Everything Is Budgeting


Show Notes

In this episode, we acknowledge that maybe we love the word "budgeting" too much and what we really mean is "making better decisions". Allocating resources (time, attention, money, nutrition) are all about scarcity and opportunity costs. It's about defining your values and the results you want, and then making the decisions that will lead you to those outcomes.

  • (00:00) - Roller coaster change management
  • (03:51) - Finite resources
  • (11:54) - Food opportunity costs
  • (14:11) - Steve's PTO budget
  • (18:25) - Scarcity and opportunity costs in resource allocation problems generally
  • (21:07) - Making better decisions (aka budgeting)


[00:00:00] Steve : So last week I told you a story about rollercoasters and, uh, did you, you mentioned you had another similar rollercoaster, something.

[00:00:09] Tyler : Yeah. Uh, well, similar rollercoaster something. It's, uh, your story about rollercoasters reminded me of something that my boss and a really good mentor of mine talks about all the time at work, uh, as our organization goes through change. And basically she just reminds me that. Our organization is like a rollercoaster.

Some people sit at the front, some people and teams are in the middle, and some people are, teams are at the back. And change impacts, uh, each of those teams different, you know, at different times in the ride, basically. Right? So, um,

[00:00:42] Steve : If you're in the back of the train, you can kind of see what's happening to the folks at the front, so you know what to expect before you get there. Is that the idea?

[00:00:49] Tyler : Uh, ideally, I think that's where the analogy breaks down in real life because

[00:00:53] Steve : Okay.

[00:00:55] Tyler : Work is so fast paced that, you know, people at the back of the rollercoaster aren't, uh, looking ahead, you know, they're kind of heads down.

So, so maybe this is not that great of analogy, but what the part, the part that does work for me really well is that, um, as changes are rolled out in an organization, it does, depending on the type of change, it can kind of roll out over the organization, right?

It hits a certain team sooner or later than others, and as you and your team are going through the consequences of those changes, Um, like our team for example, typically recently in recent changes, our team has gone through the changes first and then other teams have followed just because that's kind of the way like it had to be for the business, right? And so by the time we were done panicking and implementing the change, not panicking, but like, you know, it's a lot of stress implementing some of these changes. And then we got it to a place where it's feeling good and. Then it was time for the next team to dive in and, and they uh, you know, we had to be patient with them as they worked through it.

And that's just, I dunno, a good thing to keep in mind, I guess.

[00:01:56] Steve : Okay, so sometimes you're on the vanguard and sometimes


[00:02:00] Tyler : I.

[00:02:01] Steve : On the next, the next phase. But doesn't, doesn't, it doesn't necessarily make it easier if you're in the, the second group, it sounds like. 'cause there's still kinks to iron out and,

[00:02:12] Tyler : Yeah. Um, I'm curious, in real life rollercoasters, do you prefer being at the back or the front? And why? Because you have recent

experience with this

[00:02:21] Steve : well, yeah. And uh, one of the rollercoasters that we went on actually had a, once you got up to , Load the car. There was a separate section. If you wanted to sit on the front row, you could go stand in that line, which I thought was odd. And then I realized, well, I guess some people would want that and some would rather be in the middle.

I don't know that I have a preference myself.

[00:02:46] Tyler : So the totally scientific and bulletproof theory that I operated under as a child is that the back is the place to be because the back goes over the top of the hill, you're kind of entering full velocity, whereas the front kinda gets dangled down the hill a little ways while it waits for the back to go over.

So like the back

was like the better part of the ride. I,

yeah, probably not true,

but that,

[00:03:09] Steve : you like the,

the suspense of being hung over the edge while you wait for the rest of the car to get, that could be fun.

[00:03:15] Tyler : that's why I asked. So everyone has their preference. So

[00:03:18] Steve : I see.

[00:03:19] Tyler : anyway,

[00:03:26] Steve : Hello there. Dear listener, I am Steve.

[00:03:29] Tyler : and I'm Tyler, and this is another episode of, It's Not About the Money, where we discuss a wide range of topics related to creating and running small businesses.

[00:03:39] Steve : Tyler and I both own small businesses, uh, like you, perhaps, and this podcast is our attempt to make sense of the world of business and life and everything else, one episode at a time.

Finite resources

[00:03:51] Tyler : That's right. And today, surprise, surprise. I have convinced Steve to let us talk about budgeting yet again. Uh,

[00:04:00] Steve : It is our favorite topic. We don't have enough of this in our lives already,


[00:04:05] Tyler : never enough. As the song


[00:04:07] Steve : this is what we talk about on the podcast and off

[00:04:10] Tyler : Yes. Um, uh, specifically today though, uh, we're talking about the realization that we've had kind of independently and also, uh, together in our conversations how, uh, that basically everything in life is budgeting So

I think we just lost lost all of our, you know, half our listeners right there. But,

but Steve, what do I mean? Yeah,

yeah, yeah. What, what do we mean

[00:04:35] Steve : left

[00:04:36] Tyler : Exactly. This is gonna be, this

[00:04:38] Steve : So

[00:04:38] Tyler : extra nerdy.

[00:04:40] Steve : Yeah. Well, the way I see it, um, what YNAB does really well and and budgeting systems in general is make it very clear to you that your money is a finite resource. You only have a certain amount of it, but you have all of these things you want to do with it.

And so you have to make the decisions at some point or other of, what am I gonna use this money to do until I get more, or until it's all gone. And you can either make those decisions proactively or you can let life just happen and the money will go somewhere whether you actively chose it or not.

[00:05:18] Tyler : And I

guess what we're saying in this episode is that that same principle applies to just about anything you can think of in life. And if you can think of something that doesn't apply to let us know and we'll prove you wrong. But specifically specifically what comes to mind is time, attention, money, and food.

Those are the things that are always on my mind when it comes to this principle.

[00:05:43] Steve : I agree with that. Do you wanna talk about like each one of those?

[00:05:47] Tyler : Yeah, so, uh, I, a couple months ago, I put this in my email newsletter, uh, which I just plugged by accident. Sorry. But there you go. It exists.

[00:05:57] Steve : It's a good newsletter. I like it.

[00:05:59] Tyler : oh, thank you Steve I appreciate it. Um, but I talked about, you know, budgeting. Time, attention and money and what tools you could consider using for each of those things. Uh, and basically what I said is that, and, and I, I wouldn't say that this is any kind of like groundbreaking, uh, new original idea, but uh, it was a new connection for me. So I said, when, uh, we use a budget to spend our money, In alignment with our values, use a calendar to spend our time in alignment with our values, and we use a to-do list to spend our attention in alignment with our values. Assuming we're being proactive, right, and actually, uh, taking steps to spend our time, our money, and our attention purposefully. 'cause as you mentioned, it is very easy to just let those things go and go with the flow. Go with the path of re least resistance.

[00:06:59] Steve : Hmm. . Yeah. Time I think especially is easy to observe that, uh, because the, the time is going to pass. Whether you do anything about it or not, like, well, you can't do anything about it. Time is going to pass, but you get to decide what you do at any given moment,

[00:07:16] Tyler : Yeah, and I think that, you know, uh, money, time and attention are a little bit different. Like, uh, money, uh, you could argue it's. Uh, well, people say money's infinite, whatever. You can always earn more. That's, you know, that depends on your situation, I suppose. But the idea is that you can earn more. There is more money out there to be had if you can find a way to get it.

Time, not the case. Right. We each have like kind of a, I mean, I don't know how fatalistic, you know, everyone is, but in theory we all have, we all will run out of time at some point. We don't know when that is and like, that's how much time we have. And there's no more Right? So it's a finite resource,

[00:07:53] Steve : Right.

[00:07:53] Tyler : uh, kind of in a permanent way.

[00:07:55] Steve : and even on the smaller scale of just a single day, everybody gets 24 hours, and that's all anybody gets.

[00:08:02] Tyler : That's a lot. I like that. That's much more, uh, optimistic look at that.

[00:08:06] Steve : Well, I agree. I agree with the other framing

[00:08:08] Tyler : both are true. Both are true. But yeah,

that's more like easy to to, to wrap your head, head around, I think. And

then attention is kind of like a weird. Mix of the two, in my opinion, like I see it as a depleting resource, at least for myself, right?

Like, it kind of renews for me periodically, whether it's every day or like after a nap or a Mountain Dew or something Uh, you know, but, but like it, I don't have infinite attention in a day or a week or a month. Um, and so I kinda have to be careful about how I spend my attention. If I really wanna get the things done that are really the most important to me, um, attention, like I said it.

Yeah, it, to me it seems like, uh, uh, something that can be depleted and replenished.

[00:08:54] Steve : Yeah, I agree with that. Uh, one thing I've been noticing as I'm going through the David Allen Getting Things Done book,

which we'll talk about at some point,

Uh, because I have lots to say. Uh, but o one thing I've been noticing is the idea of contexts where you've, you've got all of the work that needs to be done, but there it can only be done in certain places or at certain times, or when you're in a certain mental state and being clear about what those things are so that you can be more proactive of, uh, like for example, if I can think better in the morning for doing things like writing, then I should do writing in the morning.

And not check my emails in the morning at that, uh, that time of high attention

[00:09:36] Tyler : Mm-hmm.

[00:09:37] Steve : where, you know, I could just do emails later in the day when I'm in a lull. And, uh, just, uh, not, not as much energy to focus on something, that kind of thing.

[00:09:47] Tyler : Yeah. And what I love about all of these things is that they can be very unique for

each individual person. Right. And so we talk about, oh, having a budget for your money, having a calendar for your time, having some kind of to-do list for your attention. But the, uh, ways that you can apply those different tools and deploy them in service of your goals are varied, like extremely varied. There's different like methods, like you mentioned, getting things done. That's like a methodology, I guess you could say for, for, uh, your attention and, and getting things done. There's time blocking on your calendar. There's, I mean, there's all kind and, and I guess my point is it doesn't matter. Find the one that works for you. But all these tools help you understand yourself and how you're able to most effectively spend your time, money, and attention. Like

[00:10:40] Steve : Yeah, I like that

[00:10:41] Tyler : I work with people on their budgets and, uh, I'm very convinced that there is no one right way to budget your money. There is one true app for doing it. I'm just kidding. I'm just kidding. Sorry. But, um, but yeah, no, there, there are very different approaches that you can take and as long as your approach is leading to peace of mind and achieving your financial goals, great. Who cares what that method is? Right? But the problem is a lot of people don't have a method. Or their default method, which is, I guess I shouldn't say that. Everyone has a method to do all these things. Whether it's on purpose or not is a different story.

[00:11:20] Steve : Mm. Yeah.

[00:11:22] Tyler : there's always a process. People always have their processes, right, but they may not be, uh, leading to the outcomes that people wish they had. Like

[00:11:32] Steve : Okay. Yeah.

[00:11:33] Tyler : the most basic budgeting process, I think. One step above, never thinking about money at all is when you are going to buy something, you just look at your bank account balance and see if there's money in there. You know

[00:11:48] Steve : it's not zero,

[00:11:48] Tyler : that's, yeah.

[00:11:49] Steve : can, you can buy the thing,

the money is

[00:11:51] Tyler : That's a way to approach it. Yep.

[00:11:53] Steve : Uhhuh,

Food opportunity costs

[00:11:54] Tyler : And then I also just, just 'cause I'm on, uh, I also mentioned this in a recent newsletter, but I, I've been working with and on a podcast actually, so I've been working with a coach on my health. 'cause that's an area of my life that I really let go uh, you know, I gained like 30 pounds over the last few years and, and, uh, didn't see a reason for that trend to stop unless I made some changes. So I've been thinking a lot about budgeting my food. Uh, Which turns out to be basically exactly the same as budgeting my money. In principle, it's, it's like it shouldn't surprise me as much as it has, or I'm like with my money, it's like I could spend a bunch of money on this fun thing that I wasn't planning on buying, but then I won't be able to have my emergency fund fully funded, or I won't be able to do this other vacation that I was thinking about doing or whatever.

Right. It's like I could eat a Big Mac, it doesn't matter. I could, I could, I could eat Big Macs and lose weight. But I can only eat so many of them in a given amount of time. Right. So it's a trade off.

[00:12:52] Steve : Oh, yeah, yeah, yeah. Yeah.

[00:12:53] Tyler : And uh, I know this is sounds so painfully obvious to say out loud, but like, this is like big stuff like uh, big realizations for me because how did I gain 30 pounds over the past few years by like, just not, not the same way people get into $20,000 of credit card debt, right?

Just like basically not thinking about it. Just doing what feels

good in the moment.

[00:13:14] Steve : Yeah. And there's an opportunity cost there. Like you mentioned, you, you can eat a Big Mac or a few Big Macs, but if you eat too many for too long,

[00:13:25] Tyler : I get

an extra

[00:13:26] Steve : you're, you're, crowding out all of the other opportunities that you could have had with that caloric budget or whatever it might be.

[00:13:35] Tyler : It's very flexible. You can, you can eat a lot. Everyone's different physically, I suppose, but for my particular body that I've got, like I can eat quite a bit more calories than my body needs without like immediate dramatic consequences. But again, over a few years it all adds up. And that's the tradeoff.

It's like I could eat infinite Big Macs, but I could, I would also gain infinite weight. And is that something I want, you know? Is that a trade off? Do I love Big Macs that much? And the answer might be yes, but no, no. The answer is no. I do like them, but not that much. Uh

Steve's PTO budget

[00:14:11] Steve : Yeah. So here's a, here's an interesting story. I think I got this idea from you, but I had a, uh, budget in YNAB, uh, for my paid time off.

[00:14:23] Tyler : oh.

[00:14:23] Steve : I, this has kind of fallen off. I don't maintain it anymore, but I did at one point have this, so the, the PTO would accrue a certain amount every month, and then, uh, I could, I had some lines in there for like Christmas.

I know I'm gonna want to take off a week and a half or two weeks, whatever. Uh, so start putting some away for that. put some away for sick days, uh, you know, summer vacation or, uh, I might've even had a line in there for like, spontaneous, uh, things like,

we're just gonna, you know, all of a sudden take a, yeah, take a long weekend.

Just 'cause we feel like it. And that was very useful in crystallizing these opportunity costs. The scarcity, like there's a certain amount of paid time off that I'll get and I could, I could use it now or I could save it and we will have a nice long Christmas break or whatever it might be.

[00:15:25] Tyler : Yeah. That is fascinating. I mean, yeah, I, I. You mentioned it helped crystallize the decisions. What, like what made you feel like that was gonna be a useful exercise? Because it sounds like it was, what were you feeling? Like ambiguous. Like you weren't sure if you could take time off because you wanted to have

enough for something later.

Like what?

[00:15:45] Steve : Right. Yeah. Yeah. That's it exactly, because it is accruing gradually throughout the year. But I know that there will be things in the future that I will want to use it for. So it's kind of like the bank balance thing. I could just look in the bank balance and say, I've got five days in here. I could, you know, we can leave for a week, that's fine.

But I want to be able to plan ahead and say, I want to be available at Christmas time. And not have to work then. So that means I need to today not use this vacation that it's in the bank.

[00:16:15] Tyler : Yeah. And, and it sounds like that, so, uh, did it help crystallize those decisions, like, and help you feel more confident in using that time off?

[00:16:24] Steve : It did, yeah. And there was still a lot of rolling with the punches, uh, as, as we went along. Like I, I don't think I ever stuck to the same,

uh, allocation for the entire year,

but yeah. . But that's kind of the point, is the, you know, just being able to recognize the scarcity, the opportunity costs, and then as things come up, you, you can reevaluate based on those principles, those values, uh, what do I wanna do with it now with this new


[00:16:53] Tyler : You know, I'm aware of people in my life that, uh, don't use all the time off that their company offers them and it doesn't roll over infinitely, right. So, like that maybe

they'll be able to roll over like a certain amount, like 20 hours, 40 hours, 80 hours, whatever. It depends on the company. Um, and to me, uh, that just, that's, I don't know. I feel, I feel bad about the people in that situation. Right. And I don't know what the reason for that is. Like, I'm not saying it's because, oh, they didn't have a PTO budget. Uh, but it's possible that they just never took the time off, uh, for other reasons, right? Like, oh, maybe they didn't feel, maybe they have a weird relationship with their boss, or they weren't confident in their perception in the company if they did take the, I mean, there's a lot of reasons that could go into it, but one of the reasons is I don't know what's gonna happen in the future. I don't know if I'm gonna get sick. I don't know if I'm gonna have to care for a family member or something. So I'm just not gonna use it when I don't absolutely have to.


end up losing a lot of it, right? And I think that's too bad. So this is something that could help someone in that situation if that's something they're struggling with.

[00:17:56] Steve : Okay. Yeah. Yeah. I hadn't never thought about that. 'cause I'm always on the other side like I'm, I mean, it's, it's all gonna get used up. Uh, because I'm not gonna lose any of this, but

[00:18:06] Tyler : That's

good. I.

[00:18:07] Steve : to be intentional about not spending it too soon.

[00:18:10] Tyler : Yeah. Yeah. See, I'm, and I'm the opposite. I'm, I'm a, I am a little bit of a PTO hoarder and it doesn't roll over infinitely at, at my company. And so I wanna make sure that I use it, if that makes sense. So that, that's what motivated

me to do that. But

[00:18:24] Steve : Yeah. Okay. Cool.

Scarcity and opportunity costs in resource allocation problems generally

[00:18:25] Tyler : um, so you've mentioned opportunity costs and scarcity, a couple of times. Would you say those are like the underlying principles here, like that apply to all these different resource allocation problems?

[00:18:39] Steve : Uh, yeah, that's what it seems to me. Let's see. Time, like money, obviously that's pretty clear. Time we have talked about . Uh, attention. Lemme think about that one. If I take the block of time in, I don't, it might be the morning, it might be the afternoon. You know, it depends on the person. But when, uh, when I can really sit down and do focused, intellectually difficult work, if I use that time instead to go run errands or , Check email or, uh, eat lunch or whatever it might be.

Then I have kind of squandered that block of attention for, for that day. I don't know if everybody's like this, but you, you mentioned how it kind of, it come, it, it ebbs and flows and it's a, a renewable resource, but it's depletable as well, and so. Uh, being aware of when those periods are and what maybe what maybe triggers them or what causes them to appear or disappear,

[00:19:58] Tyler : Yeah.


[00:19:59] Steve : then, uh, being able to plan around that.

[00:20:01] Tyler : Well, and I think, you know, I don't wanna get too into the weeds on this because I do think allocating your attention is maybe a subset of allocating your time.

Uh, but like David Allen and GTD talks about how there is a difference between things that are time bound. He calls your calendar the hard landscape of your day, right?

It's like these are the

time, these are the commitments that I have where I have to be in a certain place or doing a certain thing. Often because someone else is involved, like a meeting. As opposed to things that you can kind of do whenever, as long as they're done eventually or before a certain future due date.

But there's not like a specific time that you have to do them. And for me, budgeting my attention is all about, um, creating a system, putting a system in place that answers the question, what should I be working on right now without having to think about it? I wanna pre-think that pre decide like budget, that attention. Before I have a plan for that attention and how to spend it so that when the time comes, I'm not using my, my decision making power to decide what to do. I can instead

use it on doing the thing.

[00:21:06] Steve : I like that.

Making better decisions (aka budgeting)

[00:21:07] Tyler : Well, and you know, it's funny, maybe budgeting isn't the right word. I know we love that word and we love all the principles that have to do with budgeting, but the more we talk about this

[00:21:15] Steve : do, but it, it also strikes fear into the hearts

of a lot of people. So,

[00:21:19] Tyler : like a, a dirty word. So for, for a lot of people

or stress forward, right?

Because it symbolizes things or has connotations like restriction or limitation,

uh, whatever the opposite of spontaneity and fun is, right? Um, But I just don't see it that way. Everything that we've talked about today, what it really makes me think of is the skill of making decisions, right? So, um, and, and, and increasing the proactivity in your decision making instead of doing just the default thing that comes along. And what's so cool about a tool, whether it's a calendar, a budgeting app, a to-do list, whatever, it's just, it's like It's something for you to interact with. And it's like bumpers at the bowling alley in my opinion. Like you kind of set off in a direction and you interact with it. If you're bad at bowling, like me, I guess and those systems kind of like help you eventually get to the end of, of the lane.

And uh, that was weird. That was a weird analogy. But I guess what I'm saying is like these are, these are, these are tools. A budget is not something to restrict you. A calendar is not something to restrict you. A to-do list is not telling you what you have to have to do. It's an attempt by you to make better decisions and by better decisions, what I think I mean by that is make decisions that are going to close the gap between the results you're getting today and the results you want in the future. Whether that's financial, you know, health, health, uh, in my case, uh, nutrition and, and weight. Um, spending more time

with family relationships,

Yeah. And so basically, There. I think it has proved it all. Problems can be solved by budgeting. no, I don't know how we keep coming back to this, but like, pick a problem in your life.

Figure out what it is that you know, what behavior, what beliefs of what actions you're doing that are producing that re the result that you don't want, and then adjust 'em to so that they produce the result that you do want. That is budgeting. Thank you for coming to my TED Talk. I need some work. I need some work.

[00:23:28] Steve : Okay. But I like the way you framed it. Uh, instead of using the word budgeting, uh, using it as making better decisions

about whatever it is. Because that's, that's something everyone can relate to, I think.

[00:23:42] Tyler : Yeah. Like I, there's such a disconnect between, uh, peop the things and people in our lives that we're not happy with and like our own actions. Like when I, when I, I. I'm talking with someone who's not happy with their financial situation. Uh, all I really need is probably like a month or two of their credit card statement. And then it's really easy to be like, well, here's here's what's happening. I mean, if you wanna know why you don't have X, Y, or Z, it's like, it's because you did this instead. Like, it's not a, this is so simple, you know what I mean? And, uh, that's why it can be so helpful to have somebody whether, and I'm not talking just about budgeting your money, but like any of these things, it can be helpful to have someone to, you know, you shouldn't have to do it alone. You could have someone, uh, with you, whether it's a spouse, a friend, a coach, doesn't matter, second pair of eyes to help you see where's the disconnect between your actions and your outcomes. And you'll find that, I think that's like pretty simple most of the time.

[00:24:44] Steve : Yeah, and I like that the . The deciding factor here is what is important to you, the individual. What, what are the results that you want? So it's not like us trying to tell you

go go budget your money better go, uh, restrict your spending. It's no. Go figure out what is important to you. What do you want to spend your time on?

What do you want to spend your money

on? Uh, and, and then codify that into decisions that will move you toward that outcome.

[00:25:16] Tyler : Exactly like, it kind of irritates me sometimes when I share, or, you know, in conversation that I, that I work as a budget coach. People are like, oh, so you're like Dave Ramsey. You just tell people you know what to do? I'm like, no, no, no, no, no. Not at all. Like, not at all. Right. It's exactly what you just said, Steve. It's like, uh, figuring out, it's not prescriptive. It's figuring out what's important to that individual. Figuring out what they're doing, what they can do to, to make that thing that they think is the most important thing to them, actually the most important thing to them. Or along

the way, discover that you know what, it was aspirational and it's not that important to them.

Right? Because that's also an important discovery we

can make.

[00:25:56] Steve : sure. Yeah. Mm-hmm.

[00:25:58] Tyler : we want things, we think we want things because. Her mom thinks we should want them, or society thinks we should want them, or the Joneses think we should also have that thing, right? But it's a big deal to get to the core of who you are and figure out what you want, and then do those things.

[00:26:15] Steve : Yeah,

I think that TED talk turned out pretty well.

[00:26:18] Tyler : Well. Thanks. We'll we'll edit

it. A few dives. We'll, we'll polish it up. Uh, anyway. Yeah, I'm glad we can talk about these things. I, I think, uh, for me, uh, this is what brings a lot of like excitement and joy to life. Is, is, is just yeah, working on myself and doing that with friends.

[00:26:38] Steve : Yeah,

We'll see you again on another episode of, It's Not About the Money.

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