Have you ever seen a news article shared or story featured where a family was able to keep their expenses low, like really low… surprisingly low? And then you read the comments. It’s funny for me to read people’s reactions. They generally look something like this. “I would hate to live that way.” “That sound like a horrible, boring life.” “What’s the point of life, if you can only spend $x a month?”

I can almost guarantee that those comments come from folks who budget upside down.

What’s Upside Down Budgeting?

People start with a big number. A number that represents happiness for them. Maybe it’s $3000 a month or maybe it’s $8000 a month. But they start there. Unfortunately, spending that happy number won’t help them save, invest or pay off debt. So they start to take things off the budget. They try to trim it. They peel back all the wonderful, lovely expenses. Each cut is painful and uncomfortable. Until they get to the point that the budget can’t be cut back anymore.

No wonder they think that this even smaller number would be a horrible, miserable life!

This upside down budget of theirs has already been trimmed back to the point of pain and deprivation! Any more cuts and they might cry or start a fight.

Upside down budgeting starts with a faulty assumption. And it’s doomed to fail, or at least swim in mediocrity. Your budget will never be the force that transforms your trajectory if you start upside down.

The faulty assumption is this: $xxx of spending a month is what creates my happy life.

Then each cut or trimming of expenses is a trimming of your happiness. See how that sets people up to fail?

The solution is simple. Start your budget at zero.

Starting Your Budget at Zero

When you start your budget at zero, you are starting with a different assumption. You start will all the good things you already possess. All the amazing things in your life that add the greatest value. You start with gratitude. In my life, I start with a strong and thriving marriage. 5 amazing kids. Time to read books. The time I spend writing and creating. Hikes in the nearby state and national parks. Deep and meaningful friendships. Ways that we are contributing to our community to make it a better place for everyone.

I start our budget at $0. After taking count of all the good things in our lives, the things that really matter. THEN we add some expenses.

What expenses do we really need to facilitate this life we want to create? Hum….

And then I thoughtfully consider each one.

Is there a way to get the same result but spend less money?

In reality, spending $80 on the internet isn’t the source of my joy. My life is just as happy and content if I spend $50 a month for that service. (As long as Netflix loads quickly!)

Starting at zero, we add to our happy little life things like property tax. And the water bill. And electric. We add in some money for a tank or two of gas. We spend some on things to eat. Maybe we want to take our happy little life on the road for a week or two, so we add in some extra gas money and camping site fees.

We start with contentment and joy. And we add expenses to that. Just the expenses that add real value, make things possible or are needed.

People can lead happy, meaningful, fulfilling lives and only spend $xx a month. Because their lives were happy, meaningful and fulfilled before they spent the first dollar. Adding $xx a month just added to the good things they already were experiencing.

Upside down budgeting will always feel like deprivation and restriction because it assumes those expenses are the source of your happiness.

But let me ask you this:

Would you be any less happy if you didn’t have credit card bills? Or your car was paid off? Or you no longer had a student loan payment? Would your happiness go down if your home was paid for? Or your cell phone plans cost $28 a month? Do you really get more joy from paying more for your internet service?

Having those things might be nice, but paying for them is never the best day of our month.

Low expenses are the jet fuel to custom designing your life. 

Spending less gives us more

We have rather low expenses. Especially for a family of 7, plus our awesome dog, Cheesy Taco. We keep a rather small Monthly Nut of about $650 a month for our fixed expenses.

We have leveraged spending less to get more. More of the things that matter to us.

We hike more. We play at the lake more. We volunteer more. We were able to adopt a sibling group of three. We travel more. We have taken 5 mini-retirements. We have seen 27 countries. We meet up with friends, near and far.

When you know what your “most important” is…. What makes your short list of things in the life that actually matter to you. You don’t feel any compulsion to waste money on the rest.

When I start my budget at zero, I rarely buy new clothes for me. The dress I wore in the image above is one of my favorites. I bought it 7 years ago at a thrift shop in Scotland while I was taking a class on Scottish literature. I couldn’t love it any more if I had spent $100 on it versus the couple dollars I actually spent. I wouldn’t have been any happier that day if I was wearing a brand new dress. I didn’t need a new dress. Mr. Montana and I had a great coffee date that morning. We walked around downtown. And the way he smiled at me when this photo was taken gave me butterflies in my stomach because I thought he might just up and kiss me.

I don’t spend more on clothes simply because I’m not sure what they would add to my life that I don’t already have.

I start our budget at zero, with all the good things we already possess. And we just add and add and add from there. Maybe $1500 a month or $3000.

The Fly in the Ointment

About 4 years ago I was in a hard season of life. It seemed that everything that really mattered to me was going wrong and I had no ability to fix it. I was doing everything right but was stuck. My oldest son had just passed away. We had planned to adopt but, because of our son’s passing, the process had to be delayed a year. We had been trying to get pregnant for 5 years with no luck. The very expensive and emotionally exhausting fertility treatments weren’t working. We were in the middle of a renovation. And I hated my job. Plus, I had a coworker who was horrible to me.

So some days, when the weight of this felt too heavy to bear, I just wanted to eat my feelings. Which as it turns out tasted a lot like caramel rolls and gourmet ice cream.

Sometimes life is just hard. And maybe spending some money is the only thing that makes it seem better, or at least bearable. I could have spent a lot more money during that time. On trips or vacations or spa days, or eating out, or new clothes. But none of those things would have helped fix the things in my life that felt broken.

Instead, we saved that money believing better things were ahead. 

Because we stayed focused on those bigger goals (other than the occasional caramel roll!), when the time came for brighter days, we were ready. We had grown the gap and guarded the gap. We stood ready with low expenses, some passive income, investments, and savings.

If you have been feeling frustrated with your budget. Maybe you have been budgeting upside down? Try starting from zero. On my resources page, I have all the best tools for tracking your spending.

For Conversation:

Do you track expenses? Any tools you recommend for budgeting?

Have you ever been stuck in an upside down budget mentality?