Every weekday for work, I take the train into the city. I see a lot of people walking to and from the train station every day.
It’s a fun chance to people watch and to appreciate diversity because there are so many different types of people.
One immediate area of diversity is in the way people walk. Everyone walks in their own unique way.
Some people walk fast and some walk slow. Some people walk with a confident bounce in their step and some walk more reserved and smoothly.
Other people sway side to side when they walk. Some walk as if they have no place to be and others walk very intentionally.
Everyone walks differently. Everyone walks in a way that is natural for them.
What if all of these people tried to walk in a certain way or someone were to force them to walk in a very specific way?
Have you ever tried to walk differently than you normally do? walk when you’re not even thinking about it?
It is very difficult, awkward, and doesn’t feel natural.
It’s a far cry from when you walk without even thinking about it. It’s very natural.
Budgeting should have that same natural feeling and be different for everyone.
Depending on who you are, where you are in life, and where you want to be financially, there should be some major differences in your budget.
You hear me say that all the time, but what exactly does that look like?
Let’s look at some examples of different types of people, where they are in their lives, and how their budget is going to differ from each other.
There are some key takeaways to gather from each of the situations as well.
Single and Well Off
This person has little responsibility at home due to having no spouse or kids. They spend money on only what they want to spend it on.
They may have needs like maximizing their retirement or saving 10% of their income. And they may have wants like going out with friends often, spending money on entertainment, or
This person may also like to do things easier since there isn’t a ton of responsibility at home.
They might have their income, saving, and bill pay on autopilot so they know all of their bills and saving is taken care of.
Tracking their finances might be an afterthought and might not be necessary because they know their bills are paid.
Their grocery budget is on the smaller side because they don’t eat at home as much, and when they do, they’re only feeding themselves.
From the outside, they might seem like they spend a lot on frivolous things, but there may be more going on behind the scenes.
The Entrepreneur or Trying to Start a Business
The budgets of entrepreneurs or those just starting out trying to start a business might be all over the place.
Depending on the level of responsibility at home—kids, spouse, college expenses, etc.—their budgets can look drastically different.
Entrepreneurs tend to spend a lot of money on education in their personal budgets, especially when they’re just starting out.
They also may invest a significant amount of their own money to fund the startup.
That being said, entrepreneurs work really hard and their budgets usually reflect higher spending on things like vacations and quality rest time. If an entrepreneur has a family, they will spend a little more than average to have time with them.
An entrepreneur’s budget may also have an even higher focus on saving. A lot of startup founders will save money long before they quit their day job to give themselves a nice cushion they can live on after they do quit.
An entrepreneur may prioritize a higher grocery bill to eat healthier as well as money set aside for a gym membership or exercise equipment.
Both of these provide the entrepreneur with the energy they need to perform at peak level both in their startups and with whatever they focus on when they are away from work (like their spouse or family).
Getting Ready to Retire
The “almost retiree” has a lot to look forward to in the next year or so. A lifetime of working is about to be traded for complete freedom.
They’ve done everything they can throughout their working life to prepare for their retirement and they are 99% sure they will be set up for success financially.
This person may prioritize one last push of savings just to give them that little bit of extra financial security in retirement. They could cut back on non-necessities for a short time to make this happen.
The ‘almost-retiree” will also go over their budget several times over the course of the year just to make sure it will jive with what they want to do in retirement. They’ll adjust and plan for how often they want to travel, what they want to experience, and how comfortable they want to be in everyday life.
This person will also be looking over their investments. They will study the market and decide if they want to move to safer investments sooner rather than later.
The goal is to protect their income that they’ll have in retirement so they can make sure their needs and wants are met for the rest of their lives.
Spending won’t be a priority for this person because of their saving so they may be a little more conservative with going out and doing things.
DINKs (Dual Income, No Kids)
Couples with a dual income and no kids generally have a bit more disposable income than some others on the list.
They are usually able to easily save a decent amount for their retirement while spending money on things they want to do now.
They might prioritize travel now since they don’t have to worry about kids. You may find them living in a city or smaller suburban apartment so they can maximize their spending budget.
Depending on how they like to manage their money, they may not track every penny but still have a good idea of where their money is going.
Their grocery budget may be small and their eating out budget may be on the larger end. So it may seem like they aren’t being smart with their money.
They are able to have a nice balance between living now and living for the future and it works for them.
They are comfortable with their budget and can do what they want with their money.
The Single Parent
Depending on the income level of the single parent, they may be able to do a lot for their kids or only a little bit.
What is common between all levels of income of single parents is that they tend to sacrifice their own fun so they can do more for their kids.
The single parent may not go out much with friends, but you may see them putting their kids in school programs or extracurricular activities of their choice.
They will more than likely only budget for the necessities, and their necessities will focus on what their child or children need.
Tracking every penny is usually something you’ll see them doing so they can make sure that they aren’t overspending and are providing what they can for their kids.
They may receive help from others in different areas of finance, which does not mean they shouldn’t be spending money on extra things for their kids.
Dual Income Parents
These parents spend quite a bit of time away from their kids during the day, either out of necessity or desire—especially if their kids are in school.
They may need to both work to pay the bills, they might really enjoy their careers, or they may enjoy the extra income to be able to do more with their kids.
You may see them doing larger vacations or weekend trips or activities because either their income allows for it or it’s a way to spend more quality time with their kids.
The couple may prioritize larger trips for themselves as well to strengthen their relationship rather than doing things a little closer to home.
They may have a 401K at work to help with their future. Depending on income level, they may even max it out. They try and have a balance between saving for the future and doing things in the present as well.
They may also give up bigger trips for activities that their kids want to do around their home as well. Things like sports or other activities are prioritized and sacrificed for in terms of both time and money.
You may also see them going out to eat a bit more than usual because of that dual income.
Conclusion and Key Takeaways
This is only a small set of the different life situations that people are in. So what is the point of this?
There are three key takeaways that we can gather from this.
- There are foundational elements common to everyone in budgeting. For the people I see walking, everyone is walking upright heading to their destination even though their walks are different. With budgeting, the thing that everyone has in common is intention. If you budget with intention in a way that works for you, you will not have trouble succeeding.
- Everyone should be different in their budgeting methods. There is no one-size-fits-all approach. Beyond the foundational aspects of budgeting, you should be creating your budget to work for you and not trying to “walk” like someone else.
- Don’t judge a book by its cover. Lastly, we tend to quickly judge someone who spends a lot of money, or goes out to eat too much, or does any number of things that we don’t think they should be doing with their money. If we dig deeper, they may have their financial life already in order, or they may be prioritizing things that need to be prioritized for what their goals are or where their life situation is at. Part of accepting that everyone is different is not judging.
These are things that we can learn from this.
Everyone is different. Everyone’s life situation is different. And everyone deserves to budget in a way that will work for them, help them move forward in their goals, and ultimately win in their finances.
And I, for one, am going to do everything I can to help.