Financial_Blueprint_623

Building the Best Possible Financial Life — The Right Tool For The Job

In a recent post, The Starting Point for Building Effective Money Management Habits, I talked about the importance of understanding our biblical financial identity. We’re not consumers, as our culture suggests. We were designed to be wise builders who manage money in a way that enables us to build a thriving relationship with God, loving relationships with others, and lives of meaningful contribution. But how?

Creating a blueprint for uncommon financial success

If you were a home builder, you wouldn’t just show up on the job site with a hammer, some wood, and a box of nails, and just start pounding away. You’d have a plan, a blueprint.

In order to build a great financial life, we need a blueprint as well. Yes, I’m talking about a budget. I know that many people can’t stand even the sight of that word. It sounds restrictive, and it seems like it would take a lot of work. But it isn’t, and it doesn’t.

I’ve heard from some high-income people who say they see no need for a budget. They have plenty of margin and are never in danger of overspending. To which I would gently reply: “If a company grows to the point of great success, would it stop keeping its books? Would it stop analyzing income and expenses, setting departmental budgets, and proactively managing to the numbers in its plan?” I doubt it.

Your household is like a small business. It’s owned and funded by God, but you’ve been given the opportunity to run it. Or, to stick with the metaphor from last week’s post, you’re a wise builder who has been given all the materials needed to build an amazing life. While a consumer might wing it, a wise builder surely wouldn’t.

What would a wise builder do?

In James Clear’s book, Atomic Habits, he stresses the importance of identity in shaping our behavior.

Imagine two people resisting a cigarette. When offered a smoke, the first person says, ‘No thanks. I’m trying to quit.’ It sounds like a reasonable response, but this person still believes they are a smoker who is trying to be something else. They are hoping their behavior will change while carrying around the same beliefs. The second person declines by saying, ‘No thanks. I’m not a smoker.’ It’s a small difference, but this statement signals a shift in identity. Smoking was part of their former life, not their current one. They no longer identify as someone who smokes.

In the same way, I’m encouraging all of us to consciously reject the identity of a consumer and embrace the identity of a wise builder. With all financial decisions, it would be helpful to consider, “What would a wise builder do?”

One thing I know for sure is that a wise builder wouldn’t just spend and hope it’ll all work out. A wise builder would use a plan to build a life of uncommon financial success—a life of proactively using money to build a thriving relationship with God, loving relationships with others, and meaningful contribution. Given the loftiness of those aspirations, a budget may seem like a big comedown. But it isn’t. It’s the most powerful tool you can use to manage your finances accordingly.

Next steps

If you’ve never used a budget, let me encourage you to start now. At my day job with Sound Mind Investing, I wrote a three-part series about getting started with mint.com, the budget tool my wife and I use. You’ll find the first article here, which has links to the other two.

If you’re an experienced budget user, right now would be a good time to consider any tweaks you should make going into the new year. In our household, we made two changes. The first one has to do with our clothing budget. When Jude and I were first married, we each had separate budgeted amounts for clothes. When our kids came along, we added a third clothing budget — “kids’ clothes.” But we decided to split that into separate budgets for each of our three kids, so now we have five clothing budgets in total. It should help us spread our former “kids’ clothes” budget more evenly across our three kids.

Next, we added a “pet food & supplies” category for expenses related to our seemingly always hungry guinea pig. We used to put such expenses in our entertainment budget, but honestly, while we like our little rodent, his upkeep can’t compare with a night out at the movies. It seemed like an unfair weight on our entertainment budget to put his expenses there. 

Whether you’re struggling financially or thriving, a budget will help you use money with greater effectiveness, peace of mind, and joy. If you have questions about how to set up or use a budget, please ask. I’d love to help you put this powerful tool to use.

Take it to heart: “The plans of the diligent lead to profit as surely as haste leads to poverty.” – Proverbs 21:5

Take action: If you don’t use a budget, read the articles I linked to over at Sound Mind Investing, download Mint to your computer, and get started. It’ll take a little time to get set up, but trust me—it’ll be worth it.

Read more: The 5 Budget Mistakes I See Most Often and How to Fix Them 

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