How to Budget Your Money, The Rich Woman Way

Why the conventional budgeting advice doesn’t cut it

Budgeting is a hot topic—especially during the holiday season. After all, there’s a lot of shopping that goes on this time of year! Some people spend all year saving up so that they can spend it all on presents for loved ones for the holidays.

Behind the desire to learn more about budgeting is really a desire to manage money better. The problem with most traditional budgeting advice, however, is that it focuses on scarcity rather than on abundance.

Take, for instance, the traditional advice to “live below your means.” What that really means is deny yourself the finer things in life. It is a philosophy to get ahead financially by subtracting things. That doesn’t add up.

Another common piece of advice is to pay all your bills and then save the rest of your money. In translation that means, pay others first and then keep what you can. The problem is there’s rarely anything left to keep!

Early in our relationship, Robert and I came up with a different way to budget our money—a way that seems counterintuitive at first, but that has served us well over many decades.

Pay yourself first

When we had little-to-no-money, we still hired a bookkeeper to help us manage our expenses. Each month, our bookkeeper would come to us with our expenses and give us her advice on how to divvy up what little money we had. While we understood where she was coming from, we did not follow her advice.

Instead, we put money aside for ourselves first and then paid what expenses we could, deferring other payments for as long as possible. Ultimately, we embraced the philosophy of every business owner, including those trying to get money from us. It was our money, and we’d pay it when we wanted to.

Make investing an expense

With the extra money we kept aside each month, we created a portion of our budget that was for investing. We included that investing fund in our expense column. Like any other creditor, we had obligations to that investing expense column, and we chose to make a payment every month. That decision gave us the capital we needed to make some of our very first investments.

Ask how

Most budgeting exercises start with the words, “We can’t afford that.” Rather than embrace this status quo, we set out to embrace these words, “How can we afford that?”

This simple change in language allowed us to expand our thinking when it came to our budget. Rather than just rely on our incoming and existing income streams, we forced ourselves to set income goals and to meet them by thinking creatively about how we could generate more revenue. The result was new product and service offerings we hadn’t previously explored in our business. We were growing both ourselves and our business.

Give back

Our budgeting wasn’t just about us and our gain. It was also about giving back. We understood that when much is entrusted to you, much is also required of you. So, we always made it a priority to give a certain percentage of our income away to causes we cared about—even when it hurt to do so. Much had been invested in us, so we knew we needed to invest much in others as well. This was a non-negotiable, and it’s done wonders to help us grow financially, and as individuals.

As you get ready for a new year ahead, take some time to evaluate how you budget your money. Do you do so as a poor woman or a rich woman? How can you make adjustments this year to change the way you approach money and investing? Putting these simple principles into action will make for a dramatically different new year—one focused on financial freedom. And that’s something worthy of good cheer.

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