The Pro-Spending Budget

As most of you know, I’m not a fan of traditional categorized budgeting. I’ve always advocated a form of spending control based on a spending rate limit instead.

With a “burn rate” budget, instead of setting dollar limits for separate categories like entertainment, clothing, groceries, etc., we set a target spending rate (dollars per week, dollars per month) to keep total spending within. Nothing is inherently off limits; it may just have to wait.

However, there are certain, more sporadic areas of spending where setting a total dollar cap for a particular item or category can be useful, like giving yourself a limit for Christmas gifting or throwing your kid a birthday party. You may take a similar approach for even bigger (and less frequent) projects like a kitchen remodel or a new vehicle purchase.

These are the places where setting a budget is useful, because it sets bounds on a concentrated burst of spending, a type that, while infrequent, can still have substantial impact on your financial health because the amounts are far larger than your more routine weekly grocery run or getting your kid new shoes.

But there’s another place where setting an intentional budget cap – or target – can be useful. And that’s for areas that purposely support your non-financial goals.

Because what is money for if we never use it to create the changes we wish to see in our lives and our world?

For example, if you set a resolution to stop buying books from Amazon and support your local independent book shop instead, that requires a dedication of funds. In reality, it might mean spending nearly twice as much to cover the full retail price of a book compared to the undercut prices found on Amazon.

Or maybe you want to be more intentional about getting together with friends, but hosting company never seems to happen because your house is always a mess, not everyone likes your dog, and you can’t seem to get away from the kids. Maybe a dedicated friendship fund to host get-togethers at your favorite coffee shop with a few drinks and sweets, or a nearby restaurant with a great happy hour offer, would be a better way to make connection happen.

When goals require money, intentional use of a set-aside budget can help give you the freedom to follow through.

A strategic way to handle the logistics of this may be buying a gift card – to that local bookshop or favorite friend spot – to cover your needs for the quarter or entire year. This overcomes the problem of having a “savings fund” that ultimately dies from lack of attention or gets raided when something else crops up.

In effect, this is the way government works. A particular initiative is deemed important to develop, so funds are “appropriated” to support that work.

What personal initiatives are you working on? Is money holding you back when it comes to implementing those goals day to day? Or is something else holding you back and money could help solve that problem?

If so, it may be time to put your money where your mouth is and “appropriate” some funds to intentionally support your plan.