“Wealth is the transfer of money from the impatient to the patient.” Warren Buffett
Deborah Sutton writes an excellent article in The Desert News about budgeting for the fun things in life. The word “budget” has a negative vibe to it. To budget is to deny yourself—to live within your means and that implies not enjoying as much fun as when you don’t live on a budget. Living on a budget is about as much fun as going on a celery and oatmeal diet.
The human brain has a lot psychological resistance to the entire idea of budgeting and dieting,” said financial psychologist Brad Klontz. To purposely cut out enjoyable things creates a sense of depravation and it leads to overspending and overeating.
According to Klontz (@DrBradKlontz), establishing a budget with a “Fun Fund” is essential in order to motivate a person to stick to the spending plan.
When people get really excited about a certain goal, like a vacation or a new TV, saving is almost effortless. It becomes fun to do it,” said Klontz.
Nobody is going to stick to a high fiber diet that has no flavor, no matter how healthy it is. Burn out is the common problem. The same is true with financial planning—there must be a constant pattern of rewards to make the process palatable. There should be short-term rewards and long-term rewards as well.
The key to making the Fun Fund work is to establish separate bank accounts that are funded with direct deposits each payday. Most payroll departments can directly deposit into 3 or more accounts. If not, your bank can automatically move money from one account to another each payday if you request it.
Another key to making the Fun Fund work is to keep the contribution small. All it takes is $20 per week to be able to purchase a $500 television in 25 weeks. To stay motivated you need to be rewarded. You need to make getting out of debt a game–a fun game. It is also okay to have more than one Fun Fund so that you can finance short-term and long-term rewards at the same time.
Getting out of debt in a marriage takes teamwork. Opposites seem to attract, and most marriages have a miser and a spender personality. The trick to establishing true teamwork is to make sure that each spouse is getting what they need, and that’s never going to happen unless the spender spouse sees a reward for good behavior. Nobody is going to stick to a budget that is all work and no play.
Changing habits is never easy, and the hardest part is the beginning. Learning how to prepay for the fun things is life is a lesson worth learning.
Image courtesy of Flickr and americangirlo77.