Who is Budgeting For? [PODCAST]

Who is budgeting for?

[00:00:00] CFPN: [00:00:00] Hey, this is the Catholic money mastermind podcast. The show where we explore the intersection between faith and finances, you can learn more about our organization and find show notes at catholicfinancialplanners.com. And please note that nothing in this episode should be construed as investment tax or legal advice here is who is budgeting for.

Ben Martinek: [00:00:25] Robert, I think I'm gonna have you kick it off for us. So, you know, only who do you think budgeting is for?

Robert Franer: [00:00:30] Seems to me. And our experience is that budgeting is pretty much for everyone. Certainly for people who are living paycheck to paycheck, they, they really need, say, need a budget. But even our, some of our higher net worth clients find that they need a budget as well. I was talking to a mortgage broker who works down the hall from me and.

There's a fellow here in Cincinnati who owns a $1.5 million house. You know, [00:01:00] there's a few cars and he cannot get alone to save his life because he's leveraged too much and he doesn't have the cash to pay off his loans.

Ben Martinek: [00:01:11] right. So, I mean, you're really kind of getting at that to what defines a person success or wealth ethics, especially in the eyes of wealth accumulation. Isn't, isn't your income, but your capacity to keep that income and, and save it or put it to good uses. And I do think that, you know, budgeting the tool needed to, to help decide how much stays in the house versus how much it goes out in terms of money spent.

Robert Franer: [00:01:34] well, yes, I would certainly say that it's, it's an important tool and it's even more important when you're married. Which many Catholics, you know, looking at budgeting are because if you think, you know, you can spend 90% of your income and your spouse thinks you can spend a hundred percent well, that's when you really need to sit down and not only have a budget, but have a [00:02:00] conversation.

And even before you create your budget,

Andy Flattery: [00:02:02] a hundred percent. And I think to that point, Robert. We could, you know, we could debate about just how much individual households need to be white, knuckling it on every single purchase that they're making. But I think the broad concept that everyone does need a budget holds true, especially here, you know, in 2020 America.

Are you guys familiar with this concept of zombie companies? If you heard this one yet?

Ben Martinek: [00:02:29] No, this is new and he give us some insight.

Andy Flattery: [00:02:32] This is so perfect for the world we live in. Right? There's this this idea right now you've, you've seen some articles about like the number of companies in the S and P 500, for example, that are considered zombie companies. And what that means is. There are like a record number of companies that do not earn enough money to service the debt on their loans.

So in other words, they don't have enough cashflow coming in to actually make the payments on their debt. And so we have zombie companies and my guess [00:03:00] is without looking at the, the research is we have. A large number of zombie households. And so I just liked that image is kind of like the meme for the world that we live in today.

So I think big picture, you know, whether, whether you're, again, white, knuckling it on every single purchase, we all need a budget. It doesn't matter, you know who you are. It's you know, it can impact people in different ways. But I think as a concept, it's, it's a reliable, useful tool for just about everyone.

Ben Martinek: [00:03:29] I love that, Andy. So the new term for living paycheck to paycheck to paycheck is not, not living paycheck to paycheck. It's zombie households. You become a dumpy household. I mean, watch out for the zombie apocalypse upon you. So this is, that's a fascinating idea. I love it.

Robert Franer: [00:03:45] Sure. And, and it, it's not just, you know, our listeners. So I became a financial advisor eight years ago. And it wasn't really until one year ago that I was not the zombie household myself.

[00:04:00] Ben Martinek: [00:03:59] right. I suppose I had a similar con coming to the light, if you will, about. So a few years further back, but five years ago we otherwise didn't utilize a budget and then came across why now, which we'll spend more about here later in the podcast, but a total game changer. We both my wife and I rant and rave about how great it has been to be on a budget and just the difference it's made.

So maybe we're getting a little bit into the why budgeting, but before we do so I feel Andy, like, do you have, do you have a similar story to share of budgeting conversion? If you will.

Andy Flattery: [00:04:30] Oh, a hundred percent. Yeah, a hundred percent. I gosh, I'm 36. So like my kind of coming of age was after the 2008 financial crisis. I. Had got laid off from my very first job. In 2009, I took a job where I was cold calling for a stockbroker for $2,000 a month. And, and a friend gave me the Dave Ramsey, total money makeover book, and you know, like a lot [00:05:00] of people that, that was the game changer.

And I got super excited about it. I was. Every single month tracking my expenses to the dollar. And within a couple of years, I paid off my, all my debt, including my student loans. And, and that was kind of the beginning of the journey. But as you guys know, it's an ongoing thing, right? When you, when you get married, when you have kids that, you know, that's, it's a whole nother set of problems, but I think that that foundation that every young person hopefully gets excited about at some point is huge.

Ben Martinek: [00:05:32] Yeah. So, you know, what's interesting here is all three of us had some bit of a conversion in, in budgeting. So, and yet we were just also talking about homeless people or zombie zombie companies or zombie households. And so you might say it's rampant in the American culture to not budget. So, you know, maybe before we transition into the question of why, why someone should budget why do you guys think people don't budget?

Do you have some thoughts on that? Maybe Robert.

Robert Franer: [00:05:58] Yeah, I think people [00:06:00] don't talk people don't budget because it's very hard to talk about money. You know, I'm a financial advisor, I'm a son of a financial advisor, and I cannot remember ever hearing my parents discuss a purchase. I'm sure they did. You know, they're, they're financially solvent, but it seems like to me, Americans are taught from a young age.

That money is a taboo subject.

Andy Flattery: [00:06:27] a hundred percent the you know, maybe the best kind of analogy that I can make is the analogy to like eating well and exercising, which, which everyone knows are things that you need to do. I do, but you know, a lot of people don't do that, right? Yeah. I think with budgeting it's even, it's even worse because at least, you know, sometimes, especially like in the Instagram age, if you work out, you know, you can, you can put the shirtless photo on Instagram and show everyone your six pack with, with budgeting.

It's not as [00:07:00] easy to you kind of have those short term wins that people are going to recognize you for. Right. So, so in reality it might be years and decades to truly see the fruit of those results. Unless you, you know, get to a point where you can truly value kind of the, the financial piece of, of living that lifestyle.

So I think, I think it's human nature, you know, it's, it's hard to get in the, in the workout routine. It's hard to, you know, at least initially live a healthy lifestyle. And I think that that's kind of a similar analogy with the budgeting piece.

Ben Martinek: [00:07:32] Yeah, I think you're, you're spot on there, Andy, with that, I mean If anything, actually moving to budgeting, isn't going to be an immediate fruit. If there's any immediate fruit, you're suddenly probably a buzzkill. You know, you know, all this stuff that you used to spend money on, you can't anymore because you've realized it's, it's hurting you financially.

And so I guess you're not going out as much as you used to. So I that's going to be the immediate fruit, which is going to make you a particularly attractive maybe to friends and family, if they were accustomed to some large yes. From you. Yeah. Well, that's, you know, that's great. Do you [00:08:00] think so too, Robert?

I mean, it's just this as human nature, it works and we just have to fight against ourselves to, to, to have the degree of establishing this habit.

Robert Franer: [00:08:08] I think any difficult conversations against our nature. You know I have yet to experience a person who truly relishes difficult conversations, unless there's, unless they're going to get something really important out of it. So to help with this, we do, we will have, along with the podcast, show notes, a little worksheet that you and whoever you're budgeting with can go over to help you have this conversation.

Ben Martinek: [00:08:38] Yeah, that's great. Well, we look forward to being able to put that in the show notes and, and offer it to everybody so they can put it to use. Yeah, it's an interesting dynamic, right? And this is probably one of the most important things, in my opinion or an estimation that a client or a household could do to improve their situation.

But yet it's like the most neglected and it's not just, you know, amongst a person here or there, you know, [00:09:00] we've been suggesting as much as 76, 80% of households are living paycheck to paycheck. They're th they're these zombie households. You would think maybe you can just, as a matter of social policy, we would encourage budgeting from the get go.

I often think of it as. Like trying to drive a car with no fuel gauge. And it just, all the headache and hassle and frustration, what would happen if you drove around the car all the time and kept running out of gas? Well, you know, working and using your money without a budget, it's basically running your money without knowing how much money you have, and you can find it out if you're running out of gas and then you're frustrated, like, just imagine all that frustration leaving your life because you just now know.

Where things stand with you financially. So do you guys have any thoughts on this? You know, why you know, before we finally progressed into why we think you should budget, why do you think B aren't making a big emphasis emphasis on this, maybe in terms of a public point of concern. Andy, do you you got some thoughts to share

Andy Flattery: [00:09:54] Yeah. You know, it's funny. Because the, the wisdom of our elders would tell us that [00:10:00] frugality is a virtue, right? In fact you know, like even in the Catholic faith, for example, like you read things about you know, the virtue of thrift or the virtue of economy, or I think parsimony is a word that's thrown around from time to time too.

So, you know, you hear about these kinds of like old school ideas that like maybe our grandparents and the great depression when brace and you know, maybe you'd read about and things like the book of Proverbs. And so it seems like some of these ideas, like. Have been kind of baked into the culture from, from ages past, but certainly is not today's.

I think Ben is what you're alluding to. And it's hard to say, you know, in some ways you know, we're talking about zombie companies in some ways, sometimes we have zombie governments, that are scared it more than they're taking in. So it's not like we have of kind of Good role models to look to in the you know, in the broader U S landscape.

So I think the best we can do is to try to Maybe redefine our own cultures and our own homes and our own communities. And try to bring [00:11:00] back some of these like ancient principles, because I agree it's, it's not, it's not in the kind of broader culture, but it does, you know, it does, it does offer a.

Someone like a Dave Ramsey to be a voice crying out in the wilderness, you know? So I think, and the kids, one of the reasons why his message just resonates with so many people is because people recognize the truth of, of those principles, of, of kind of getting out of that rat race of living paycheck to paycheck.

Ben Martinek: [00:11:27] Yeah, for sure. I suppose just good for his business at the end of the day, although maybe we all would, would like to think that Dave would be okay to put himself out of business, at least in this regard, if we could change the type, but there's, there's reasons to think that this might might persist Robert, before we only transition here.

Do you have any thoughts as to why this isn't such a point of emphasis in public policy?

Robert Franer: [00:11:48] well, I not to get too political. I'm not sure that it's in the best interest of the government for every American to be self-sufficient.

[00:12:00] Ben Martinek: [00:11:59] Sure. So you think there's maybe a degree of dependence on here of ever wanting to facilitate? That's definitely a political statement. So we'll leave it at that. I mean, there may be some merit merit to that point.

Robert Franer: [00:12:11] don't know that it's even intentional. Right. But. They're so focused on Saul. They're so focused on solving the problem. That's right in front of them. That sometimes it's easy to miss the underlying problem. That's going to take years to fix instead of a month to fix

Ben Martinek: [00:12:31] Sure. Yeah, kind of a short-term thinking versus a longer term approach. Well, I don't want us to go off into too much of a rabbit hole, although I do think in terms of the struggles associated with budgeting, it's worth noting that we live certainly in a pro-consumer society. And we're as Andy was suggesting where we live in a society that wants to wear wealth on his sleeve and demonstrate at least, you know, physically visibly, visually.

What you know, how well we're doing and you know, there's this [00:13:00] fight or, or struggle urgency to keep up with the Joneses and to feel like we're missing out or being deprived of something, if our own spinning. Patterns don't match that of our neighbors. And so I think all of this works against us and maybe it's the reasons why people don't budget.

Perhaps we could save it, budgeting, shits too much light on, on the subject matter. And we wouldn't want her brother address the, you know, what's really going on. But you know, maybe, maybe to move away from why, why not, why people don't budget to let's discuss why you think we should. I mean, what are your reasons, your best reasons Robert for why someone should budget.

Robert Franer: [00:13:35] I think one barrier. The good reason is that money conflicts are one of the primary sources of conflict in any American household. And, you know, as we all know it's goes back to a house divided against itself, cannot stand. And I know. Using divorce as a proxy. It's the third, most common [00:14:00] reason people get separated and it's cited in the other two.

Right? So having this budget, talking it through and actually agreeing to one and hearing two, it removes a lot of that conflict from your own household.

Ben Martinek: [00:14:18] Sure. So you see this as an opportunity to facilitate communication between two people and maybe adjust expectations and, and keep both of you on a similar playing field. You see the budget as the means to do all that.

Robert Franer: [00:14:30] I see a budget as a, as one of the primary means. Yes. If you have agreements between you and your spouse who, what you'll spend, where you'll spend it when you'll spend it You remove a lot of the stress that comes along with not knowing what's in your bank account, you know,

Ben Martinek: [00:14:53] Yeah, we tend not to like surprises. I mean, we could enjoy them, but you know, so maybe surprises of this nature don't often go [00:15:00] over well with folks. And I do think there's an identification of money and survival and we, you know, it's not much in terms of our own response to money neurologically. We see it as an attack on ourselves.

And so. Suddenly somebody spent a bunch of money in our relationship. Your spouse does more than what you thought they should or think they should. It's, it's almost as if you're attacking them or you're attacking their physical wellbeing. Our physiological response tends to be rather significant to this, which would be, you know, perhaps just a really good reason to, to budget, to help minimize, you know, these moments of, I don't know, fighter fight or flight.

Andy, do you think the same? Are these the reasons why you, you think we should budget?

Andy Flattery: [00:15:42] And to even be a little bit more basic just on a basic level. Like what we're talking about here is really even just developing kind of simple virtues. So like earlier I said the word thrift, which I think probably kind of has a negative connotation In the modern world, like [00:16:00] this idea of being thrifty, but, but thrift is actually, it's an iteration of the word thriving.

Believe it or not, which I think is a much more positive way to put it. And so it really, it is a Christian virtue. Right. And so like throughout tradition throughout the centuries these virtues like thrift have been talked about Bye. You know, even the church fathers over the years, like St John, Chris has some actually gave a homily once about the virtue of of industry is what he called it.

But, but thrift is, is related to that. And so I think, I think people recognize this. I think they recognize it as a virtue if you're kind of making these Acts to move your, your household forward on a daily and a monthly basis. I think it's, these are small wins that can help build momentum.

And so I think even just thinking about as a simple virtue is a, is a useful kind of a useful way to look at it.

Ben Martinek: [00:16:55] Yeah. You know, that's a fascinating take on it and certainly you know, a step into the Catholic, moral teaching or [00:17:00] perspective invent in order for any of us to be good or excellent. We have to develop character traits. These. Points of strength, also known as virtues in order for us to do well. And. You know, ultimately the, the misuse of money is not, it's a vicious activity of a point of advice that would just work against other aspects of our relationship working and living together where you know, if we're vicious in one way, it tends to be the word fishes and other ways.

And so the work of budgeting and it's a good habit to cultivate because it. Moves you towards excellence and a rather in a way from, I don't know if I want to say failure or you know disintegration is really, I suppose, what comes to mind. That's, that's kind of a fascinating take on this fit.

It's not just simply a practical tool to help have communication, but it's kind of strikes at your very wellbeing in terms of you know, the daily decisions you're making on, on how to be good or what to do. If it's a rightful. Oh, and your situation is, is that how [00:18:00] you're understanding or seeing the value of budgeting

Andy Flattery: [00:18:02] Yeah, I think the other thing that's great about it too, Ben is like, especially like in a marriage, for example, you recognize that you have different virtues than your spouse, right? And so like, if, if maybe it's more commonly thought of is like the wife has maybe more thrifty. I know that's not always the case, but Maybe the husband is more kind of liberal.

I know like, like my parents that's, that's the example right where my mother was always the, the very thrifty one in the household. And my dad was the one that always wanted to do kind of more fun stuff. And they kind of balanced each other out quite well. And so I think thinking of it as like a virtue is useful, because you can recognize the strengths of, of different people in the marriage.

And there's, there's kind of a place for both of those. And that's kind of the beautiful thing about marriage, right? We're not expecting that you know, a husband and a wife, or we're going to have the, you know, equal an equal balance of each of these virtues, but you know, they have different strengths.

I think that's kind of important

2020-11-04--t10-26-44pm--andyflattery (1): [00:18:59] way

Andy Flattery: [00:18:59] to look [00:19:00] at it.

Ben Martinek: [00:19:00] Yeah. So budgeting is a discipline, you know, an art or a practice as a way to improve and true improve our own. Well on the quality of life, but just our moral character really is what it comes. It resonates back to well, Robert, do you have any other thoughts as to why someone should budget? I mean, you've listed, there's a lot more marital conflicts.

Tendencies is a great way to resolve that. It facilitates communication. It, you know, it helps to work against our ingrained human nature, which tends to not want to talk about things and this kind of forces you out and to talk about it. Anything else come to mind for you as to what you, you think.

Well, why we should be mentioning

Robert Franer: [00:19:38] Well to touch on the moral side. I think we as Catholics have a responsibility to practice stewardship and I really, I truly don't see how you can practice stewardship of your own money in your own house. You know, your own financial life without knowing where the money is going in, having [00:20:00] decided why it's going there.

Ben Martinek: [00:20:01] Right. I mean, you can't really say you're being a good caretaker of him. No idea what's going on. Right. I mean, you kind of have, I mean, that's kind of the nature of being a caretaker is you have to care. Right. And so you can't very well say you care about your finances, if you're oblivious to what's going in and out.

And so it's, yeah, this is just a good practical way to really demonstrate your. Your care for them. What's been given to you, is your, your, your, you have this oversight or diligence on on the money. W w Andy, do you have some thoughts on the two?

Andy Flattery: [00:20:36] Hey, I just pulled up that St. John Chrysostom's homily that I had referenced earlier. Do you guys mind if I read this it's like three sentences.

Ben Martinek: [00:20:44] I'd love to

Andy Flattery: [00:20:44] Okay, so here it is. So St. John Chris's stone, I don't know, early church father. Right? So over, over a millennium ago, he says, quote, he, that spends his money on fit objects.

This is the magnanimous man for someone who is not a [00:21:00] slave to passion and who is capable of taking money to be insignificant. Truly has a great soul. Likewise economy is a good thing. Someone who spends in a proper manner and not at random without management will be the best steward and quote. And so one of the great saints said it much better than I did.

Ben Martinek: [00:21:21] Yeah. I almost feel like we have to end on that, but then number our podcast would rest short. We've come more to talk about mandates. So that's a great, great quote to, to throw in. I mean, maybe budgeting was an issue or overspending was an issue. Always John Christensen was just bringing it out there to us to say, Hey, you know what I mean?

You guys need to do this too. And you know, I'm sure that the manner of currency and, and trays and goods has changed significantly in the last a thousand years, but it's just as applicable today as it was back then. Okay. Well, I would be curious to know do you have some practical suggestions Robert for how someone should.

[00:22:00] Take out the practice of budgeting. I mean, how do you get started and what do you budget on? And I think maybe a lot of people listening to this to recognize that this is important. I should do it. I know I should have. I think this is a time management issue. We tend as humans to give Priority to things that are urgent, but not, not important.

You know, so something that pops up in life, maybe it could be a Facebook message, a notification on your phone, feel the need to look at all these things. But, you know, in reality we don't, we probably don't need to spend our time on that. But the thing that we actually need to spend time on, we recognize as important.

It's it's not, it's not blaring at us. There's no notification unless you're using why now, but you know, it's just easy to neglect it. Like, how do you. How do you get started on something that just doesn't feel like if I don't do this today, it's it's still going to be okay.

Robert Franer: [00:22:46] Right, right. Well, a budget sounds and seems like you're, forward-looking here. You're determining what you're going to spend, but how do, how do you know what you're going to spend? I think the best way to do that is [00:23:00] to sit down with your bank statements in front of you. Hopefully not your credit card statements, particularly if you're over spending and write down.

What comes in, what kind of bills you're paying every month and how much they are. So you'll have your fixed bills such as your mortgage, homeowners, insurance you know things like that. And then you'll have your variable ones. So you have to fill up your car with gas, but it's different every month and you have to get groceries, but that's different every month.

I think one of the, so one of the first most important steps is to write all that down. And come up with a monthly average for each of those major categories.

Ben Martinek: [00:23:42] Sure. So you're looking at expenses that occur on a monthly basis. They reoccur, we expect them to occur, but we should start by separating them out between fixed and variable. You know, some of these expenses are predictable. We know what's going to be is either the exact same amount every month, like a utility bill or, or [00:24:00] it's probably close to the same amount, but it might change a little bit And, you know, you got to spend you know, allocate money towards those fixed monthly expenses.

And then also tracker recognize the variable. So you think looking back over prior expenses for the last month, two, three months as a way to gauge, especially those variable expenses is a good way to get, start, to get a handle on it.

Robert Franer: [00:24:22] Yeah, so I think at least three months, and then you know, the advent of online banking is nice because you can pull out, you can download your statements and then start searching through the documents for things like, you know, you have an oil change every year. You maybe need to replace your tires every other year, every three years.

I drive a lot, so it's every year and a half for me, but pull

Ben Martinek: [00:24:46] drive a lot.

Robert Franer: [00:24:47] pull out pull out those expenses that you also know are coming, but are more infrequent and start to budget a little bit for each of those every [00:25:00] month, too.

Ben Martinek: [00:25:00] sure. Well, maybe Andy, I'm gonna kick it over to you, but how would you suggest just getting a handle of budgeting for it? Like, is it as simply as a task of just figuring out what you're spending between the fixed and the variable expenses and. You know, you just, you do a tally of the income and then do Italian the expenses and figure out where you stand.

I mean, is there any trick to this?

Andy Flattery: [00:25:21] Right, right. You know, I, I think maybe I'm too Pollyanna about this, but I've kind of come to the conclusion that there are kind of different ways to skin the cat here. So like me personally, for example, ban I use a very simple spreadsheet and that's what's I found is kind of worked for me over the years in terms of kind of manually tracking expenses.

And then figuring out what our kind of monthly game plan is using just a very simple spreadsheet. And so I know like a lot of spreadsheet wizards, that's kind of useful for them too. On the other hand in terms of like tools that are out there, I have some friends and clients that really rave about the wine [00:26:00] app tool.

So like if you're looking for, you know, ways to start you know, checking out some of the great spreadsheets that are out there, like the wine app tool might be a great

Ben Martinek: [00:26:09] real quick, any, so what what's, why nav again, just

Andy Flattery: [00:26:11] Yeah. Yeah. Yes. So it's right. It's maybe the most, one of the more popular kind of budgeting tools, but it stands for, for you need a budget and it's maybe that.

Kind of re re most robust version of an app that you can use, you can share it with your spouse. So it makes, it makes it really handy. You do have to pay for it, but it does have some kind of nice bells and whistles. I know a lot of people love and, and what's great about it is I think it does help kind of build habit.

And so. That's where I've seen it really work. So those, those are kind of two options. I, and I know there are others frankly, at, as, as we were speaking earlier and I had kind of my come to Jesus about budgeting a decade ago, I was also using the envelope plan as well, too, which I, I, I don't, I'm not going to throw that one out.

I think there's a place for that [00:27:00] as well, too. The kind of Dave Ramsey cash in the envelope idea. So those are just kind of a, maybe three ways to get started. And and one of the things too, that as you're, as you're getting going with this, I like the idea of being open to just the, the concept that as you're starting budgeting, you might find just basic financial planning stuff that pops up here and there as well, to where you realize that your issue is maybe not so much you know, the.

The, the typical kind of $5 Starbucks, but it might be something more structural, structural, and you're realizing that you know, maybe we need to downsize to a different house or sell a car or you know, change our lifestyle where we find a way to not spend so much with healthcare costs. These are some of the things that as you're doing a budget and, and realizing what your spending is You might want to be open to as you, as you're, as you're going through this process.

Ben Martinek: [00:27:58] Sure. I mean, we could all be [00:28:00] guilty of impulsive spending and pulling her shit or creating one and then not, not abiding by it, which I think really at the end of the day, this is the trick to this is, you know, we could take the time to put all these numbers down and get a sense of what what needs to be done or what changes to me.

But then, you know, this really comes down to human behavior. And are you going to make the changes that. That that's needed, you know, there's a saying out there that if nothing changes. Nothing changes. And, you know, only for someone to see progress in their finances, we have to make a change, you know, presumably, but that's what's needed.

And you know, for budgeting, we have to adopt or adhere to some new standard or discipline. So I, I think you know, this. We got to pick up a PR a system or a process that's going to resonate and work with you so that you know, you don't find it particularly onerous as a task because you know, it's just simple behavioral change.

If this gets to be too challenging, we're going to go back into our old ways of habit and, and the likes. [00:29:00] So, I mean, Robert, do you have any suggestions in the early phases for somebody as they're, you know, moving from having this conversion experience from having not budgeted to budgeted. You know what really drove it home for you as you made this change.

Robert Franer: [00:29:12] Well, so what. The reason why I stopped living paycheck to paycheck was I'm a bad financial decisions in college. What really drove it home was actually having children. That's when I really buckled down. But I think a really quick and easy step for anyone starting. This is after you've determined that average monthly amount go to whatever bank you use.

Open up a savings account at the bank and move all the money that doesn't fit into your monthly budget over there. So most banks will transfer that same day if you have to, but it can kind of show you how much you have to spend and the other money's still [00:30:00] available, but it prevents you from kind of falling off the wagon.

Without doing it content consciously. So if you only have your fixed monthly expenses in there, or your average monthly expenses, you're a lot less likely to just spend indiscriminately.

Ben Martinek: [00:30:19] Right. So you see this practice is like a control. So, I mean, you've, you moved the amount of money that you need to have it's in the account. And then as you go through the month and that account spends down. You know, let's say it's 5,000. Initially we just throw in and now it's 4,000, 3000, 2000. You know, there should be some alarms or awareness going off to you, especially maybe once you get that two or $1,000 market.

Hey, we got to, we have to ease it up a little bit. We got to make this last little bit of money work until, until we get a new, new allotment with another paycheck next month. Is that how that works for you?

Robert Franer: [00:30:50] Yes. Well, and another important part would be knowing what balance it should be at at which time of the month. Right? So [00:31:00] if you have 900 come out for your mortgage, you don't have to be too worried about that. But if you have 1200 come out and only 900, if it was your mortgage, well, that's. Becoming a problem.

So yes, I think it's an, I think this is an important control for the people who are starting to budget. One thing my wife and I do is we use capital one, which will send a text alert for any transaction in any amounts you set. So it, when we started this out, we. We both would get a text alert if more than $50 was moved between any account.

Ben Martinek: [00:31:42] So sure. It says, these are the gauges that I was alluding to here, you know, previously that we call need gauge to kind of tell us how things are going. And so the text alerts, the notifications and, you know, they just, the current balance in the account, or is really fundamentally your gauge to say whether you're not you're full or empty on your [00:32:00] financial gas tank.

Right.

Robert Franer: [00:32:01] Yes. Yes, exactly.

Ben Martinek: [00:32:04] Okay. Well, what about for you, Andy? Do you have a similar gauge if you see that you're using to help see whether or not you're spending a stain in control and on track for your, your financial capacity?

Andy Flattery: [00:32:14] Yeah. I mean, I like that life hack that Robert mentioned there as well, too. Yeah, I mean, we, we, we use an aggregator tool at my firm where we're able to kind of look at our, our household in one place. And so. You know, with the kind of financial complexity that households have these days, like we use kind of one of these simple aggregator tools, like a mint.com to kind of look at everything in one place.

But I had not heard that that notification idea yet. So I'm gonna, I'm going to start looking into that. Robert. That's pretty cool.

Robert Franer: [00:32:43] Yeah. Well, I actually went with capital one because at the time they had the highest interest rate, but not a lot of local banks do that. You kind of need to get one of the big national online banks.

Ben Martinek: [00:32:54] So they, they, they want, they alert your business with the interest rate, but they've won your business [00:33:00] on the notifications. So let that be a lesson now does a fun little tidbit there. Well, I have to say, you know, just as I chime in, on, on gauges Sydney, maybe that's my thing when it comes to budgeting, but I, I really think that's what it's all about.

You know, why NAB has this age of money component which is just another variety of. Basically you're the, the wealth of your financial condition. And, you know, if you could imagine like your classic arrow, moving back and forth between red, yellow, and green age of money, more or less communicates your, whether or not you're in the green zone, yellow, yellow, or red.

Now it doesn't necessarily do this on a month to month basis, but as you mature and move along within the software, and again, we're pretty avid users. Like that's. That you know, the movement in the age of money is the telltale for us. Every time you let me know whether or not, I think we're okay. Or if we need to make some adjustments or changes, you know, are we good to, in terms of our current spending patterns or do we need to pull back ancient money, just communicates that very quickly and cleanly.

So I think it seems to me that in order for budgeting to work. Over [00:34:00] the long-term because it can be a tedious, onerous task. You know, we're looking into what we spend our money on and you can feel like an accountant perhaps, or, you know, like a parent looking it over you. You know, I mean, these are all good things to do, but maybe we don't don't really want to adult to use that expression.

Right. There has to be some quick go-to to help us get a sense of, are we okay? Cause I feel like that's all. What it's about. But are there circumstances as we close out, I have one more question. I want to shoot by you guys. And then I think, well, we'll call it a show around. Is there a time in which she thinks someone would be okay, not to budget it is budgeting something that you would put as kind of an absolute or a really nice thing to do or, or could somebody reasonably get away and not budget and still be okay.

What do you think on that, Robert.

Robert Franer: [00:34:44] I think in rare cases. Yes. But only, only people who are pretty good at mental math. So they know. They know how much is in their account. They have a decent [00:35:00] idea of how much their monthly expenses are and they just don't spend more than that. So I think that's one case. The other case would of course be somebody who just makes so much money, they would truly have to try to spend it all.

But that's not me.

Ben Martinek: [00:35:17] Well, I don't know if I met one of those, like there yet, at least not yet. I don't know, because really a life ambition either to be a point where I could just spend freely never worry about draining, draining the money that's coming in. But I mean, we will see some high-income burners, right. To, you know, to some degree maybe they, they approach this where there they could just spend on just about anything.

And it seems to be enough. Do you, do you think that's going to get you into any trouble eventually, Andy taking that or are they okay to just. Kind of only loosely have a budget.

Andy Flattery: [00:35:46] well, sure. I mean, even going back to kind of the idea of virtue or the idea of like developing good behavior, there are just some people that either are natural. Thrifty, or they've kind of just developed a habit of thrift that, you know, using my analogy before, [00:36:00] like maybe you don't necessarily have to white knuckle, every single expense.

I know no one's saying that you should do that. But, but you know, they, they just, by virtue of their behavior by their spending patterns might not need to do the kind of rigorous budgeting process that we're kind of talking about here. But I mean, even, even kind of like in the modern rule of using like credit cards for everything, debit cards for everything.

I think at the bare minimum, it's, it's probably a good idea to just check your accounts, to make sure that there's no fraudulent charges. So we do see a lot of that. So I think for better, for worse everyone is probably going to need to do some version of budgeting, budgeting, and reconciling. But to what degree, I think it depends on the situation is you're getting at Ben.

Ben Martinek: [00:36:46] Yeah, I agree. I mean, I kind of come to a conclusion that you know, what I budget, I think it's a good habit to do. I think you're better off budgeting than not budgeting, but if you're like, you know, can I. You know, shortcut this or get away with it or do I really have to budget? I [00:37:00] do think that, you know, at the end of the day, a financial situation progresses along, based off of whether or not you're accumulating accumulating wealth, which is, you know, done only through savings or growth of equity equity in a home, a comedian, a business, or the like, and so, you know, what really tells, I think how well one's doing, someone's doing financially.

At least, you know, from a secular perspective, I'm to throw this out here because I can hear the saints in the back of my mind saying, but this doesn't matter. But you know, we're, we're dealing with money, which is very secular concern. You know, it's all be the growth of your net worth and you know, and that really how much a net worth grows is a large component of your current savings rate.

And so if you're hitting your savings goals, you know, are we setting enough money aside and our, if we're not. You know, accumulating balances on our credit cards, we're able to maintain the current monthly balance. Then I think you're, you're currently fine. You know, I mean the savings goal is what determines your longterm outcome and the you know, whether or not you're accumulating credit [00:38:00] balances on credit card is tells you whether or not you're spending too much and you can't keep up with it.

And I think as long as we see both of those going, you can shortchange this. And, you know, just sign off on it, on those two elements alone. But I don't know if I would really recommend that. I truly think that if someone, you know, I think what's in anybody's best interest is probably to incorporate budgeting and go down this pathway.

I think the payoff is well worth it. And you know, Having these two simple metrics doesn't necessarily still facilitate better communication between you and your spouse. And you know, it may not facilitate this growth, the virtue as Andy's alluding to. So this is really kind of a bare minimum, you know?

Yes, this will work, but you know, I think we can do better. W what do you guys think?

Andy Flattery: [00:38:41] do you guys mind if I end this on a light note?

Ben Martinek: [00:38:43] Oh, please. Yeah. And I don't want it to be too heavy.

Andy Flattery: [00:38:46] My wife just sent me, I'll put this in the show notes. My wife just sent me a picture of my son in the family room, I guess just recently this morning. He colored all over the wall, the floor and the chair.

[00:39:00] Ben Martinek: [00:38:59] Okay.

Andy Flattery: [00:39:00] And so he's been going through a lot of markers recently cause he's coloring on everything but papers.

I think we're going to up our our budget expense for art supplies in our, in the flattery household.

Ben Martinek: [00:39:11] All right. You know, something might have to be decreased to make that work, you know? I mean,

Andy Flattery: [00:39:15] Right.

Ben Martinek: [00:39:16] Is it, is it either more income coming to the household or, or less expensive somewhere else? Right. But it's kind of a nice way to see the trade offs, but how funny you, Andy? Thanks. Thanks for letting us all know.

I think you know, there's been a distinct increase in cleaning supplies. Or just replacement of everything since we met her girls because, you know, stuff tends to get used up in unexpected ways when you have children which is I think a nice surprise to have on a monthly basis

Andy Flattery: [00:39:40] Yeah, it's a good problem to have Ben.

Ben Martinek: [00:39:42] So yeah, there's, there's a story of, of it all getting real, so well, thanks everyone for joining us today. I hope you found a lot of value in this.