When you hear the word “budget,” what comes to mind?
For many, it’s an immediate reaction of dread – restriction, deprivation, and tedious record-keeping. Budgeting both sounds and feels like a chore. But what if there was another way to think about managing your money? One that feels empowering, liberating, and even fun?
We don’t use the ‘B’ word. Instead, we focus on optimising your spending and saving, which is not just about controlling your money – it’s about making your money work for you in a way that enhances your life, aligns with your values, and supports your long-term goals.
This approach is grounded in a deep understanding of psychology, particularly how we derive subjective value from our spending and how this influences our financial decisions.
Below, we’ll explore why traditional budgeting falls short for many people, and how just reframing the process as optimising your spending and saving can offer a more effective and enjoyable way to start managing your finances.
The Problem with Budgeting: Restriction vs. Freedom
If budgeting is seen as a form of financial dieting, optimising your spending and saving is the equivalent of making it a lifestyle change.
Just as a restrictive diet can lead to feelings of deprivation and an eventual binge, a strict budget can make you feel confined, leading to resentment and potentially impulsive spending as a form of rebellion. This is because budgeting tends to focus on cutting back – spending less, saving more, and constantly monitoring every cent.
However, psychology tells us that humans naturally resist restrictions. Psychological reactance is the idea that, when we feel our autonomy or freedom is being threatened, we’re more likely to push back. This explains why many people struggle to stick to a budget; the more we feel deprived of freedom and joy by our financial plan, the more likely we are to abandon it.
In contrast, optimising your spending and saving is about increasing your sense of freedom. It’s about making conscious, deliberate choices that align with your values and enhance your life.
Rather than focusing on what you can’t do or have, it emphasises what you can – encouraging you to spend on things that truly matter to you and bring you joy, while cutting back on areas that don’t add significant value.
The Role of Subjective Value
One of the key principles of optimising your finances is understanding subjective value – the idea that the individual value we each experience from a purchase is not solely about the price tag, but about the personal satisfaction and happiness it brings us.
Traditional budgeting often fails to account for this, treating all expenses as either necessary or wasteful without considering their emotional impact.
For example, a morning coffee might seem like a trivial expense in a strict budget. But if that coffee is part of your daily ritual that helps you start your day with a moment of peace and pleasure, it holds subjective value that goes beyond its monetary cost.
On the other side, a budget might also allow for larger expenses that are deemed “necessary,” like an expensive car, without questioning whether that purchase genuinely contributes to your happiness or if it’s a decision driven purely by external pressures.
Optimising your spending means learning to identify and appreciate this subjective value.
This approach not only makes financial management more personalised and enjoyable, but it also helps you align your spending with your core values – ideally leading to a more enjoyable life with fewer disappointments.
Saving is only a problem for “Future Me”
Just as traditional budgeting can make spending feel like a chore, it can also turn saving into a dull exercise, depending on our mindset towards money.
Although most of us know we should be setting aside money for the future, it can often feel like a sacrifice in the present, rather than an opportunity for growth. But, if we shift our perspective from restrictive budgeting to optimising our lives, saving can take on a different role – it becomes an opportunity to invest in your future self.
Research in psychology has shown that people who feel a strong connection with their future selves are more likely to make decisions that lead to better long-term outcomes, such as saving more and spending less on immediate gratifications.
By framing saving as a way to provide for your future self – someone you care about and want to see thrive – you’re more likely to feel motivated and empowered to set aside money regularly.
Making Financial Management Fun
One of the most powerful aspects of optimising your spending and saving is that it can actually be fun. By turning financial management into a game, you can motivate yourself to stay on track without feeling like you’re depriving yourself.
Gamification, the application of game-design elements in non-game contexts, can transform how we approach our finances.
For instance, you might set challenges for yourself, like finding creative ways to reduce your grocery bill by 10% each month or tracking how much money you save by cutting out unnecessary subscriptions.
You could also set up rewards for meeting your savings goals, such as treating yourself to a nice dinner out or a weekend getaway.
This approach not only makes financial management more engaging, but it also taps into our natural desire for achievement and progress.
When we see our savings grow or notice the positive impact of optimised spending on our lives, we feel a sense of accomplishment that reinforces our behaviour and encourages us to continue.
Aligning Finances with Values
At the heart of optimising your spending and saving is the idea of aligning your finances with your values; it’s the blueprint for the life you want to build for yourself.
This means taking the time to reflect on what truly matters to you – whether it’s spending more time with family, pursuing a passion, or securing your future – and ensuring that your financial decisions support these priorities.
By focusing on optimisation rather than restriction, you create a financial plan that is not only sustainable but also deeply satisfying. You’re not just managing money – you’re using it as a tool to build the life you want.
The reason we don’t use the ‘B’ word is simple: budgeting, in its traditional sense, is too often associated with restriction and deprivation. It’s boring, difficult, and just doesn’t work for so many of us that crave success through something meaningful and purposeful.
This is why we advocate for optimising your spending and saving – a process that is empowering, enjoyable, and rooted in a deep understanding of psychological principles. By embracing this approach, you can transform your relationship with money, making it a source of joy and fulfilment rather than stress and frustration.
After all, financial wellbeing isn’t about living within your means – it’s about living in alignment with your values.
If you’re ready to take control of your financial wellbeing, consider if our moneyfit.me Kickstarter course might be suitable for you. Start your journey towards financial health today and experience the benefits that come with a well-managed, stress-free financial life.
