Out with the Budget; in with Alignment

Shame, guilt, and judgment have no place in the development of your employees’ financial wellbeing. Would your people rather I try to shame them into living on a budget, or would they rather we have a two-way conversation about aligning their personal values with their vision of a successful financial future? Yeah, me too.

Budgeting, debt elimination, and emergency cash are all foundational pillars of financial wellness. However, it seems everything we’ve heard from the talking heads on this topic falls in the “How” and “What” categories and runs right past the “Why.” The alignment of our thoughts and behaviors with our values creates the nearly magical place where our lives are carried out with purpose and intentionality. Once your employees find this untapped power source, the budget, debt elimination, and emergency cash will happen. And get this…they’re actually going to like it. They’re going to demand it! It’s no longer a best practice or principle. It’s a way of being that comes from their most meaningful reasons.

There are endless templates, software, and ideas on how budgets should be built. We have our favorites at the Foundation for Financial Wellness, but whichever your people decide to use, it must be a zero-sum budget. Meaning, you must “spend” every dollar on paper before the money hits your account.

Debt elimination is an interesting topic. We teach two types of approaches: 1) Mathematical approach, and 2) Behavioral approach. The mathematical approach would have you pay off your debt in order of highest interest rate (most expensive) to lowest. This is logical. The behavioral approach has you pay off your debt in order of smallest balance to largest balance. This is emotional. The emotional brain gets the chemical release quickly by knocking out the smallest first, then builds momentum by rolling those payments into the next debt item, and so on.

The vast percentage of people we have taught through the years prefer the behavioral approach, and for good reason. “The best approach is the one you complete!” Not to mention, it was emotion, not logic, that got us into the consumer debt, so likely, it will be the power of the emotional brain that gets us out.

Finally, the third component of the financial trifecta, is emergency cash. There is nothing sexy about this. Then again, there’s nothing sexy about an Ambien either, and it’s debatable which one helps you sleep better at night.

If you want to learn more about how to help you and your employees budget, eliminate debt, and build up emergency cash, contact us at the Foundation for Financial Wellness.

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