Ep 23 | The Budgeting Trick That ACTUALLY Lets You Spend Guilt-Free

Forget budgeting apps and color-coded spreadsheets—there’s a better way to manage your money. In this episode of The F. Word, Priya Malani breaks down the one financial strategy that actually helps high earners spend guilt-free: the magic number. Learn how this simple but powerful system puts your savings on autopilot, eliminates decision fatigue, and finally gives your money a purpose. If you've ever felt like you're doing “girl math” just to justify your Uber Eats order, this episode is for you.

Tune Into This Episode to Hear:

• Why traditional budgeting doesn’t work for high earners (and never did)

• How to calculate your “magic number”—the amount you can spend guilt-free

• Why automating your savings first is the key to avoiding lifestyle creep

• How to stop over-saving, over-thinking, and finally enjoy your money

Follow Priya Malani:

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THE STUFF OUR LAWYERS WANT US TO SAY: Stash Wealth is a Registered Investment Advisor. Content presented is for informational and educational purposes only and is not intended to make an offer or solicitation for any specific securities product, service, or strategy. Consult with a qualified investment adviser (that's us) before implementing any strategy. Investing involves risk, including the loss of principal. Past performance does not guarantee future results. There…we said it.

Transcription

Because that's what we all want, right?

We all wanna blow our money and not think twice when we buy stuff. We don't wanna have to ask ourselves, like, can I afford this? Should I really be buying this? You should feel like, oh wow, yeah, the money's there. Go for it. That's the freedom of the magic number.

Hey guys. Welcome back to The F Word, where we talk about money in a way that actually makes sense for 30-somethings.

Today we're talking about one of my most favorite things to teach clients. We call it your magic number, and it's our antidote to traditional budgeting. It's probably the sole reason why our clients stop feeling guilty and actually start enjoying spending their money.

I'll just say this: if you've ever tried a budgeting app and it made you feel like you were back in school rushing to get your multiplication tables done before time—AKA, the month runs out—this is for you.

So let's get into it.

Backing up, what is the problem with budgeting? Everybody and their mother is talking about, "You should get a budget. That is how you will achieve all of the things that you need to achieve in life." It's all hinging on the idea of a budget.

Okay, so let's talk about the problem with traditional budgeting and why the "tracking every latte" method does not work for high earners.

The budgeting shame spiral is real.

Frankly, budgeting is how people set themselves up to fail.

The thing with budgeting is that it's rigid, right? Like, you create these predefined spending limits in various categories, and that is an insanely rigid system that frankly requires you to predict the future. Which—no two months are ever the same.

Not only are no two months ever the same, but life is unpredictable. I guess that's kind of the same thing, but I'm saying sometimes it's curveballs. Sometimes it's not necessarily a curveball—it's just friends come in from out of town, or it's a rainy day and you're not feeling like taking public transportation, so you're gonna hop in an Uber.

So to sum up: the problem with budgeting is that life is unpredictable and budgets are rigid, which means it's set up to fail.

So now let's move on to the magic number.

The magic number starts with the end in mind, in that you get to start by thinking about the things that you truly care about. And let's make a foolproof plan to ensure that you're on track for those things.

Personally, some of the things that I think about are: I wanna know that I have money set aside to tip my doorman every December. I love to travel, and I wanna make sure that I have enough money—the amount that I want—to travel every single year.

Oh, I live in the city, so I wanna know that I can spend on a rental car. I wanna know that I can spend a certain amount of money without having to think about it, without having to feel guilty, without having to see whether it fits into my budget. I wanna know that I can rent a car and go wherever I wanna go.

So you decide what you're saving for first, and then you put a plan in place to automate for those goals.

So for example, I want $10,000 every single year to travel. I know I need $833 every single month to go out of my checking account into a dedicated travel savings account.

I also know that I'm saving for retirement and I have a certain amount of money going automatically to my retirement account. So I have money going to my retirement account. I have money going to my short-term goals like travel, holiday gifts, doorman tips, friends’ weddings—especially the out-of-town weddings that you wanna like, save up for.

It allows you to actually see what's left over. And now, it doesn't really matter where you spend that money. You can spend it on groceries, you can spend it on shopping, you can spend it on whatever you wanna spend it on—and you don't need to worry about having anything left over because you're already on track for the things that you care about.

Right? Because again, just to go back to the point of budgeting—why do people budget? People budget because they want to ensure that they don't overspend, in hopes that they have money left over at the end of the month. They can save it, they can put it towards something that they wanna do down the road.

Well, what if you do it in reverse and you take care of the things that you really care about—that you really wanna know you're on track for—do that first, and then whatever's left, spend however you want.

The total amount of money that you can spend once you've taken care of automating for all of your priorities is your magic number.

So for high earners—we had a couple that was jointly making around $350,000, and their magic number was around $3,500. Which doesn't seem like a lot. That's their total "what's left over" to spend and live their life.

We had another couple who was also making about $350,000, and their magic number was closer to $6,000. And the difference is: one of them was planning for a lot more things that they wanted to make sure they were on track for.

So if you just simply think about what it is you want to do in a given year—five years out, ten years out—take some time, sit down and think about it. And if you're in a relationship, amazing conversation starter.

Think about what you wanna accomplish, figure out about how much you'll need, automate it on a monthly, bi-monthly basis, and then blow the rest of your money in your checking account down to zero every single month.

Your magic number is the most you can spend in a given month without disrupting everything else that you wanna be on track for. And so by backing into that number, it's a true, pure discretionary spend number, because you've already taken into consideration everything else.

The reason the magic number is so powerful is because it actually allows you to see what kind of lifestyle you can afford, given all the other things that you wanna accomplish.

Too many people wait and think like, "Oh, when I get my next paycheck, when I get my next tax refund, then I'll feel more secure. Then I'll feel like I'm able to save for the future. Then I'll put money away for retirement."

If you keep following that mindset, you will inevitably fall victim to lifestyle creep. I'm telling you this right now. I've seen it thousands of times. Everyone approaches this thinking like, "Oh, there will never be enough, and my magic number will never be high enough for what I want it to be."

But that's literally never the case. We always come out of that exercise with people being like, "Wait, there's so much to go around. I just was wasting it to a certain degree." Like, without having a plan in place, you end up spending more mindlessly.

It's not mindless spending and then save whatever's left over. Save first, and then mindlessly spend whatever's left.

And I promise you, you will have more than you think. Unless someone is in a dire situation with a ton of debt, or it was just very obvious that they were a hot mess with their money—I always walk away from this with people being like, "Oh my God, wait, I still have X thousands of dollars to spend, and I'm still on track for all these things."

It's very empowering. And I highly recommend.

Okay, so why does this work?

Essentially, it accounts for your priorities upfront, and then your lifestyle becomes whatever's left. If you do it the other way around, you will invariably end up being a victim of lifestyle creep.

Every time your paycheck goes up, every time you get a tax refund or a bonus or a commission check or have a really good month with your business—you will adjust. And if you keep adjusting upwards and don't let your saving and investing adjust with it, you'll always live paycheck to paycheck.

So the magic number really breaks this cycle, and it forces you to think about your priorities, put a plan in place for them, and back into what you can actually spend—mindlessly and guilt-free.

Because that's what we all want, right?

We all wanna blow our money and not think twice when we buy stuff. We don't wanna have to ask ourselves like, can I afford this? Should I really be buying this? You should feel like, oh wow, yeah, the money's there. Go for it.

That's the freedom of the magic number.

No budgeting, no spreadsheets—just one crystal-clear number that stays the same until your financial situation changes. Maybe that means your income changes or your student loans get paid off—you have to recalculate your magic number.

But otherwise, you know: every month, you can spend $5,000 guilt-free.

So sometimes we'll hear people say like, "But shouldn't I track every dollar?"

No. I always say: smart money management does not require micromanagement. If you're micromanaging your financial life, you do not have a great system. If you have to check in with your money every single month, that's not a great system.

You should literally have everything on autopilot and be focused on this one number, which is your guilt-free spending number—your magic number.

And sometimes people say, "Well, what if I wanna save more?"

I would say, why? Why do you wanna save more? Tell me what your goal is. Do you want to increase the amount that you get to spend on travel? That's a solid reason. And maybe for that reason, you do decrease your magic number and automate more towards your travel sub-savings account.

But it's intentional, right? We're removing arbitrary decision-making. It's not just "save more" because you feel like saving more. Save more for what?

In fact, I'll tell you this—and it'll blow your mind—we have so many clients who come to us and they are actually over-saving for retirement. Which sounds crazy, because like, who the hell can over-save for retirement? But it is actually very, very possible.

We see so many high earners over-saving because they're doing it very arbitrarily. It's like, "Oh, I think I'm not on track. I think I need to put more away." It's like, no—you are not only on track, you're ahead of schedule, and you're compromising on your lifestyle today.

Which is also not a goal for many of us. We want to enjoy our lifestyle. Putting intention behind your savings is key.

I wanna make sure that you're not just saving for the sake of saving, but you know why you're saving. To get on track for a goal faster, to retire earlier, to have more saved up for travel. There's many reasons to save.

But if you're just saving 'cause you feel like you're not doing enough, and you don't have a plan—you're just winging it.

And you make good money. You should not be winging it.

Oh, and this is my favorite bit of pushback: "This seems too simple."

Uh, yeah. It's designed to be that way. Why do people feel like money has to be complicated?

Personal finance is not rocket science. It is so, so, so simple. And I'm not saying that like, "Oh, you should already have this figured out." In fact, the financial services industry is predatory in this way—they wanna make everything feel complicated.

It is not complicated. Tell me what you care about. I'll show you how to get on track for it. And whatever's left is your lifestyle.

If you're not happy with your lifestyle, there's really only one major thing that you can do—which is increase your income. And that's a conversation for another day.

So to sum up: why do our clients love their magic numbers?

Well, one, it eliminates the need to have to micromanage every transaction. To have to track in a spreadsheet where your money's going—how much you spent on gas, how much you spent on groceries, how much you spent on insurance, how much you spent on whatever. Stop it.

The other thing that's really nice about this system is that once you're automating towards your goals, as your income grows and goes up, you actually can see how your lifestyle can adjust and increase with it.

It's so much more clear of like, okay, we're on track for our retirement. We're on track for the travel goal we have. I use travel as an example a lot because it's a non-negotiable for most people. And I don't think we have a stash plan that doesn't include travel as a goal.

So travel—like all the things that you care about—if they're already solved for, if you're already planning and you'll be able to spend that money guilt-free, then as your income increases, so should your lifestyle.

And at the end of the day, this gives you clarity, this gives you confidence, and this gives your money purpose.

Because that's a problem for most of us—we're operating from a state of fear, right? Like, we're never sure we're gonna have enough. And so we're either hoarding it or we're spending it mindlessly.

And then we get into this cycle of girl math and all the other twisted ways in which we justify spending.

But by simply taking a step back, figuring out what your priorities are, putting some purpose and intention behind every dollar, it'll allow you to actually adjust to your lifestyle, enjoy your lifestyle, and spend your money guilt-free.

If you're still feeling like you're operating from a place of fear or restriction—you probably need a magic number.

If this episode made you second guess how you're approaching your saving and your spending, or budgeting like you're broke—you know where to find us.

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Thanks for listening to The F Word. See you next time.