about how our mind works to sabotage our own thinking. We literally deceive ourselves. Part of the deception lies in our hearts and minds—emotions and thought processes—and another part lies in our environmental cues and the systems we construct for ourselves to reinforce either positive or negative behaviors. Let’s cover a few of the most common areas where we pull the wool over our own eyes, and then I’ll present an easy-to-remember system that works on both the mental and environmental aspects. Finally, we’ll look at some super practical tips and hacks you can work on right away to stick to the financial plans you’ve made for yourself.

Here’s the start of what I hope is a pretty comprehensive list of reasons spend more than we intend to. Let’s dig in!

Emotional triggers and stress spending

The top emotions that lead me to use money, things, or buying stuff as a drug are:

• Boredom. I want something novel, new, shiny.
• Hunger. I’m responding to my body’s cravings.
• Envy or Lust. Just like hunger, I feel this emptiness and want to fill it, regardless of whether I actually need it or it’s even good for me.
• Fear and stress. I’ve worked in the home security industry for years and have personally seen how well fear motivates people to buy. It’s based on love—protecting what we care about—but gets twisted when we become afraid, stressed, or resentful.

The antidote to all of these is twofold: time and talking. Most of the emotions that trigger us are fleeting, either from our own minds or from the environment we can soon leave. A few hours or at most days will usually leaves these emotional triggers far behind.

The rest can be talked through with your friends, family, spouse, therapist, basically anyone besides a salesperson! If you can tell your partner the emotion that’s driving your desire, just saying it aloud will help break through the short-term pattern.

Impulse spending

I call this one “buy now, think later.” Her are the lies I tell myself to justify the purchase in the moment”

• “It’s on sale now and I might need it in the future”
• “I might never find something so unique again”
• “You only live once”
• Keep a list of stuff you actually use and enjoy daily and ask how this fits into that group

Helping out with impulse spending is mostly just avoiding places where you’re tempted and when you’ve got any other emotional baggage you’re carrying. “Don’t grocery shop when you’re hungry” is very common and very helpful advice, but it can be applied to many other situations of temptation. In today’s online 24/7 environment, the equivalent may be to uninstall apps, block emails, pay for ad-free plans, whatever it takes to keep you away from temptation.

Social pressure and keeping up appearances

We buy stuff because we think it will:

• Enhance our appearance, prestige, intelligence
• Keep us popular and trendy
• Make us look wealthy, powerful and put-together

Instead, ask yourself these two questions before you buy something. Actually say these things out loud:

1. “Will people like me better if I buy this?”
2. “Will I like myself six months from now for spending this money?”

The answer to the above will usually be “no, that’s silly.” The trick you’ll need to discover is to uncover the hidden motives behind your purchases and actually get to the point where you realize that you need to ask evaluate your reasons for purchasing. Once you start asking these two very dangerous questions, the social pressure you’ve been feeling will likely collapse like a sandcastle in the surf.

Marketing influences and sales psychology

Another type of pressure isn’t from our friends and peers, but from the huge economic driving force behind our consumption economy. You’re constantly bombarded with these wherever you look, read, watch, listen:

• Ads, sales, promotions, influencers, reviews
• Willful ignorance because you don’t track your spending
  • I still have credit left on my card, so it must be OK
  • “I pay off my balance every month” but don’t save for the future and actual exposure
• Convenience and habit-based spending
  • Triggers of times, places, people, pressures, etc., that drive you to overspend
  • Choosing the wrong time or wrong store or wrong quantity: buying small amounts at high-priced venues when you could buy in bulk, make your own, or go without
• Unrealistic attribution—if I buy this then I will:
  • Feel better about ____ (some flaw you hate or some status you want to achieve)
  • Earn more money doing _____ (some job you think will be easy if you have an xyz)
  • Attract more ____ (friends / dates)
  • Be a better _____ (some relationship, maybe this one is unlikely)
• It’s my time or I’m tired of waiting
  • I deserve this because ____ (I’ve worked hard or it’s time for some luxury); this may be true but how does it actually fit your goals—if a Lexus replaces your new roof and then you go into debt later on, then you’re in trouble; “I deserve this” doesn’t mean “I can afford it because it’s in my spending plan”.
• Mental tricks you play on yourself (aka cognitive biases)
  • Present Bias: Overvaluing immediate rewards while undervaluing long-term consequences.
  • Anchoring Bias: Relying too heavily on the first piece of information offered (e.g., an inflated “original” price next to a sale price). I’m a big sucker for this one—I love a good discount off MSRP, which was just totally made up number to begin with so that they can show a huge discount.
  • Mental Accounting: Treating money differently depending on its source or intended use (e.g., being more frivolous with a tax refund than with regular salary).
  • Optimism Bias/Overconfidence: Believing one is less likely to experience negative financial events or overestimating one’s ability to control spending or pay back debt.

Four simple steps to help you help yourself

Welp, that was a lot of psycho-babble. But figure out which of the above issues are true about you, then you’ll be ready to tack my simple little framework below to pushback against all of the mind games you play with yourself.

You’ve heard of AA batteries, yes? And probably AAA batteries, the smaller and increasingly common cousin. But did you know there’s a AAAA (quadruple A) variant? I’ve only seen them in digital pens, such as a stylus for a tablet, but a random LLM I consulted assures me they are used in a lot more tiny devices that I’ve never heard of. This thrilling trivia is completely irrelevant to budgets, sadly, but the quadruple A naming happens to be what I’ve settled on for a framework of steps you can use to make sure you stick to a budget.

Let’s look at each of the four steps in the AAAA framework for sticking to a budget:

Practical Tips That Work for Me—Unless You Know Better Ones

I worked at Amazon’s HQ in Seattle for 5 years. Their leadership team has a phrase “unless you know better ones” meaning that “here are what we think are the right tenets (principles) for this project, but we’re open to improvement suggestions.”

While the below list contains my go-to life hacks for sticking to our family budget for 25 years, there are hundreds, maybe thousands more tips I could add to this list.

What are your tips/hacks/strategies that work better for you? Please let me know in the comments.

1. 👀 The first and most important tip should be obvious from the Awareness step in my framework above, but you have to look at your budget categories before you buy something to see if you have enough money allocated in the plan to actually afford it right now. If you’re only looking at where the money went, it’s like driving a car by looking in the rearview mirror. Check the budget before buying!
2. ⏰ Implement a waiting period for big purchases. Pause a whole day, maybe even a week, for purchases you want and probably even purchases you “need.” As an aside, this is one of the many reasons healthcare is so expensive! It’s always an urgent need, there’s no time to research, shop around, compare quotes, etc.
   • By “big” purchases I mean anything that costs more than 2 hours of your time—so if you make $15/hour, that’s $30. $70/hour, that’s $140. Actually, anything over $100 you should probably wait on, even if you make a ton 🤑
3. ⬇️💰 Find no-cost or low-cost alternatives for entertainment. With my budget coaching clients who make a good income, entertainment is one of the biggest areas of temptation to spend beyond what they’ve decided ahead of time. Eating out, vacations, concerts, sports, kids’ activities, it all adds up very quickly. For what to do instead, see the next list item.
4. 📚 Fill your free time with free fun. A lot of reasons we overspend are because we have too much time on our hands. If you’re working or volunteering or hanging out with friends (pick ones who don’t need to spend money to have fun), then you won’t have time to waste money. You’ll be enjoying life too much to fritter away your paycheck! Make a list of things that can pay you or give you fun for free. Here’s a start:
   • 🏛️ Go to the freakin’ library! Ever heard of it? I increasingly get blank stares when I suggest this to folks now. But you have to give credit to public libraries: they are trying so hard to stay relevant in today’s InstaTube age, so you’ll be treated like royalty just for walking through the door. You can borrow and spend countless hours with real books (what are those?), ebooks, DVDs, graphic novels, etc. Some libraries even have 3D printers you can use for free 🤯.
   • ❤️ Volunteer or get a side hustle you love. I have a cousin that’s a very successful, highly paid executive, but she spends every Saturday working long hours for free at an animal shelter because she loves it. Some people spend Saturdays shopping or on $200 rounds of golf; she’s helped literally hundreds of dogs and cats find their forever homes, then comes home after a long shift fully of gratitude, contentment, and no energy left to waste money.
   • 🥾 Explore the outdoors. Go hiking, bird watching, disc golfing (my son and I just went today!), spelunking, anything else that gets you out in nature. However, be careful not buy expensive outdoor gear and then abandon it. I used to be the category manager camera accessories when I worked at Amazon, selling hundreds of millions of dollars worth each year. One vendor admitted to me that their fancy tripods, which could cost up to $1000, were notoriously neglected by amateur photographers. Spend $300 on a whiz-bang carbon fiber doodad, use it a few times, then into the closet it goes forever.
   • 🏫 Go to sports and activities through your school or local community center instead of for-profit clubs. Does your teenager really need a traveling sports club? Or could the local YMCA provide exercise and social opportunities just as well? If the $3000 traveling team is in the budget and that’s what your priority is, then you’re in control. But if you’re going into debt or not saving, you need to understand your needs (and your family’s needs) vs. your wants. The biggest irony is that the free thing may actually be more fun and fulfilling—the hyper-competitive parents and kids on those expensive traveling teams can make even a kids’ game stressful and tiresome.
5. 😱🗓️ Be scared of subscriptions! Regularly audit and eliminate unused subscriptions; these are the traps you fell into once and they keep billing you. Finding them will give you a surprising amount of headroom in your budget, especially when you discover you have 3 or more $20/month streaming services and only have time to watch one. It’s especially important to have these regular audits when you have multiple people spending out of the same account—I helped to track the cash flow of one client where the husband bought an Amazon Prime subscription and the wife had also purchased a subscription. Of course Amazon never told them they hadn’t ever used the second subscription—they got billed for 3 years of a product that was literally never used. Fortunately I was able to get a refund for 2 of those years, but how many opportunities like this exist in your house, right now?
6. ✍️ Write down your long-term goals every time you login to your bank/credit card website. Just the act of writing something down has huge psychological benefits and sticking power! So, whenever you look at your budget, review your transactions, check on your bills and direct deposits, get out a piece of paper or journal and write out the 3-5 things you’re actively saving for. Hopefully you’ll do this at least weekly and the 30-second habit will prime your brain whenever you’re tempted to waste money on something that doesn’t align to these goals you’ve chosen for yourself.
7. 🙈 🙉 Protect your environment. Make drastic changes to ensure that you’re not tempted by all psychological issues and attitudes this article has made you aware of. Here’s a good place to start:
   • Unsubscribe from marketing emails/texts and catalogs in the mail, unfollower “influencers”, block deals websites you visit, get an ad-blocking browser extension
   • Stage healthy and low-cost alternatives in the places and times you need them. Buy bulk, low-cost, healthy snacks and put them in your work bag or desk. Pack your lunch instead of buying it at work (maybe even the night before with those leftovers you were gonna throw out).
   • Don’t go “shopping” as an activity or past-time. You’re going to an expensive store, full of temptation, with the intention of spending money without a clear goal? Instead, only go to the store when you have a specific list of purchases you really need (or want subject to your budget) and give yourself guardrails.
8. ⬅️ 🛍️ Sell or take back anything you don’t use and (realistically) won’t use in the future; this can be a sobering reminder of how difficult it is to sell stuff and how much of a loss you have to take
   • Be careful because selling can be a thrill just like buying, so you can get caught up in some sort of “buy high, sell low” frenzy that’s super unsustainable (ask me how I know).
9. ❌ 🍔 Eat out less, and never visit convenience places. If you’re having coffee with a client and can expense it, that’s great. But without corporate expense accounts, those frequent trips to convenience stores, cafes, coffee shops, vending machines and restaurants/takeout do add up. A large driver of inflation in the last few years has been in the service industry (where wage growth has finally surpassed inflation for the first time in decades). Instead, try this:
   • Make a complex, fancy dinner at home by watching cooking videos for free online and then invite your friends to bring side dishes and desserts; you’ve spent a whole afternoon learning a new skill and a whole evening having fun with friends, and it cost less than drinks/dessert at a “meh” restaurant.
   • Make snacks yourself with reusable containers filled with bulk mixed nuts. Always bring your own water bottle or coffee/tea instead of buying.
   • Batch cook meals and use your freezer, even if you have to buy a standalone deep freezer. It’s easier, cheaper, and healthier to grab something you cooked from the freezer than it is to order in, drive to a restaurant, or even mess with commercial frozen meals (full of sodium, preservatives, and mostly like dried out by the time you nuke it).

Why only 9 tips? The tenth is up to you—and 11 to 111 as well. Find your own path and write down what actually works. Share your tips with friends, ask your spouse to be strong in areas where you’re week and vice/versa. You’ve got this! 💪