Create a Budget You Can Actually Stick With!

In order to produce the podcast and keep content up free for you, I work with partners so this post may contain affiliate links. Please read my full disclosure for more info.

How well is your budget working for you? With this crisis, many couples are reviewing and evaluating theirs. 

Some of it is due to the sheer force of changes they've had to deal with – maybe it's a job loss. It could also be a cut in work hours or sadly it can be from dealing directly with battling the coronavirus.

With these changes and shifts, it's understandable that your budget is going to need a redo.

Creating a Budget That Actually Works

While these can be difficult times, it can also be an opportunity to start from scratch so to speak and create a better budget together.

I had a chance to chat with Peter Polson, founder of Tiller Money. In our discussion we get into:

• the biggest misconceptions and mistakes couples make with their budgets
• how to decide how high level or into the weeds you want to go with your numbers
• finding ways to take care of essential bills, get some financial stability, and yes enjoy your money

You can watch the video right here or scroll down to get an edited transcript!

Make a Better Budget Together

Elle Martinez: Peter, thank you so much for joining me this afternoon – figuring out how to make your budget work for you.

Peter Polson: Thanks for having me on your podcast. No, it's a topic dear to my heart and everyone's heart. Your total money. And it's something we think a lot about. So loved talking about it.

Elle Martinez: Yeah. And I know you guys have this philosophy of your money is important because your life is more important. And I think a lot of people can appreciate that because now more than ever, we're seeing like our finances are reflecting our lives.

And if we want to, you know, either maintain a certain lifestyle or adjust or change, it really does come down to, are your finances align towards your situation and your goals?

What's the Point of Your Budget?

Elle Martinez: So I kind of want to jump in with the first thing – people have a misconception, the idea of a budget like they feel like it's a straight jacket or they feel like it's a restriction.

Everybody has a different philosophy of what a budget is since you guys are running, you know, this engine and helping couples take care of this. What would you say the budget is now?

Peter Polson: Great question. And I would just go back, you know, the whole, you know, money matters because life matters more, I think, money, What we are seeing right now is that money can be one of those things.

That is something that's stressful, but that is something that weighs on us when we're uncertain about it and when we can feel more comfortable with it, when we it's hard to feel control right now. But as we feel a little bit more control, it allows us to then focus on everything else that is more important – our family, our work, friends, and our life.

And so… What is a budget? You know, there are many, many ways to do things. But one at an age old tenant is if you want to improve something, you can't do that without tracking and getting where you are.

And the budget is simply a plan that says, here's what I think I'm going to make over this next period of time. A month is a great period to think about a budget because a lot of our expenses come in monthly cycles. So a budget is simply here's what I think I'm going to make. Here's what I think I'm on to spend.

And then tracking and sitting. How do I compare? Did I actually make that? And did I actually spend that? And that's all a budget is. It doesn't need to be any more complicated than that. And also, life has its curveballs.

No one thought of the situation we're in right now. [A lot] of us have lost some or all of our incomes. It's affected us all. It's also affected how we spend money. And so no one's budget had the well, here's the pandemic scenario in it. And that's OK.

Because the whole part of a budget is it's life. And so let's be very flexible with it. But it's a place where we can check in and say, here's what I thought I was going to spend and make. Here's what I'm actually spending and making. And then let's take it into the next month and the month after. With the goal being that we can live within our means.

Actual Spending Match Your Budget?

Elle Martinez: Yeah. And I think that was really interesting what you're pointing out about not just making the budget, but then checking to see if our spending is aligned.

And, you know, you and I have been talking about this, you know, for a while in the personal finance debate space. And it's always important to track your numbers.

I think many families and many couples kind of got a real-life scenario, whether they have a formal budget or not, where they say, wait a minute, I didn't realize I was spending maybe this much eating out or for the commute with the gasoline, you know.

It felt real because, you know, if they weren't spending that money, that was money now. And they account.

And of course, there were other expenses that went up for us. It was a grocery store. Now, you know, at home more. Yes. So, you know, a budget does reflect that and can be so powerful and helpful.

3 Key Goals for a Budget

I know there are so many different ways you can slice it. But the philosophy I like about the 50/20/30 rule is if you look at a budget, at its basic goals, you want to:

• take care of those essential bills
• give yourself some financial stability, hopefully, you know, build up some wealth for your family or next generation
• actually enjoy it now

I see a lot of conflicts with couples about that, where one spouse is going towards this aspect, which is maybe long term and the other is more like, well, we're making this money, let's enjoy it.

So it can be tricky, right. It can be hard to find a budget that fits.

Why Tracking Your Money Matters

Elle Martinez: So, you know, a lot of families now are directly affected or indirectly affected and their budgets have shifted.nWhat can they do, this kind of visit and a learning opportunity or an opportunity to sit down and maybe retool that budget?

Do you have any tips on how a couple can kind of look at their numbers and make their budget fit them in their goals?

Peter Polson: Sure, it's a good question. You know, the 50, 30, 20 is a great framework because it gives us a place to start. Ultimately, I think everyone comes to a number that fits their situation.

And it might be different than that. It might be 30, 30, 30, or it might be 80, 90 in one or more.

It really. And so going back. Also, there's no judgment here. It's just about let's let's dive into our numbers. So where's the place to start?

What's interesting is that many people, actually most people and this was sort of a shocker, as when in the early days of Tiller Money, when I started throwing money, talking to people about their finances and realizing how many of us had no idea of where our money went. And so true.

If you actually were to ask someone, walk down the street and ask some of the social distance, brought my chart and show me where your money is allocated, your expenses were allocated specifically.

Most people are during the headlights and they drop blink. And so if that's you, that's OK. That's actually a common situation to be in.

Technology makes it so easy to spend it, make it with a click and a swipe. Technology has made it possible to spend without keeping in touch. And so that's OK. You might not have a cent. So a good place to start is to actually look at a month of expense.

Maybe you focus on this month. If you're partway through the month and just say, OK, let's start here and and maybe we can sketch out what we think we're going to be spending this month with, then let's actually we know we're gonna get that wrong. So let's actually just track it.

So we have our rent or mortgage. We have groceries. That's a moving target, as you said right now, because we're all eating in more. Let's actually track this month and see where we spend our money. And that gives us a really good baseline.

What's interesting is that tracking is literally half the battle, because as soon as we start tracking, we're more aware and we're more in the numbers and all of a sudden we're that pie chart starts to fill it in in our head even when we're not through the month.

And so we can start to acknowledge, oh, yeah, we've already been spending a lot of discretionary or maybe we haven't been spending a lot of discretionary. And we probably have a little wiggle room. But, you know, you're going to be all you're just going to be in the know you're going to be much more immersed in the numbers and in a better position to have an intuitive feel. And then as the month goes, you'll actually have a very detailed analytical assessment of the month. And that is a really, really good place to start.

Let's track all of our expenses for a month, and you can do it on a sheet of paper, obviously here to our money. We're big proponents of the spreadsheet, but the tool doesn't matter. Do it in a place that makes sense to you and do it for a month. That's going to give you a great baseline.

Now, within the next month, then you can say, OK, we know last month we spent this, this, this and this now. Now we have a firm baseline. And this is going into the new month. We think it will be a little higher here, a little lower there.

Last month, maybe we spent above our means or maybe we spent well within our means. And so here's how we want to adjust. And you'll have an informed baseline to start.

Build Your Budget a Piece at a Time

Elle Martinez: Yeah. I love that. I know how hard it is. Sometimes when I chat with people in the community, we have a Facebook group and they feel like they have to do everything at once.

And I agree with you completely. Just tracking the numbers is so powerful because of the awareness that you have. Because we all have. No one is like a perfect robot where they stick 100 percent to the plan. And that's not necessarily a bad thing.

If you kind of budget that in with your you're spending have a little bit of buffer. But we all have, like, these little small kind of expenses that add up and kind of surprise us. But if you can one track that is a huge win and then something I've noticed that's helped couples is and I like your phrase, a judgment free is sit down together.

It can be a separate night and review the spending. Was that a good expense? And it's not, again, judging like eating out. This was worth it. You know, we've eat out once, once a week, like supporting a local business.

So that's more than we're usually spending for, like a family dinner. But really, it was worth it. Right. And then other expenses. You might say we can cut back on or we can redirect. But that first part absolutely necessary is like tracking us the numbers, so.

How Couples Can Tackle Their Budget Together

Peter Polson: Yeah. Yeah. I'm just going to dive in on a couple of points. Well said and I, I think when you think about the stress and you had alluded to some of the stress, I think there's some of the stress.

There are two kinds of stress I see with couples. One kind of a stress is purely based on misinformation. And that's really easy in a relationship because often one of the couples is paying the bills. Maybe they're paying the bills, a bill, maybe they're there. Maybe they're also doing have started some of this tracking, but. Maybe not.

And the other might not be paying the bills and might be out of the loop. And then it's really hard to calibrate because one might feel, gosh, your aunt was spending a lot on shoes or gosh, don't you think we're spending a lot on this or that? And so having the numbers in one place where we're both partners can look at them. Let's create some alignment because now it's not based on misinformation.

Now, the second step is your goals may diverge. One of you may be wanting to save for a vacation and the other may simply be wanting to pay down that credit card bill or make an improvement the House.

And so where the goals diverge, if you've tackled the misinformation because you have the shared sheet where you can look at your expenses together, then you can start to come together on the goals. And a lot of that is is talking and even acknowledging the goals. Like it's really important for me to make this improvement to the House.

And I would say in our household, my wife, Shana, like she's often the one who's saying it's really important to me for us to do this trip as a family. And yeah. And it's. And rather than having it be this back of a sort of this tension that lies and just just outside of the conversation when we actually can hear it, when I hear her say that, I'm like, you know, I actually love that time when we can take a vacation and we're out together as a as a foursome and let's make that happen. And so it gets vocalize. We start to calibrate.

It's not that our goals exactly match each other, but we can we start talking about the goals. And so, yeah, that's, you know, tackle the misinformation, start having a conversation about goals. And again, that you may not have the same goals, but merely talking about them goals, you'll start to empathize for each other's goals. And you can start to creatively come up with ideas for how you can both accommodate those goals. And if you can address both of those, you're on a much firmer footing as a couple. Than you were before this when you were blind. And just wondering how we're going to make this work.

Elle Martinez: Yeah. I don't think that gets discussed enough, especially when you're in a relationship and you're both having your input. Is how helpful it is to have that clarity, to have the numbers in front of you where you might think, oh my, this vacation and fixing up the house, maybe it's updating the bathroom, the kitchen, bedroom, something we can't do both. But when you have the numbers in front of you, you're thinking we can we're going to have the spaces out or how we're going to do this. Now, you're working together as a team. Right. Because you have that information in front of you, because kind of circling back to this budget, really.

It should be reflective of what's going on in your life and what matters to you and kind of helping you get to where you want to go based on where you are now.

Peter Polson: That's right. Your budget is a way to manifest your priorities and and your goals are part of your priorities. And and the budget is a way to help make them happen.

And if you have a budget, your odds of actually getting there and achieving them go up vastly because you're coming up with a methodical way to do it, which is the same.

If you know, if you're you want to run a marathon or if you are, then then you're much better off saying, okay, I'm going to try to run a mile tomorrow and then next month I'm going to run three miles and then I'm going to build up and build up and and you'll know along the way. Or am I on track or not. And and if you don't track how much you drop to run, it's a little harder to know if you're actually going to get to Marathon because the marathon requires getting out there and running a specific distance.

Yeah, exactly. Now, at least we talked about kind of like high level. You know what. Yes. But you can do it in empowering. But, you know, when you're actually putting pen to the paper or a spreadsheet, usually out, there's so many ways you can deal budget.

Now, you kind of get to see, you know, what kind of templates people use. As the CEO and founder [of Tiller] what you see and then kind of get your personal take about how you budget as a family to?

Peter Polson: Yeah, great. It is. It is, so it's it's as varied as you as you might imagine.

And and what I have come to believe makes for an effective budget is coming up with a workflow that reflects how you think, how you work and your goals. And. And an analogy is if we're both listening to a talk and we're taking notes. My notes on my notebook are going to look different than yours because my goals are different. My brain works differently. I'm trying to get something different out of it. And so embrace that flexibility. Right. Yours is gonna look different than mine at two to pick a few examples.

One of our customers, we don't. As a privacy first solution, we don't see our customers data. We don't see their budgets. Occasionally, customers are really excited and they want to share it with us. And so they'll take a screenshot or they'll consider their spreadsheet with us. Or they'll just talk about it. And it's always fun to hear what they do.

So one area that's really interesting which may resonate with anyone who's tried this before is there's a lot of variance around how people think about categories.

And I'll pick one extreme, which is an extreme. There's some people who are like, you know what? Let's not get lost in the details of categories. Let's have our discretionary and our non-discretionary living in two categories. Yeah. And let's put everything into those categories and let's not try to get into the weeds on 30 or 100 different categories. Let's just. It's either discretionary.

We could have we could make this purchase or not. It's you know, it's it's totally elective or had to do this. Groceries. Gas for the car. Maybe for us. That's a have to do. And and let's just look at it that way. So at the category level, I think there's some really interesting approaches people have taken. But another actually one of our team members in the way he and his family budget, which I really like, is they. Which is, again, a very different approach than the kind of standard approach is that they.

Then every month they have a clean sheet and they look at and may see their transactions come in from the fields until the money. And as the as that month accumulates, they they sort of budget minute managed work with that data in that month. And then wipe it out. Basically make a copy of that. Throw it into another. And then the next month they start with a new sheet.

It's sort of a clean slate, which also gives you the flexibility like this month. We may slice things this way next month. We may do it differently. Yeah. That kind of report, the analysis, the categories used can vary month to month because each month is a new sheet and it's sort of like it's it's about to be June. Know it's a new sheet of paper. And and I think there again, I think that's a really interesting approach.

We have we have our own money. We have our foundation template, which is a pretty sort of middle of the road approach to budgeting and and provides a place for people to start also because it's built in a Google sheet spreadsheet, gives people a lot of flexibility. It is really interesting to see on the directions people take. And and I think that's you got it. Got to make it work for you and own it and and make it make it yours. And that will make it stick.

Elle Martinez: Yeah. Yeah, absolutely. A budget. I know a lot of people. One of the mistakes and we made this too when we first started budget, we went with a template and we in our minds thought we were going to follow this.

Exactly. But it really didn't reflect we were in our spending and actually just cause more frustration because whoever created that and that budget template was fine for them. And it didn't really kind of like we've been talking about over and over again priorities that we had personally. So I love how you talk about that. And then also. It's good to optimize your budget. I know that, you know, that's thrown around a lot and trying to get everything in check.

I do want to spend less than you earn. But realistically and actually to enjoy life, you know, there's going to be certain things that you spend money on that bring you some kind of joy. It's some kind of level. And I know I have mine. It's books. That's like one of my things or, you know, weekend trips. How about you? How do you find that balance of spending and not feeling guilty about it? E

Peter Polson: Yeah. No, that's it. That's a good question. And especially right now. Right. I think when I think about. The best spending we've done that has given us tremendous joy comes to the top of my mind is a new bike we just bought for our 10 year old. And we're doing a lot of biking as a family. And he outgrew so his his bike became our seven year old's bike. And he gotten a new bike. And we've put miles on it this month. It's about a month old now. And I and he's been on his own. We've been out on family rides in it. And so that's been an incredible win.

I think, you know, a good book. I'm reading Deep Work by Cal Newport right now, which I am real.

Elle Martinez: I love. Yeah.

Peter Polson: Yeah. Yeah. And and so a good book.As I said, that's one way I enjoy spending money.

And you know, the other thing I'd say right now is there's some there's some real big needs out there.

And we one of the things we've been talking about in our family there, there's a statistic that came out recently that's just sobering. But one in five children under twelve are not getting enough to eat right now. And we just made a gift as a family to The Cove, which is the local food bank here.

But I think that's that's really meaningful for us.

And it's also something that gives us some small sense of of trying to contribute in areas where we can at a time that's really hurting for a lot of people.

So when I think about where we spent money this month, those are those are those are stories that come to mind.

Elle Martinez: Yeah, I know. And those are those are good points because I think that's also where people think a budget is only about saving and investing and paying the bills. But when you can share and give when you include that. I mean, that is helping others also. You get a joy out of that as well. Again, it's where are your priorities at? Where can you help out? So I think that's fantastic.

And also that you guys are having a discussion as a family, introducing your kids to that, not just budgets being a number, but budgets as being a tool to help you kind of build a life that you want to get closer. One step closer there. Practically speaking, yes. Yeah. I know we can talk about this for hours. Is personal with you, Peter. I know. But this is this is really good stuff.

But I do want to mention before we wrap up about, one of the things I love about Tiller is I get couples who are kind of like we've mentioned, they have it like a unique circumstance or they've tried different budgets and it doesn't fit them. But with Tiller, you can literally customize your budget to reflect, you know, you have templates.

I saw that. But it's fantastic because you can take all that data from the bank, put in your Google sheet, and literally that Google sheet can be however you want to break up your budget. So if anybody wants to, you know, try tell her out and sign up for it. Where can they find you guys? And you guys also have a fantastic community, by the way.

Yeah. Thank you. And, you know, and I'll just add and thanks for that generous plug there, that one of the things that's for you and for your audience.

One of the things that's especially exciting and helpful is that the collaboration features we're built on Google Sheets. Yeah, we support itself as well. But the the Google Sheets collaboration features are awesome in our family.

We have a Google sheet for our family expenses that I share with my wife. I mean, most of the time she can go in at any time to check, hey, did this bill get paid or how are we spending on this category? So the collaboration is awesome. She also, as an author and speaker, we have sort of her business and a whole separate sheet. And I just I'm guessing that's sort of a scenario that's common for many of your audience, where there's household income, maybe there's some freelance income.

You can have different spreadsheets for those those different areas. And it makes it really easy to track all of that can be found. So tell tilted money you ask, all your money can be found. TillerHQ is our Web site.

If you're interested, you can sign up. It's free for 30 days, cancel any time and it's a you'll find it all there.

We also have a really helpful customer success team then is responsive and can give you help as you go. As you said, we have a community where people share and ask and it's a good place to see some of the other things people have built with their children money, parents, spreadsheets. So to our HQ dot com.

Elle Martinez: Yeah, guys. And I will say, like, I've dropped in time to time. That is a very collaborative community. I love it. Like everyone sharing what what's working for them, what's not and tools and everything. So if anyone, even if they're new to budgets, what I like about that is they can usually find someone that can help them out or show them what's worked for them and kind of get inspired by that. But thank you so much, Peter, for joining me. I appreciate it. I hope you have a wonderful afternoon.

Peter Polson: Thank you. It's so good to be on the show. Thank you.