Budget for It!
Since I’ve already copped to the fact that the biggest risk facing Permanent Equity is cholesterol, then you probably won’t be surprised to learn that we like to eat while we talk about stuff. This is why we’ve started a tradition of hosting semi-regular Lunch & Learns at the office for the team on topics that might be important or interesting. Taylor, for example, led a fantastic Lunch & Learn on compliance and James on what to do and not do and drink and not drink if we end up at Harpo’s for Late Night Rooftop at Capital Camp this week.
But I’m pretty sure the best received Lunch & Learn so far was the one where I led a discussion on personal finance…
Kidding aside, the reason we did it is that we want everyone at Permanent Equity to be making good and confident decisions about their money. After all, if people are stressed about their finances, they probably won’t be able to keep a clear head about work.
So we kept it general, but hit on things like savings and withdrawal rates for retirement, expected costs of college, the ease of low cost indexing, and how to craft a household budget. It ended with me getting several requests to share my own household budget framework, which is a spreadsheet I built a long time ago now when my wife and I started a family.
But it’s funny, I had a lot of anxiety about sharing that document and edited it heavily before doing so. The reason is that, and you wouldn’t necessarily know this on its face, budgets are really personal documents. Even leaving aside numbers and amounts, the things you budget for say a lot about you. “Oh wait,” I thought a few times, “do I want everyone to know I am saving for that? Or that I value that enough to put in my budget?”
Yet even after making the Hanson budget framework more anodyne, I got some really interesting questions.
“Why isn’t there a line for charitable giving?” someone asked (I consider this a more discretionary item and handle it that way but absolutely take the question).
“Do you never eat out?” wondered another (because I had “Groceries” listed as a category but not “Eating Out,” but in my defense do have the catchall “Fun and Travel”).
Just don’t judge me. Like I said, this is personal stuff! Your budget says a lot about you and that’s why you, your family, and your business should have one.
Because here’s the thing, budgets get a bad rap for being a tool only fun-sucking penny pinchers use. But they don’t have to be that. Used correctly, they aren’t something you create to spend less. Instead, budgets are a tool you can use to make sure you are able to allocate meaningful capital to the things in your life or business that are the most important to you.
The alternative (and my experience) is that if you don’t have one, more money than you know ends up being spent without a purpose. The reason that’s sad is because having capital is a privilege and an opportunity. And if you have a privilege and an opportunity, why not have a plan?
– By Tim Hanson