[00:00:00] Intro: Forget the civilized path. It’s time to break the chains of debt and dependency, take control of our financial lives, and live free. This is the Fiscally Savage Podcast.

[00:00:15] Dylan Bain: Hello and welcome to Fiscally Savage. I’m your host, Dylan Bain. And today, I want to tell you about a time in which I had just started budgeting. And in the early days of this experiment, I found myself frequently looking at my budget and, I mean, I had set it up with the best guess as to what my expenses actually were. And here I am sitting at the end of the month, realizing that there’s too much month at the end of my money and asking myself: Where did the money actually go? And I’m struggling with this because I’m a math teacher. Why can’t I make this work? I mean, all the budgets are just mathematical spreadsheets, right? So, I should be able to figure out how to get my income to equal my expenses and for whatever reason, I just can’t seem to actually make the numbers work. And I start to realize as I go back and start looking at this, that I had failed to start in the right place.

[00:01:20] Now, ladies and gentlemen, I tell that story because so frequently when clients come into the coaching practice, one of the most common phrases I hear from my clients is “I just don’t know where all my money goes.” And this is doubly true for clients that make a good solid living. It’s kind of surprising to me because it kind of seems like my clients that make the most money typically have the most issue with keeping track of where it all seems to go. And that’s when I say, well, you need to have a budget. It’s an important tool that you need to have in your arsenal so that you can manage your money effectively. And people will then almost always look at me and say, well, but I just don’t wanna make any cuts or I don’t know where to make cuts and I just don’t wanna be restriction or they bristle because I don’t wanna live like a monk. And this is the point where I have to remind them and have the conversation that budgets are not a statement of restrictions. Budgets are statements of values. You see, when you look at your time and your money, what you spend your time and what you spend your money on will reflect what values you have in this world. Time and money are more or less the same thing and we’ve talked about this on previous podcasts. Time is money. Money is time. Money is what you’ve exchanged pieces of your single most precious nonrenewable resource — your time — in order to get. Money is stored power. It’s stored time. So, if I were to take and look at your finances, what would I see? What would your numbers tell me about your life and about your values? Budgets are also a conversation. They’re a conversation that you need to be having with yourself and with your partner and all the other people in your life that are affected by your budgetary decisions. Budgets are a conversation, so where does that conversation start? Well, it starts with your financial vision. What do we want in this world? What are we working for? What are we building? Why is it that we make the choices we make? How do they reflect us? If you are in a dedicated relationship with another person and you are not sitting down and budgeting, are you really sharing your values? Are you on the same page? Have you ever had a conversation about what you’re spending and what your income picture looks like and how that actually affects or reflects your values and what you value in your world, what you value from other people, what you value for your kids? What do we want this money to be doing for us? That’s a conversation that inherently is part of actually creating and maintaining a budget. And budgets are a plan. Like where are you going? Why do you want to go there? And what will happen when you get there? Budgets are part of that plan. It is your day-to-day operations. It’s what we’ve decided we’re going to spend our money on. It’s how we manage our resources that we exchange pieces of our single most important nonrenewable resources in order to get. So, budgets are a statement of values. They’re a conversation. They’re a plan. They’re not a statement of restrictions. They’re not having to engage monk mode. They’re not taking all of this and throwing it out the window. It’s extremely important that we start to understand how our money is coming into us and where our money is going out from us. These things together, ladies and gentlemen, are what constitutes the foundation on which you are building your vision.

[00:05:12] So, if you’re listening to this and you’re saying to yourself, okay, yes. I am totally bought in. It is time for me to make a budget. I want to have this conversation. I want to have a statement of values and I want to have a plan. Dylan, what’s my first step? And I’m gonna share with you on today’s episode the first step that I take a lot of my clients through. See, whenever we’re in a situation, even if you feel lost, well, if you’re lost, then congratulations. You’re at step one of an adventure. This is the place where we actually start and the first thing we need to do is orientate ourselves to our current reality. Because if we’re not dealing with that reality, then we’re not going to be effective in trying to build what we’re trying to build. So, the first question you have to ask yourself is: What’s the current state? And how do we know what that current state is? Well, you would have to actually look at what your income and what your expenses are. When was the last time that you actually looked at those two things? And I’m not talking about like, yeah, I opened my bank account and I looked in there and yeah, looks about right. Like no. Like when was the last time you actually sat down with your pay stub and looked at it? Really looked at it. What are the deductions? Why are the deductions? Where are those deductions going? Have you ever looked at it and, you know, actually calculated? Are they calculating your taxes correctly? Are you is the money actually going to a 401(k)? What are all these other lines that are in here? Like really look at your pay stub and really ask yourself what this pay stub actually is telling you. And then, when was the last time you actually did the same thing with your expenses? Like when was the last time you sat down with all your credit card statements and went line by line asking yourself: what is this and why did I do that? And actually start having that conversation. Same with your bank statements. You know, printing out your bank statement and going line by line. Okay, well, that’s the power utility and then there’s this other withdraw. Oh, there’s my paycheck coming in. And actually going through it and really, truly looking at it. Looking at this is hard, ladies and gentlemen. Like it’s not easy. It’s confronting. In my coaching practice, this is one of the places that we start after we’ve created a financial vision so we know what we’re building. We are now gonna deal with reality so we’re gonna sit down.

[00:07:36] And for couples, I give them this task and what I say to them is they need to sit down and do it together. And you’d be shocked at the different conversations we’ve had over after a couple has sat down and gone through their finances. ‘Cause one of the first questions I ask them is: How was that for you? What did you learn about yourself and about your partner that maybe you didn’t know before? And I’ve heard everything from, my God, I’m doing exactly what my ex-wife wanted me to do to I didn’t know that we actually spent money on X, Y, and Z to I’m really angry at my partner. I have heard it all or at least I like to kid myself that I’ve heard it all. And I’ve also seen a lot of couples start actually having conversations about where did this dollar go? Well, that was the coffee I bought. Well, you shouldn’t be having that coffee and them saying but that makes me effective. I’m able to show up for you. And they’re now learning about each other in a very open and truthful way because the numbers aren’t gonna lie to them. The numbers are what the numbers are but now, they’re having to see their partner in this very open and vulnerable state because it’s reflected in their spending. And coffee gets picked on a lot because it’s something that so many of us engage in and there’s this great way to just like judge people, like if only you didn’t drink that coffee, you could afford that multimillion-dollar McMansion down the street. Like that’s bullshit. It’s comforting to have this idea that like, oh, somehow we could just do this one simple trick. Accountants hate it, right? The whole clickbait articles around it. But the reality here is is that that’s probably a cup of joy that you have in the morning that gets you going and you can show up. This is why the budget is not a statement of restrictions. It’s a statement of values. Because the correct answer here is if that cup of coffee is what allows you to greet the day with a smile on your face and a song in your heart and you are more effective at every single arena in your life because you had your fucking latte, then by God, go have your fucking latte. Because now, you’re making a choice in line with your values because what you want to do is show up effectively in every aspect of your life. That’s part of your values and the budget enables that conversation, particularly with couples.

[00:10:01] And so, in Fiscally Savage, when we are working in a coaching relationship, we actually have a tool to help us with this. It’s called the spending analyzer. This is a spreadsheet that I put together. You can go to fiscallysavage.com/tools and download it. I give it away for free and in my coaching practice, I work with this very tool with individuals and couples to help jumpstart the conversation and ground that conversation, not in what we hope we’re going to spend but what we’re actually spending. And so, when you have the spending analyzer, you’re going to start by gathering all of your bank statements and credit card statements together in one place. And once you have that — and if you’re with a partner, this is a good exercise to do with that person — you’re going to sit down with them and you’re gonna actually go through those bank statements. Same with the credit card statements. Take your time for maybe the first time in your entire adult life to list out all of your income and expenses, to actually have the conversation with your partner and with yourself as to why are we spending the money here and not in an accusatory way but from a place of curiosity.

[00:11:18] And this is one of these things when you’re working with the spending analyzer that I do need to have a side note. So, here’s our side note. The side note is there’s a difference between credit card payments and credit card interest. So, when you’re working with a spending analyzer, understand that your month-to-month spending is not your credit card payment. It’s what you put on the credit card plus interest should equal your payment if you’re paying off your credit cards every single month. So, if you do download the tool, just know that there’s a potential to double count if you include the payment plus what you put on the credit card in the first place.

[00:11:55] Now, once you start working with the spending analyzer, you need a minimum of one month and it’d be better if you have three because then you have a trend. Because the goal is to actually get a trend of your actual spending. Because it turns out, ladies and gentlemen, when people first make a budget, one of the biggest pitfalls that they have is they use fictitious numbers. So, for example, one of the numbers that I used to use when, you know, it was just my wife, myself, and my oldest daughter, I used to say, well, we’re gonna hold groceries to $400 a month. That was not a realistic number like ever. It’s especially not a realistic number if you want to eat high-quality food, which is what I do in fact want to be feeding to my kids. So, the question then isn’t “What do I wish I was spending?” The question is “What do I actually need to be spending and what have I actually been spending?” Without sitting down to actually look at it, there’s really no way to answer. So, if you’re trying to make a budget and stick to it, you’re gonna be ending up in this situation where you’re constantly gonna be off and it’s like playing a game of whack-a-mole. You’re not actually gonna be getting anywhere. So, the spending analyzer’s job is to actually help you figure out what you’re actually spending so when you first make a budget, it can be based in reality. And don’t get me wrong. This exercise is both tedious and time-consuming and the good news is you only have to do it once. Because the end goal is to actually be able to create a budget and have that statement of values to be able to have that conversation to be able to create a plan with actual numbers to work with that reflect your actual reality. And one of the things that’s interesting when, you know, I’m working with couples and working with individuals to help them create budgets, get a handle on their finances, they very frequently will be having these conversations around, well, I think we should be doing percentages or, well, I think we should be doing X amount. And that’s not really a very grounded way to actually address your finances. Why? Because those percentages you read online, they’re arbitrary fucking numbers typically created by people who are disastrously out of touch with the audience that they’re attempting to talk to. When we actually look at what our actual numbers are and we look at it and we say, well, we’re supposed to only be spending 30% of our income on housing, we’re spending 40%. What are you gonna do? Are you actually gonna like pull stakes and go move? Or is it time to sit there and say, no, I actually like where we live. So, 40% of my income, that’s reasonable to me because my home is really fucking important to me and maybe that’s okay. If you’re looking at it and you’re saying, well, I spend 5% of my monthly income on coffee from a Seattle-based coffee chain, well, my brother and sister in caffeine, if you are actually showing up better in every aspect of your life by going and getting that cup of coffee from a Seattle-based coffee chain, then God bless you and pass the creamer because that is something that’s within your values and that’s okay. This is where the conversation really starts. What are we doing and why are we doing it? Where are we going and why do we want to get there? And after we get there, well, what’s our life gonna be looking like?

[00:15:23] This type of episode is a little bit more dry than what I normally put out and I get that because at the end of the day, good financial practices are not sexy and they’re not exciting. They’re just worth it. Because at the end of the day, you’re gonna sleep better, you’re going to show up better, you’re gonna be more sovereign in every single aspect of your life. And I know exactly what this process feels like because when I was sitting there asking myself why I couldn’t make this work and realizing that I didn’t start in the right place, I knew in that moment it was time to truly do the investigative work to figure out where my money went. And so, I did exactly this practice. I got all my bank statements and my credit card statements out and I calculated down to how much am I spending on groceries, how much am I spending on gas, how much am I spending on insurance and rent and all the other things. I created the categories. I sat down with my wife and we had the conversation and we started to create a budget with real numbers. And at the end of the next month, we came the closest that we had ever come before to hitting our budgetary goals.

[00:16:41] And I wanna leave you, ladies and gentlemen, with this one observation from that time. Budgets are a statement of values. And when I sat down with my wife and we looked over the budget and we looked over what became the spending analyzer, one of the things we realized very quickly was we spent a lot of money on childcare for our daughter. And when we looked at that, I remember turning to my wife and I had the conversation. I said, Honey, it’s a lot of money. She looked right back at me, looked me square in the eye, and said, it is a lot of money and she’s completely worth it. And that is exactly one of our core values as a couple. And ladies and gentlemen, that was the start of my path to financial sovereignty.

[00:17:36] Outro: Thanks for listening. If you like what we do here, please hit that subscribe button. Leave us a rating and review. And share the content with somebody who would benefit from the message. You can follow us on Instagram, Facebook, and Twitter, all @fiscallysavage. And head over to fiscallysavage.com to get our free tools, suggested reading, and everything else you need to take control of your financial life and live free.