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Try Budgeting Backwards

by jgordon on August 16, 2011

In true non-conformist fashion, Joshua Gordon takes a process that’s been done from top-to-bottom for thousands of years and makes it bottom-to-top. I think you’ll find his perspective intriguing (unless – like me – you actually do like eating broccoli). ~D.S.

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I hate budgeting.

Always have. Sort of like eating broccoli – no fun, but necessary. Budgeting feels cramped and sterile; I don’t love being told what to do, so when my budget tells me I can’t spend money on something, well, I don’t like the feeling. Don’t get me wrong: I’m glad for the structure and intention our budget gives our finances, but… I just think broccoli. Blech.

Now, I like both-and solutions. I like to ‘have my broccoli cake and eat it too’. So I’ve been thinking: Can I have the structure and intention of budgeting without the restrictive-feeling baggage?

Reverse Budgeting. That’s the term I’ve coined to describe the mindset my wife and I have adopted. It’s a fresh way of looking at money: It’s conventional budgeting flipped on its head. Reverse Budgeting is really only a slight shift in thinking, but the ramifications are huge.

See, conventional budgeting says, “I have this much money; I can only purchase A and B, but not C”. Reverse Budgeting says, “I want to purchase A, B, and C – therefore, I will make $X”.

Did you catch that?

Budgeting uses your current resources to limit your actions. Reverse Budgeting uses your actions to determine what resources you need. After defining and embracing Reverse Budgeting, I’m living with a new perspective that encourages me to expand my income to meet my needs.

Here’s  what reverse budgeting has done for me:

  • Encourages industriousness in my business endeavors
  • Inspires creative problem solving and money stretching
  • Reminds me that my job doesn’t control my income, I do
If you want to realign your priorities towards entrepreneurship and fantastic greatness, give Reverse Budgeting a shot.
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Joshua Gordon is Head Man of Awesome at TheNonConformistFamily.com. Together with his wildly hot wife, he’s leading his family of four on an epic trek out of Boring Template Life. Josh needs friends (his words, not mine), so hit him up on twitter and facebook


  • http://twitter.com/JWFinCoaching Jonathan White

    Josh, I have always known about the concept of doing a
    budget upside down, but never had a name for until now! I love the phrase reverse
    budgeting. Reading your post reminded me of one of the habits Steve Covey talks
    about in his book, “7 Habits of Highly Effective People”- Begin with the end in
    mind.

    I think it can be a good motivator to first figure out how
    much you are going to spend and then figure how you will earn the money to make
    those purchases. Of course you then have to go out and earn that money, but it
    is a cool concept Josh and thanks for sharing it! I appreciate it.

  • http://pastdueradio.com/ Derek Sisterhen

    Hey Jonathan – great connection with “begin with the end in mind”!  For folks in Josh’s position – where income earning is essentially uncapped – this reverse budgeting process is pretty slick.

    For those who work (and enjoy) a salaried position, reverse budgeting can shed light on inefficiencies in their budget.  If they plan their spending and determine they need an income of $5,000/month, but they only bring in $4,000/month, it’s a great time to reassess priorities, lifestyle expenses, and reconnect with reality.

    Great points on a great post!

  • http://www.thenonconformistfamily.com Joshua Gordon

    For sure, Jonathan. As Derek mentioned in his comment below, RB works really really well – especially since we’re striking out on our own, outside of a regular J-O-B. For Sar and I the concept of reverse budgeting helped us to reframe our thinking, equipping us to be much more streamlined in our income generation.

    Does that make sense?

  • http://twitter.com/JWFinCoaching Jonathan White

    Yeah it does make sense Josh. I
    can easily see how that keeps you focused on generating income and gives you a
    blueprint on what you need to do that month to create that income. Again, good stuff my friend!

  • http://twitter.com/JWFinCoaching Jonathan White

    Derek I agree with you, for those who are self
    employed using the reverse budgeting method is a great way to not only manage
    their money but to create more income to budget! Slick idea indeed.

    For
    a person with a salaried position I never thought of it like that but it would
    a great way to kind of do a “wants vs. needs” list. Especially if you are
    having trouble with overspending and it could help you prioritize your spending.

  • http://twitter.com/shalommama Nina Nelson

    Well Josh, this tells me two things:
    1) I can totally increase my income just by tweaking the way I approach my budget.
    2) You obviously have not tried broccoli cooked in bacon grease. Oh yum. And that’s why I love eating Paleo. :)

  • http://www.thenonconformistfamily.com Joshua Gordon

    Nina, broccoli cooked in bacon grease would be delicious. Frankly, muffin wrapper cooked in bacon grease would probably be delicious as well. I’m warming up to broccoli, really, I am… 

    RB puts the onus for earning squarely on my shoulders. It says, “Josh/Nina/Reader, if you want this – you can have it. Go out and earn it.”

  • http://theherohandbook.com Matt Langdon (@theherocc)

    Now you have to reverse budget for the castle in Europe.  Me too.

  • http://www.thenonconformistfamily.com Joshua Gordon

    Exactly! We’ll figure something out together, dude. First up, figure out how much the sweet trip’ll cost. Then, figure out really creative ways to finance it… my favourite thing to do! 

  • http://www.financialexcellence.net Matt Wegner

    I like it! Great idea for businesses and self employed folks. The trick is going out there and actually earning the money…

  • http://pastdueradio.com/ Derek Sisterhen

    I concur on both of Nina’s points.  Particularly the idea that bacon grease makes everything better.  Josh may be onto something with the bacon-dipped muffin wrapper; could be a great new trend (following on the heels of the gourmet cupcake shops that have become all the rage).

    Excuse me while grab some wrappers and fire up the frying pan…

  • http://www.thenonconformistfamily.com Joshua Gordon

    Exactly, Matt – you’ve hit right on it. Reverse Budgeting does fit very nicely with businesses and the self employed. I believe also, though, that RB has a lot to offer individuals in traditional jobs as well. Reverse Budgeting can be an incredibly freeing principle; it’s helped me realize that even when I am an employee, I still have control over my income.

    Side jobs, consulting gigs, the odd chore for hire – all of these options are available to anyone in a traditional job, and RB helps people realize that.

    Does that make sense?

  • http://pastdueradio.com/ Derek Sisterhen

    True, Matt – it’s all just a great idea if there isn’t any action.  I remember when Justin and I would sit down and do our annual strategic planning.  We also started with the desired results (X financial coaching clients, Y speaking engagements, Z product sales), and backed up to how many people we needed to interact with in order to yield those results.

    It’s funny how good old fashioned strategic planning is pretty much an application of Reverse Budgeting.

  • http://www.debtfreeadventure.com/ Matt Jabs

    I love the idea of pushing yourself to create more income. Every time I see people picketing for jobs I can’t help but think how that time could rather be spent creating a side income. Traditional culture teaches people to rely on others and to take what they’re given and be thankful, but there’s a huge diff between thankfulness and independent industrialism – both are needed. As a people we need to reclaim the skill of pushing ourselves beyond circumstances… choosing instead to reach for the stars and create our own prosperity.

  • http://www.thenonconformistfamily.com Joshua Gordon

    Mr. Jabs!! Brilliant to hear from you – and I’m thrilled at your response, man.

    I absolutely agree with you, especially your point about thankfulness vs industriousness; that’s such a fine balance to walk. It’s crazy to me (thinking along the lines of industriousness and self employment) that approx 20% of North Americans are self employed… And 75% of millionaires come out of that small group. That tells me that people who are willing to step out and make their own way are rewarded. Doesn’t mean it’s easy, though.

    Thoughts? Criticisms? Responses?

  • http://www.debtfreeadventure.com/ Matt Jabs

    Yeah, definitely not easy; self-employment is a lot of hard work but, when done correctly, can also deliver much more security, satisfaction, and prosperity.

  • http://www.thenonconformistfamily.com Joshua Gordon

    So, what you’re saying, Derek, is that I’m a genius? #wayoutofmyleague #dontbesillyjoshua

  • http://www.thenonconformistfamily.com Joshua Gordon

    Great insight, Matt. Challenging and perceptive, as always.

    Josh

  • http://pastdueradio.com/ Derek Sisterhen

    It is difficult to see people overly reliant on others to provide for them, who then turn and point a finger of blame at those “providers” as soon as business models shift, economies change, etc.

    I’d argue that you can connect thankfulness with industrialism: I’m thankful that God gave us creative brains, skill sets, and past experiences that we can leverage in industrious ways.  Those “industrious ways” can provide for our material needs in the form of income, and also meet the needs of others utilizing our product or service.

    And, as a side note, I’m always a little leery of working to earn lots of money for the sake of having lots of money.  Some are blessed considerably with financial resources through the application of their industriousness.  But I’ve seen that blessing become a curse on multiple occasions because the money became the ends, rather than the means by which a lifestyle of generosity could be used to bless others.

  • http://www.thenonconformistfamily.com Joshua Gordon

    I love what you’ve said here Derek, about the connection thankfulness and industrialism. That’s a big, big deal. I think of Deut. 8:18 “Remember the Lord your God, for it is he who gave you the power to produce wealth.” In the very same breath, I want to give a lot. Like a LOT. I want to fund hospitals, prizes for creativity and innovation, education centres, etc… 

    I need wealth to do that. And I thank God he gave me the power to create that. 

  • http://www.thenonconformistfamily.com/2011/08/19/how-to-win-with-money-ncf-style/ How to Win with Money, NCF Style.

    […] great lengths to figure out why we’re here, define our family vision and goals, and work to fund those goals. Every spending decision we make (ideally), is one that contributes to our […]

  • http://twitter.com/MoneyPlanSOS Steve Stewart

    Reverse budget kind of sounds like “Think And Grow Rich”, doesn’t it? Ya can’t be rich until you have the money but you have to envision yourself being rich (or increasing your income $1,000 a month), write it down, actually go out and DO some things to make it happen, and chances are you will make it happen. And if you didn’t quite reach the goal in the time you planned then I would guess you are closer to it than the day you started.

    I think we all have used a simple Reverse Budget at some time in our lives. I can remember when I was a teenager and I wanted two Technics SL-1200 turntables. I had a job, but it wouldn’t get me what I needed as fast as I wanted them. So I got some side jobs, saved up the money, and a few month later my buddy and I were carrying two brand new 1200’s to the train (Amazon wasn’t around in those days and you could only get these as specialty shops in downtown Chicago). 
    That was a simple example, a bit harder to pull off when you are married with kids, but definitely doable.

  • http://pastdueradio.com/ Derek Sisterhen

    Hey Steve – thanks for sharing, and a great example with the turntables!  (Ah, life before Amazon had everything you could ever need a few clicks away…)

    What I like about your story is you just didn’t sit and think, and think, and think.  You actually did the doing that it takes to make a goal become a reality.  I’ve met a few “Think and Grow Rich” Kool-Aid drinkers who love do more thinking than doing.

    Thanks for the comment!

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