Budgets Don't Work For Most People So Use An ISP Instead

If you've ever paid any attention to the personal finance world, you've heard some stat around how 2 out of 3 people don't have a budget.

I mean...how could that be?

They're so important. They're so easy. They're totally free.

None of that matters.

What the statistic won't tell you is that most of those people have had a budget in the past, but they quit using it.

Why would people quit something that's universally considered the most basic, important step to building wealth?

Here's a few really common reasons people give...

• "It felt punitive and like it was the end of fun."
• "We did it for 3 months but with kids and life, we just never hit our budget number."
• "Our expenses fluctuate too much to have a budget."
• "My income isn't the same every month so its hard to budget."
• "It's just really time consuming to keep track of every single thing you buy."

The list goes on, but it turns out, they are all wrong about budgets.

So If Budgets Don't Work, Why Do Businesses Have Them?

Think about a billion-dollar business. They have lots of variability in their monthly expenses and income. 

They have to cut back on pizza parties and happy hours when things get tough.

Keeping track of money is really time consuming (and expensive).

Any business leader will tell you they constantly go off-budget and make mid-year adjustments.

But everyone in management knows you STILL MAKE A BUDGET.

Why do that if it doesn't ever match up to what you want to spend money on?

Because that's not what a budget's purpose actually is!

Goodbye "Budget", Hello To "Intentional Spending Plan"

Let's drop the word "budget" for a second and change it to "intentional spending plan". This can help us reframe things a bit.

Success with an ISP is...

• aligning spending with your long term goals
• understanding your cash flow
• learning from your habits

Dwight Eisenhower once said that plans are useless but planning is everything.

Well an intentional spending plan is just that...a PLAN! It's generally useless.

It will be wrong 11 out of 12 months for some of the most organized people unless they have incredibly simplistic finances because...well, shit happens.

But it's the act of making the ISP, (the planning) that is everything.

That is WHY you have a budget.

It's not a tool to flog yourself in shame every time your bank statement doesn't match perfectly with it.

It's an exercise that keeps you intentionally conscious of the direction your life is going.

Then, you compare the reality of the numbers to the dreams and goals you have in your life and see if its moving you in the right direction.

If it is...great!

If it's not...adapt and overcome.

Life's too short NOT to chase the things you want in life and settle for the unfulfilling role society will throw you into by default.

Switch your mindset from a budget to an intentional spending plan (ISP) and you'll make progress faster than you ever thought possible.