Guilt Is Not Necessary for Budgeting

Bad dog. Too many restaurant meals.

For awhile, I was really active on the forum for the budgeting software I use, You Need a Budget. I got really familiar with the frequently asked questions from new users, one of which essentially boiled down do: "Why doesn't this software punish you enough for overspending?"

That wasn't how people put it, exactly. It was more that their minds were blown by YNAB's stated best practice for overspending: move money into the category to cover the overspend. You are not supposed to leave a giant, red, negative number to remind you of your failure. You're supposed to fix it. 

But people wanted a giant, red, negative number. They wanted to be punished. "If I can just move money to cover the overspend," they worried, "what's to stop me from overspending ALL THE TIME?" People felt the software was being too kind, too cuddly. They wanted to be guilted more. Some people refused to follow the standard practice, and would leave the red numbers anyway just so they would feel more pain every time they logged in.

The thing is, there's a very practical reason to cover the overspends, and it has nothing to do with cuddles. When you move money to a category you overspent, you have to move it from somewhere. You are essentially saying, "Because I spent $20 more than I thought on restaurants, I have to spend $20 less than I thought on clothes." You are facing the reality of the post-overspend world and deciding on a course of action that will change your behavior to correct for it. The lack of guilt is just a bonus. 

The truth is that the maximal-guilt method, leaving the overspend angry and red and unsolved, actually makes the problem worse. You haven't changed your other categories, so you're on the same spending plan as before, just with an unsolved deficit. As longtime YNABers would say, "You've introduced Monopoly money into your budget." 

There's this insidious idea that feeling intense guilt for your failure is more important than actually solving the problems it caused. This idea is demonstrably incorrect, but it feels right. Why is that? Puritanism? I don't know, but it's not just in budgeting that it crops up. Anytime I do anything wrong, I feel like I haven't adequately done my penance unless I've spent some serious time and emotional energy being guilty.

So You've Done Something Wrong…

Here are the steps you might take:

1. Feel guilty - This actually not a step you take but may feel more like something that happens to you.
   
2. Apologize - If your wrong action hurt or inconvenienced someone else, you might want to apologize to that person. Or if you're me, you also apologize to pieces of furniture you bumped into.
   
3. Make amends - Separate from simply saying you're sorry, there may be concrete steps you can take to reverse the consequences of your wrong action, or make up for them. For example, replacing the vase you broke. I'd put updating your budget to cover the overspend in this category.
   
4. Learn from your mistake - Create and enact a plan for the future to prevent the same thing from happening again. You might try to break a bad habit or kick off a good one ("from now on I'll always check my budget on my phone before I make a purchase".)

The problem is that too often, we get hung up on step #1, maybe getting as far as step #2. If we absorb all our energy in those steps, we haven't actually solved the problem! Steps #3 and #4--especially step #4--are much harder but more actually useful. Actually, the steps go in order of usefulness.

Guilt Is The Most Useless

Guilt in itself solves nothing. Guilt is purely useful as an alarm system to let you know that you need to do the other steps. Once you have that information, you can stop being guilty. 

Easier said than done, I know (and you should assume that when I say "you" here, I'm talking to myself.) Excessive guilt feels necessary and productive, but it may actually get in the way of fixing the problem, because after all the moping around, you're too drained or ashamed to work on the solution. There's no such thing as virtue points and you don't get them commensurate with how much guilt you feel. 

Imagine a person who skips step #1. They experience zero feelings of guilt, but still have a sense of right and wrong and desire to do right. They are able to understand, in an emotionally neutral way, that they did something wrong, so they know when to do the other steps. Is the person who only does steps #2-#4 any worse than person who does all the steps? No, they're indistinguishable! And they're certainly doing better than a person who gets hung up on step #1.

Apologizing May Be Necessary, But Is Not Sufficient

If you've hurt someone, it's important to apologize. But, like with guilt, it's possible to do this step to excess. And while apologizing profusely feels polite, it can backfire if you don't make it to steps #3 and #4, making you look insincere in proportion with the intensity of your apology.

This is easier to understand when I think about it from the point of view of the wronged party. If a friend hurts or inconveniences me, a straightforward apology and a sincere promise not to do it again is ideal. It can get uncomfortable to be apologized to repeatedly and dramatically. (I don't care how strong the person's internal feelings of guilt are--if anything, I hope they don't feel too bad, because I like them!) A person who fails to apologize may come off as gruff or even rude, but I'm quick to forgive them if I can see they are doing steps #3 and #4--actually making amends and doing better next time. A person who overapologizes and yet continually commits the same transgression is much, much more problematic and may not stay a close friend for long.

Making Amends Is The First Real Thing

Actions speak louder than words. And if the wrong you committed was just against yourself--like overspending--making amends is the first useful step. It can be a lot harder to do damage control than to just feel and talk about it, but it's much, much more effective.

Still, this step only fixes one instance of one transgression (and might not fix it completely). Prevention is a lot more powerful.

If You Only Do One Thing, Learn

"Don't be sorry, be better" was a gruff teacher's response to apologies, and while it's hard to be better--the hardest step of all--it's the step that makes the most difference in your life and the lives of those around you. If I had to pick between a friend who only did step #1 and a friend who only did step #4, the step #4 person would win every single time. So, it stands to reason that I should prioritize step #4 in my own behavior. 

Changing yourself, really changing for good, is incredibly hard. And that's probably why this step drops off for so many people. Maybe that's why people overdo the other steps, too. They know they're something else they should be doing, but they can't. 

How to change yourself is a whole other topic, but I will say this:

First, don't rely on willpower alone. Set up systems and structures. Ask for help. And be gentle with yourself. You have to change, but you don't have to change in the most difficult and agonizing way possible--the idea that change needs to be painful is really just more penance and martyr complex lingering from step #1. Anyway, the less painful it is, the more effective it will be. Making it easy for yourself is the key to making it last. Recommending reading: Switch: How to Change When Change is Hard by Chip and Dan Heath. 

Second, you don't have to be perfect right away. You just have to try. Even if you fail sometimes, it goes a long way to show that you are making an honest effort and achieving gradual progress. People appreciate that. I appreciate it in myself.

To get back to budgeting, you don't need to use a particular software or method, but take a look at what effect your budget has on you, especially when you blow it. Does it make you feel sad and guilty? Throw out that method. It's not helping you. It's just making you feel bad for no reason (which is probably why budgeting gets such a bad rap.) A good budgeting system helps you with steps #3 and #4:  it guides you toward decisions that make amends for overspends (move money, return purchases, face reality update the budget to plan for these overspends so they're not overspends anymore), and change your behavior in the future (spend less, spend according to your values more). 

In budgeting, as in life, say no to guilt and yes to change.