Dang! Where did all my money go? Have you ever wondered this before? I call this the phenomenon of the invisible budget. Today, I will review the invisible budget and how to lessen its effect on your lifestyle. That’s right; you will not be able to defeat it.
The invisible budget is also called “the cost of doing life.” It is everything in life that you don’t budget, plan, or account for on your monthly account. These mysterious items keep popping up, month after month. I have found that just accepting that these will happen is the easiest way to get through life comfortably.
Let’s look at a quick example of the invisible budget at work. Let’s say your income for the month is $6,000, and you have $4,000 strictly accounted for in a budget. You plan to buy the monthly food allowance out of the remaining $2,000. The food should be about $600. By your estimates, you should have at least $1,000 remaining in your account to save at the end of the month.
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Enter the invisible budget. Over the month, these things happen. 1) The cost of some food items went up, increasing your food spend. 2) Your oldest son needs to buy a yearbook. 3) Your youngest son needs a new backpack. 4) Both kids are doing a cookie fundraiser where your wallet is the biggest sponsor. 5) Mom’s birthday happens, and you buy a gift. 6) You are asked to bring in a cake for a work party 6) You buy a videogame for your husband. 7) You take the family to Sonic on a Friday night- you love their shakes. 8) The whole family needs new beach attire for March. 9) You have friends over for a Saturday BBQ. 10) The dog needs a new shot.
Yes, this sounds like a lot. However, anyone who has run a household knows that this is typical of any standard month. Living in a first-world society requires this kind of constant bombardment of money spending. It is just a way of life that you will have to adapt to sooner rather than later. There is no point in crying about it or trying to keep a tight grasp on your money; that will only frustrate you more.
How can you manage your invisible budget? Since the invisible budget is here to stay, what things can you do to help manage and contain it? You can do a few things to control your invisible budget, and they all involve visualizing the money.
Pay yourself first. Have you ever heard the quote “Pay yourself first?” I am sure that you have heard this before- but what does it mean? It means that your savings and investing should be part of your monthly expense budget. In the above example, this mother should have listed her total expenses are $4,500 instead of $4,000. Adding $500 would have allowed her the chance to invest $500 right from the start of the month. Then the remaining $1,500 would have magically lasted her the rest of the month, without issue. Your spending will conform to your remaining budget.
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Use multiple accounts and debit cards. Having multiple accounts is my favorite way to control my invisible budget, especially in a first-world, multiple-children family. You can use different bank accounts with debit cards or load cards like Venmo and Cash App. Either way, make each card have a different use-case. In the above scenario, you can have a card that has $600 for your food budget, $300 for family fun, and $300 for the parents. Now, you would be able to see how each budget would deplete over the month. Having $1,500 directly available can be risky. The invisible budget loves to have this much free space.
Create multiple streams of income. Bringing in more revenue is my favorite way to combat the invisible budget. I understand and appreciate the invisible budget; therefore, I know the best way to combat it is to make more money. The trick is to bring in more money passively. I don’t want to sign up for Uber or a second job; I want to use my mind to create new financial opportunities. I would leverage ideas such as renting a room, building RV hook-ups, or starting a dividend portfolio. I talk about the topic more in “How We Created 13 Streams of Income.”
To some intent, you can lessen the effect of the invisible budget, but you will not be able to defeat it ultimately. Running a household can be very expensive, but saying “no” to everything is not the way either. Something I learned from reading “Rich Dad Poor Dad” is that saying “no” or “we have no money” to your children creates a scarcity mindset around money (read the article “Scarcity vs. Abundance”).
Instead of saying “no” or “we can’t afford this,” we ask the question, “how can we afford this?” This simple change in the context can have a world of meaning.
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If my son wants a new $500 Xbox, what do I say to him? I have the money, but giving him an Xbox is not the solution. I ask him, “how can you afford this Xbox?” He may have seen that my wife sells cakes on the weekend for $25 profit per cake. He says, “Dad, if we sell two cakes a week for ten weeks, we will have enough for the Xbox.”
Now, parents, I ask you the same question. We have the invisible budget, and for the most part, everything is legitimate. How do you afford to pay for your hidden costs? Do you have a scarcity mindset and use the words “no” and “can’t,” or do you have an abundance mindset and use the words “how” and “learn?”
In my opinion, the best way to mitigate the invisible budget is to build multiple streams of income. When you have cash flowing throughout the household, you can control the invisible budget and still have cash remaining. It also teaches the children that saying “no” is not the answer- by using the word “how” correctly, we build our children’s mindset to survive in today’s fast-paced world.
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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