Sandra Gilpatrick, CFP ®,CDFA™

Budgeting Challenges: workshop review

            When creating a budget, many fail to consider the emotional and psychological intricacies involved in this process. During a virtual Budgeting Workshop, hosted on October 4, licensed mental health counselor and financial therapist Dasha Tcherniakovskaia helped attendees better understand why budgeting is so emotionally challenging. By engaging in interactive exercises and a sequence of introspective activities, Dasha and I shared some strategies and tactics for easing the emotional strains of budgeting. 

            Foremost, Dasha began the workshop by reviewing the specific parts of the brain that contribute to the challenges associated with making a budget. Money issues or financial problems threaten an individual’s survival and can trigger one’s primal compulsions. When financial burdens activate this survival instinct, the logical portion of the brain structure, known as the prefrontal cortex, “goes offline.” The limbic system and more specifically, the amygdala, which are two lima-bean-sized neural clusters linked to fear and anxiety, assumes control of the brain’s decision-making process. Many often cope with this heightened financial anxiety by avoiding looking at bank accounts or completely halting spending altogether. 

            As Dasha outlined, there are many available solutions to managing this stress related to making a budget in a productive and healthy manner. Further, a sense of mindfulness can ease these financial anxieties and address the ambiguousness of these reactions and beliefs. Looking introspectively, and even into the past, for learned associations from childhood can give reason to one’s financial beliefs. After identifying these beliefs, it is best to rationally weed-out any values that always have negative implications and develop new beliefs. 

            In an interactive exercise, Dasha proposed a prompt: “money in my family growing up meant/was…,” which workshop attendees answered and collectively examined. Many found money was “unpredictable” or even “hidden.” Together, participants considered what they learned as a result of these childhood experiences; some found it was the source of their lack of knowledge on how to manage money. These activities solidified the notion that money beliefs from childhood impact one’s relationship with finances today. With this said, the first steps to overcoming challenges in maintaining a budget are to figure out what those beliefs are and determine which ones are advantageous and those that are restraining.   

            During an engaging activity, Dasha used keywords such as “budgeting,” “spending,” and “deserving” to allow participants the opportunity to understand how everyone’s financial beliefs are different. For a few, the words invoked similar responses yet, more often than not, the phrases resonated diversely with participants. The results of this exercise are indicative of the distinctive values everyone shares and the various avenues individuals might have to navigate to overcome their budgeting challenges. In sum, it is important to reflect on personal experiences and implicit values to tackle financial planning and budgeting. 

Strategies that have helped my clients stay on track with budgeting include putting online items in their “cart” and letting them sit for at least 24 hours. This helps to mute buying impulse and it is possible the act of putting the item in the cart was enough to satisfy the urge. Additionally, this allows for time to contemplate before purchasing and consider how buying the item fits into a budget. During the pandemic most have spent more time online bombarded by advertising. To help fight the urge to impulse spend, try keeping a post-it note on your computer screen with three easy distractions to take you away from needless online spending. My favorite diversion from spending money is to write a letter. This way, I can make others and myself happy in a cost-effective fashion. Actionable items allow for one to shift their emotional impulsivity to a more rational mode of thinking and help in sticking to a budget.

 Special appreciation to my intern, Olivia Kulevich, for taking copious notes to draft this article from my workshop.