The Learning Curve Chronicles: You Need a Budget!
- 9 minutes ago
- 6 min read
In this monthly blog series, Circles USA Chief Learning Officer Kris Alexander shares insights on her learning journey, sources of inspiration, and what excites her about her work. The column offers a behind-the-scenes perspective on the learning curve that drives growth and progress at CUSA as we continually deepen and enhance our mission of building community to end poverty.
Let’s talk about budgeting! I know, it’s probably your favorite topic, right?
*Note: This is not a paid endorsement and Circles USA has no affiliate relationship with YNAB.
A lot of times, middle- and upper-income individuals believe that people in poverty are just bad at budgeting. I often hear things like, “If they just set and kept to a budget, they would be able to…X”. Get out of poverty, go to school, get a better job, afford basic needs, etc. This myth is one that Circles USA immediately works to bust. Not only does research and data show this isn’t accurate; but the time I’ve spent with people in poverty has created, for me, a deeper understanding of their reality… and their brilliance.
When I was experiencing poverty myself, I knew down to the penny how much money I had at any given moment. I knew where my money needed to go, when my bills were due, how much they were, and how much I needed to miraculously find to keep my son and me afloat for just a few more days or weeks. And because I didn’t have the time to maintain a formal budget while working several jobs and raising a child as a single mom, it was all in my head. (How, 24-year-old Kris, how?)
As my financial situation has improved, I have less of a handle on my day-to-day finances. Even though I now use a budgeting tool, I rarely know exactly how much our bills are or when we pay them through autopay. I simply categorize them when they come through. If you asked me how much money I have at this moment, I could give you an approximation; but if you needed an exact amount without my budgeting app, we would both be out of luck.
I say all of this to emphasize that budgeting is not the solution to poverty. The reality is that no amount of budgeting will solve a lack of resources. If I am budgeting with not enough, the budget will never make it enough. Budgeting is a tool that can support personal discernment while decreasing shame, but only if it is used with compassion and openness rather than being wielded as evidence of failure.
The budgeting tool we use in my household is YNAB (You Need a Budget.) I am low-key obsessed. Not only do I use the app, I have also watched a ton of their videos and gone to their Q&As. And I recently read the book You Need a Budget by Jesse Mecham, the founder and developer of YNAB*.
The YNAB method focuses on personal financial priorities. Instead of telling you where your money “should” be going, Jesse explains that everyone’s money is personal to them, and we get to decide what we spend our money on. Money is a tool to live our best lives.
With this in mind, he recommends that you budget for your priorities. When the money is available and you’ve met your financial commitments, you can spend your money without financial guilt. If collecting Funko Pops! figurines is your jam, do it! Love expensive vacations? I love that journey for you! Want to save for a cushy retirement? Great! There are no inherently “right” or “wrong” ways to spend money, but it is important to understand your priorities and then set up a budget that allows you to work towards them.
There are four rules of budgeting according to YNAB:
Give every dollar a job. Instead of leaving nebulous funds just hanging out unaccounted-for in your budget, calling you to the endcap of your favorite store, put that money somewhere in alignment with your priorities. That way, you’ll be reminded of your goals when you want to buy that new gadget that you didn’t know existed 5 minutes ago but now can’t live without.
Embrace your true expenses. We tend to budget assuming that we will suddenly be a whole different person. For example, I stop for coffee three times a week, but I definitely don’t need to budget that because I just won’t do it anymore! (Ha!) Just put the reality of your current financial landscape in your budget; you can always change your habits later. In fact, having a clear picture of where your money goes actually makes it easier to shift your behaviors to align with your priorities.
Roll with the punches. Another pitfall of budgeting is being too rigid with little wiggle room. As soon as something unexpected happens, from the trivial to the serious (like a fourth stop for coffee or the HVAC system dying in August), the whole budget goes flying out the window. We give up. Our budget has to be as flexible as life is unexpected. If we have a budget that is flexible, we can move money around to accommodate those “oh no!” moments. Perhaps the latest Funko Pop! you’ve been eyeing needs to wait another month, but you’ll be able to replace all four tires after you accidentally drove through a construction site… without having to eat ramen until your next paycheck.
Age your money. This was my biggest “a-ha!” when I started. Saving is this big important thing that everyone talks about and says we need. But for me, trying to put money into a random account that I don’t touch was not working. Instead, YNAB focuses on getting a month ahead. When all your expenses are covered for August and you have extra money, put it towards September’s budget. Then, in September, when you need less of your new paycheck for utilities, more can go to October’s bills. Eventually you are no longer living paycheck-to-paycheck, but have funded your entire next month before it even starts! Now that is something I can get behind.
These rules won’t solve poverty. They do however, shift budgeting away from a punitive experience, and from trying to stretch non-existent resources to fill real needs. Instead, budgeting becomes a values-based activity focused on flexibility, priorities, and real data. It allows anyone (and everyone) to dream about the future and focus on what their money can do for them, rather than nagging at all of the ways that they are falling short with their finances.
All of this is to say, I absolutely recommend the book You Need a Budget, and I also suggest using the YNAB app, especially if your finances are more “just vibes” and less personal values and priorities. You Need a Budget (the budgeting tool, book, and/or system) is one personal tool I have found that increases discernment and decreases
shame, a foundational teaching of The Trauma of Money InstituteTM.
Again, though, YNAB won’t solve the systemic issues that create a lack of resources in the first place, and it absolutely doesn’t replace community. Financial literacy is not the answer to poverty. We need systemic changes led by those who are experiencing the challenges of poverty, and we need to build and activate our communities.
Circles USA does this. We build community around people experiencing poverty first. Community support and social capital are the number one tool that people need to leave poverty behind. Once a transformational community is established, we can then educate individuals and families about the systemic barriers that are keeping them in their current situation. Finally, with that support and understanding, we can change the systems themselves through our Big View work.
Now, we need to talk about scarcity and shame… but let’s save that for next month.
Read more from Kris on her monthly Circles USA blog, The Learning Curve Chronicles:
