How to Use Personal Budgeting Methods to Find the Right Balance in Life
With all the demands on your life, how do you make good choices about splitting your time between different activities? For example, is an hour of exercise “worth” more than an hour of spending time with your spouse? At what point does the time you spend commuting to work “cost” you more than the income you are bringing in?
My recommendation is to assign a dollar amount to each hour spent on an activity, and use personal budgeting methods to ensure that you are increasing your life’s net worth. In other words, manage how you live your life through a “Life Budget”. The key concept is that time management cannot be done simply by comparing priorities of activities against each other. (If this was true, you’d just sit around watching the reality TV show network on television - a top priority for most of us) You need to understand the impact on your life of the choices that you make. By applying traditional personal budgeting methods to balancing the “income” and “expenses” of your daily activities, you can find the right balance in your life.
I’ll walk you through this process in several follow-on posts, but here is a general outline of what to expect:
1) Identifying your ‘Life Budget Categories’. I’ll discuss how to develop the specific categories of activities to track in your Life Budget. These are based on your own personal values. This includes how to determine what activities in your life are “income” activities, and what are “expenses”. I’ll compare these activities to the traditional type of “income” and “expense” categories you’d find in personal budgeting, like Salary, Interest, Food, Housing, Utilities, etc.
2) Assigning Dollar Values to your Life Activities. After you’ve determined what categories you want to track , you need to calculate the hourly rate of those activities. I’ll describe how to do this for some common life activities, like exercising (or being a couch potato). Just to give you a idea, the time you spend exercising is worth about $21 per hour of “income” due to the increased life span. You could also look at not getting enough exercise as a $21 per hour “expense” for each hour you should be exercising. Spending more of your time on “expense” items than on “income” items results in a life that is out of balance.
3) Calculating your Current Life Budget. After determining the hourly rate of each life activity, the next step is to find out where you currently stand from a Life Budget perspective. Are you going into Life Debt each month by not spending enough time with your spouse and children? (I know, Life Debt sounds pretty hokey, just keep reading) This step is likely to be an eye opening one for you.
4) Establishing your Future Life Budget. Once you determine your current state, you’ll likely want to make some changes in your life to better balance out priorities. I’ll describe some typical hours to consider budgeting for specific activities. For example, you should budget about 75 hours for sleeping and eating, and will likely have about 29 hours available per week for “leisure” activities. How you spend them will be based on your personal choices.
5) Tracking your Life Budget. I’ll go over some ideas on how to apply traditional personal budget tools to tracking progress on your Life Budget. This will include ideas on how to analyze what you are doing right, and where you could use some improvement.
6) Making Corrections. As you track your progress, you may find you need some help in the ‘Life Finance’ department. I’ll highlight a few concepts from personal finance and budgeting, and how they can be applied to better balancing your life’s activities.
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