Is Your Budget a Puzzle?

With all this down time during quarantine I have seen many pictures of people completing epic puzzles. Whether you have never completed a puzzle before or you are a veteran, think through this with me.

Imagine you are sitting at an empty table with a 10,000-piece puzzle in your lap. Then you dump out all the pieces and spread them out over the table. When they are spread out, they take up most of the table and there is no order to them. Then you pull off the lid with the picture that you are working towards and set it in front of you. As you begin to follow the picture and put pieces together, your puzzle pieces start to resemble a shape. As the pieces are locked together, the empty space in between them disappears, so they take up less and less of the table. Before long, the puzzle starts resembling the picture, and instead of being spread out over the whole table, there are now some empty spaces around the outside of the puzzle. After a little more work, the puzzle is complete. It looks just like the picture, and there is plenty of space on the table around the puzzle. There are a lot of similarities between a budget and a puzzle.

You can think of the table space as your income, and the puzzle pieces as your expenses. Right now many of you have a big jumble of puzzle pieces (expenses) that are taking up your whole table (income), but have no plan for how to put the pieces together in an orderly fashion that looks like you want it to look. With a puzzle, this is where the picture on the lid comes in. With your finances, this is a job for your budget. In a puzzle the picture on the lid shows the ideal outcome for your puzzle pieces. A budget, if prepared correctly, should be a roadmap to reaching your financial goals.
When it comes to both puzzles and budgets, the beginning is the most difficult part. Once you start getting a few pieces where they go, however, the rest seem to just fall into place. Here are some tips to get your budget (or puzzle) going.

1. Start with the edge pieces. When you are putting together a puzzle, you start with the edge pieces. You build your border, and then work from there. With a budget you do the same thing. You start with defining how much you have available to spend. Once your budget limits are in place, you can start working on the specifics within that. If your puzzle is bigger than your table and hangs off the end, it is all going to fall apart and make a mess. If your expenses are bigger than your income, you are going to quickly find yourself in a financial mess. So, if you find your border getting too large, throw that puzzle out and get a smaller one, or find a bigger table.

2. Build the important parts: Once you get your border built, if you are like me, you find the most recognizable parts of the puzzle and start putting those pieces together. Most likely these are the most important parts of the picture, whether it is a person’s face or a tree in the foreground, that the rest of the picture is built around. For your budget, these are your goals. You may have a goal to save $300 for retirement and pay off $500 of debt each month, so those amounts will be added to your budget first.

3. Add the necessary background pieces: These are the parts of the picture that are not exciting and do not take center stage but are essential to the overall picture. This would include your sky and ground pieces. The pieces that seem to find their way into every puzzle but are never the focus of the picture. For your budget, these are your essentials. Food, housing, utilities, transportation, insurance, etc. There is nothing exciting about buying food, and it does not help you accomplish your goals, but you cannot live without it. If your background gets too big, it begins to detract from the focal point of the picture. If you spend extravagantly on your essentials (buying expensive cars and houses, and eating out all the time), it will take away from how big your goals can be (which are ultimately what matter in the picture).

4. Throw out pieces that do not belong: Somehow, puzzle boxes tend to draw in pieces from other puzzles. These extra pieces make it difficult to put your puzzle together and take up much needed space on your table. In your budget, these are expenses that do not lead to any goals and are not essential to living. As you start throwing out pieces that do not belong and putting proper pieces where they go, you will start finding more and more extra income that you could not see at the beginning.
5. Do it again: With puzzles, you usually take them apart when you are finished so you can do them again later. You will regularly need to readdress your budget as your income, expenses, and goals change over time.

What happens if you have a huge table? Moving your puzzle pieces to a bigger table may leave you with extra table space, but you are still not any closer to having a completed picture. You just have a mess on a bigger table. Some people have incomes that are so large that they still have money left over, even with excessive and disorganized spending. But without having and following a clear picture, they will have trouble creating the financial picture that they want. If they do happen to stumble into the desired result, they will have done so in a highly inefficient manner with lots of wasted time and money along the way.

What happens if your table is too small to small that no puzzle will fit? If your income cannot support even the most frugal lifestyle, then it may be time to look at ways to increase your income (which is a post for another day).

So, for those of you cranking out puzzle after puzzle during quarantine but your finances are a wreck, this may be a good time to stop and put together a budget. For those of you who need help, that is what we are here for!

Josh Roberts

Josh grew up in Tyler and after graduating from Baylor with a degree in financial planning, moved back to Tyler to pursue a master’s degree in accounting at UT Tyler and a career in financial planning. Josh holds the Certified Financial Planner designation and is a licensed Certified Public Accountant in the state of Texas.
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