My UnBudget: Using Meaningful Categories

Just about everything written about getting on your financial feet starts with “make a budget.” Well, as a brokeaholic, I can tell you that putting my expenses under that much scrutiny for the very first step has pretty much shut me down every time I’ve tried to do this. And believe me, I’ve tried many many times.

Yes, I know there’s software that will help. I have even had a few budget-tracking apps loaded onto my phone at various times. And I have a Mint account. And I’ve used Quicken and Quickbooks before. And I’m solid with excel. And with a pen and paper.

It’s not about the tools. Sometimes it’s not even about knowledge – because I do actually know a lot. Dealing with my brokeaholism has been about dealing with my thinking.

But it is also true that I needed a way to see track what I was spending in a way that made sense to me, and which didn’t shut me down.

I am not interested in keeping money for its own sake, but once I started getting concrete and focusing on what that money would do for me, I was more inclined to keep it. I also learned that my years of generally avoiding thinking about finances left me with one major habit: I often know approximately how much money I have in my main account but not outside of that. While tracking things mentally is clearly not optimum (and can be remarkably ineffective), I decided to use this habit rather than fight it. I re-named my checking account “Daily Living Account” and use it for my regular expenses. And I then diverted money out of it into savings accounts* named after different Meaningful Categories — which then let my mind “forget” about that money so I wouldn’t spend it.

The first Meaningful Category for me for savings was the Emergency Fund. I know eventually I need to have a savings account that I totally leave alone, but the ever-present fear I lived with was not having any kind of fallback. This is most urgent for those of us who don’t have family members we can turn to should we get into a financial crisis due to the sudden loss of a job, getting injured, or something else unexpected. Lots of financial books suggest that your Emergency Fund should be able to cover 3 months’ worth of expenses, but I found that arbitrary and therefore unmotivating. It’s more useful to think about how much money you’ll need to bridge the time until you can get another job or find some kind of income source, and this can range from a month to a year (or more) depending on where you live and what you do and what’s happening in the job market overall. (Note that if you have dependents, you need to add in what it will cost to cover their expenses and emergencies during this period as well.) And while I’m still working on saving up this amount, I’ve found that almost no matter how much I have in there, just knowing that I have the account makes me feel like I’m taking care of myself so I don’t end up in the kinds of crazy stress-panic moments I’ve had in the past.

The next Meaningful Category was the retirement account. Once again, I started with the premise that starting with something now was better than waiting, even if now was small. (Read up on compound interest if you don’t know why this is so.) I have a small amount withdrawn automatically from my bank account every month and added to my retirement account. It really helps me to not have to think about this one again after initially setting it up. (Darren Hardy’s book “The Compound Effect” is a great one on this topic)

I then have several Meaningful Categories that each relate to something that costs a lot that I want to save up for: a trip, a new piece of gear, etc. While I have more than one, I am careful not to have too many – these are big costly things that I know I definitely want or have to plan for, not urges that will go away soon. It’s pretty great to watch those accounts increase, knowing that I’m building towards something. Sometimes I have to siphon money back out of these accounts to cover something (particularly if I didn’t yet have enough in my savings account) and this just reminds me that I’m going to have to wait longer to get that thing. As an added bonus, research has demonstrated that being skilled at delayed gratification can lead to greater life satisfaction as well as more success. So it’s useful in a number of ways to identify what I want and how much it costs and then save up for it slowly.

I also have “Play” as a Meaningful Category. I got this one from “Secrets of the Millionaire Mind.” Basically, Eker points out that if all we focus on is saving, then we’re likely to either rebel at some point and start spending without thinking, or we risk getting crabby and miserly. Eker suggests in addition to creating savings categories that you designate a play category – money that you don’t need to justify, money you can spend on things that feel indulgent or silly or wasteful. The thing that’s cool about it is that you decide in advance how much you can “waste” which helps keep those costs from hitting your daily budget (and send you dipping into overdraft for something frivolous, which for me only heightens my sense of shame). When I want to buy something on impulse, I know have a single place to check (my “Play” savings account) to see if have enough for it, without having to mentally track my upcoming expenses, etc. I’ll write more about this and how I calculate amounts in a future post.

Recently, I added another Meaningful Category that has made a huge difference in my overall attitude about myself and money: Tithing. I noticed one of thing I spent on that I didn’t track very well: money that I donated. If the cause was important to me, I would just contribute, but then would forget to add that into my “regular expenses” because it didn’t fit that category, and sometimes I would give more than I could afford. I didn’t want to stop giving, but I needed to keep track. I read about how people from various religions ranging from Orthodox Jews to Mormons would “tithe” a portion of their earnings to the church. I’m not religious so that particular form doesn’t resonate with me, but I do really like to contribute to the arts and to social causes that matter to me. So I created a “Tithe for Donations” category, and it has been amazing. I was prepared for the added feeling of control over my spending habits that it gave me, but was unprepared for how much it affected my self-perception. I will write about this more in the future, but for now I’ll say that it’s a tremendous difference to have a concrete example of having more than I need and being able to be generous with it.

Summary of Meaningful Categories:

  • Daily Living
  • Retirement
  • Wants/Needs (Big ticket items)
  • Play (aka No Need to Justify)
  • Tithe

This odd kind of “UnBudget” has really helped me keep track of my overall spending without getting so much in the weeds that I mentally shut down and ended up doing nothing at all. As I get more comfortable with these I imagine I’ll do even more on the planning side, but for now this works great as a start.

Do you have systems that work for you? Write about them in the comments field below so we can all learn from each other!


* My bank allows me to create multiple savings accounts and add “nicknames” to each one. It also doesn’t charge for money transfers between accounts. All this makes the process I outline here much easier. Some people prefer to do this via a spreadsheet or budget system instead of creating separate accounts. Doesn’t matter how you do it; it only matters that you choose a system you’ll actually use.


Breaking Through Shame

Possibly the worst things about being a brokeaholic is the shame of it all. I was ashamed because I knew what to do and had all the skills and resources to pull myself out of the same old hole – and still didn’t do it. I was stuck and frustratingly blind to what kept me there.

I was ashamed of being broke and resistant to asking for help. I thought I was able to hide my state and my stress, but friends saw through it. But since I was clearly so uncomfortable with the whole topic, they didn’t know how to bring it up and didn’t feel that they could. So my friends just sat by helplessly as I struggled. I would only turn to them when I was absolutely desperate, and in those moments I felt like an idiot, full of shame and regret, and totally incapable of being the person I wanted to be. They would hold me as gently as possible and offer to help. But since I was in such a stuck place I had a hard time receiving it. I know that I made it hard for them to give because I couldn’t receive (and this is a different kind of issue that I will explore in another post).

Right now I want to share with you a conversation that took my by surprise and shook me out of the deepest layer of shame.

Billy and I were in a class together and just getting to be friends. We decided to go out to dinner and he picked out a place. I hadn’t heard of it but said, “I love trying new places! Sure!”

When the day came, I looked it up online to get the address and saw the website. It was swank. My heart sunk. I looked at the menu and realized that there was no way I could afford this dinner. I could feel my face flush and my stomach tighten. Now (thanks to Brene Brown) I can describe what was happening: I was in a shame spiral. At the time all I knew was: PANIC!

Dinner was only a couple hours away. I had to do something. There was no credit card to drop this onto and I lived only on what I had in my bank account, which wasn’t much.  I could see no options. I had to call Billy and tell him what was going on.

As I dialed, my heart raced and my stomach got even tenser. Billy answered, “Hey sweetie! What’s up?” I stammered out that I had looked at the website and and and… I paused. He asked what was going on. I tried to figure out the least embarrassing way to tell him but everything felt awful. I blurted, “This place isn’t in my budget. I can’t afford that.” He immediately said it was no problem, that he would cover dinner, that he just liked that place and wanted to share it with me.

This is the point when most conversations stop, when an issue is raised and a solution is found. But the class that Billy and I were taking was about communication and learning how to understand another person’s world. He could sense that something was still wrong, that there was a deeper cut to this for me. He said, “What did you think I was going to say?”

I told him that I was deeply embarrassed that I couldn’t afford it and scared to reveal that to him. I thought he would think less of me for not having my financial world together, that I felt unqualified to be an adult, no matter how many other things I did well and have handled. I said it made me feel like a total f**k up and was sure he would judge me harshly once he knew.

In the gentlest and most loving of voices, Billy asked me, “Do you want to know what I actually thought?” I felt tears rise and I choked out a yes.

“I was so impressed that you’d call and tell me that. I know so many people who don’t have money but try to hide it and act like they do. They end up overspending and stressed out and it makes me crazy. The fact that you told me this wasn’t in your budget let me know that you’re trying to take care of your finances. I’m so happy that you told me. And it’s not a big deal to me. Actually, it makes me proud of you.”

As he spoke the tears turned into a full-bore cry. I sat in my car on the side of the road and let his words sink in. I could feel that I really was trying to tackle this problem of mine. Even if I wasn’t out of my hole, I was at least trying – possibly for the first time.

Looking through his eyes, I saw myself in a different way. I wasn’t pathetic and incompetent. I was struggling and in that struggle I saw a kind of strength. Without strength, there’s no struggle; there’s only giving up.

I also saw that I was going to have to have more of these painful conversations, that it was necessary to reveal what I was actually experiencing in order to get out of the grip of my money shame. I didn’t look forward to that, but I made a resolution not to run away from it any more because now I could see that some part of me was strong enough to confront this.

Before that conversation, I was unable to recognize the shame that I was living with. Without confronting that shame, I would never have been able to see the fear and stories that polluted my financial mindset. This was the first necessary step to quitting being a brokeaholic.

My hope is that by sharing my story someone else won’t feel so alone and they’ll be able to get out from under the grip of money shame. It makes us feel like less than, filled with fear people will find out and then turn away from us. But if we can talk about it, we can get through this and make it end.

I give thanks to Billy – and to myself – for sticking it out through that dark place. There’s light on the other side of that rock. I know, I’ve seen it.

“True Art” & “Selling Out”

This whole brokeaholic thing started because I was taking a look at some of the crazy ways I think about money stemming directly from being a creative.

I’m not a full-time artist. I would say I never have been, but I suppose that depends on your definition of “artist.” I say I’m a creative. I have spent most of my life doing creative jobs, and I sometimes make art on the side. Right there you see that I’m making a distinction between “true” art and “what I do for money.” This is part of the problem.

I remember my dad once saying to me in a voice filled with regret, “It’s too bad that the world will never pay you for what you do.” I also heard comments from other people about how I was “never going to make any money” and “art doesn’t pay.” I read about great artists and other creatives who died penniless, ranging from Schubert to van Gogh to Poe to Tesla. The phrase “starving artist” is so common that it’s not even questioned. It seemed a given that since I’m by nature a creative, I was also destined to be broke.

I’m definitely not alone in this. In fact, when I talk about being a brokeaholic, other artists and creatives are the first to start nodding knowingly. It seems that we’re all raised with this, that the separation between doing art and making money are fixed in all of our minds.

But here’s the crazy awful truth that I learned the hard way: I am at my least creative when I’m broke and hungry. Whenever I get stressed about paying rent or realize I have to make whatever is currently in my fridge last until the next time I get paid, there’s no way I have enough mental space to be creative. I can’t invent anything, feel inspiration, or even choose a color if my mind is filled with thoughts of bouncing checks and angry creditors.

It was in one of these desperate moments that I made the decision to be done with being broke. I had a lot of writing to do and I couldn’t think of anything but money. I decided I had to do whatever I needed to do to have enough. I had to stop stressing about money 24/7.

This might be the moment when I could be described as “selling out.” To me, however, it felt a lot more like taking care of myself and doing something in service of my art. What was really in conflict with creativity was being broke.

I started to think about the documentary filmmakers I know who direct commercials so that they don’t have to rely on their documentaries to make money. I thought about a theater lighting designer I met who does lights for theme park rides and lives off that money for the rest of the time he’s working in small regional theaters. I thought about Michelangelo having patrons, the Globe theater selling tickets, and Warhol making fun of all of it.

I also thought about one theatrical artist I worked with who felt he had lost his ability to choose which plays he directed because he had to accept whatever jobs paid him well enough to cover his mortgage – and how he started to get bitter and jaded about his once great passion: directing. I remembered burnt out painters and sculptors who grew tired of struggling and stopped doing work altogether. And I definitely didn’t want to go down that path, because a world in which I no longer get joy from making things is a very dark one.

Now I have a job that pays me well at a company that celebrates my being a creative as well as my organizational skills. And I make stuff on the side. Yes, I have less time to do art, but when I do have time I now have enough mental space to let the creative thoughts flow.

Making art, being creative, inventing something new – all these require that you have enough time and mental openness to let your thoughts wander. And those thoughts get easily crowded out by stress and hunger. It’s easier (happier, better, lighter, freer) when they’re not around.

Some days – many days – I don’t make any art at all. But it’s not for lack of ideas or because I’m in a panic, and for that I’m deeply grateful. Now I just have to deal with my lack of focus… which is a topic I’ll have to write about at another time.

I’m not trying to be rich

There are a lot of books out there about money and personal finance, many of them with really good advice. Most of them have titles about being “rich” or a “millionaire,” like Courage to be Rich (Suze Orman), Secrets of the Millionaire Mind (T. Harv Ecker), Rich Dad, Poor Dad (Robert T. Kiyosaki), Millionaire Next Door (Stanley & Danko). I didn’t resonate with these titles, was embarrassed to be seen reading them.

Oh, I did buy them. And I read them. And I would sometimes start doing what they suggested. But in the end, I didn’t like the premise and I didn’t keep it up.

See, I didn’t want to be rich. Having that as a goal in and of itself just doesn’t inspire me.

The newer books that talk about “financial freedom” are more in line with what I’m interested in: being freed from stress around money. That could mean equally choosing a simpler life that fit comfortably within what I earn now, or finding more ways to make money.

“Financial freedom” also suggests to me the possibility of ending the obsession around money, whether it’s background noise when I’m doing OK, or a loud migraine-causing alarm bell when I’m feeling strapped. The thought of working towards a sense of freedom feels motivating and inspiring. It also points to the idea that much of what I need to do has nothing to do with the logistics of making more or spending less. It has everything to do with how I’m thinking about it. I’ll be posting more in the future about how to defuse old toxic ways of thinking and replace them with new thoughts that lead to a more settled place.

This language thing seems like a little shift, but it’s one that really matters.