Shadow Budgets and the Stories We Tell Ourselves
When your system starts to slip, it’s not about failure—it’s about honesty.
I built a cash flow system to give myself clarity, but somewhere along the way, I started bending the rules. Not in big, dramatic ways—just little ad hoc choices that slowly added up. This isn’t a story about blowing up my budget. It’s about how easy it is to drift from the structure you trust—and how to find your way back. Photo by Bilgehan Tuzcu.
One of the things I’ve noticed, both in my work with clients and in my own financial life, is that a lot of stress comes down to one thing: not really knowing where you stand. Not because you’re bad at math, not because you’re careless or undisciplined, but because the tools we use to track our money — usually a single checking account or a credit card balance — just don’t give you a clear enough picture.
That’s why the cash flow system I teach clients, and that I use myself, revolves around a simple but powerful idea: different accounts for different jobs. The basic idea is that you don’t let one account do everything. You don’t let one account pay your rent and your Netflix subscription and your groceries and your sneakers. Because if you do, you end up staring at your account balance, wondering if that money is actually available or already spoken for. Instead, you separate it out. One account — your “clearinghouse” — is only for automatic, recurring bills: mortgage, utilities, subscriptions, things that will come out whether you’re paying attention or not.
Another account handles flexible spending: groceries, restaurants, gas, sneakers. If you want to get even more granular, you can add vacation funds, house repair savings, whatever makes sense for your life. In my case, I have a business “runway” account — essentially my version of a personal safety net — that holds about six months’ worth of expenses. Every month, I move money from the runway into my clearinghouse account. From there, it flows automatically: mortgage, utilities, recurring bills. I also send a set amount into my flexible spending account each week, which I treat as my real “dashboard” for everyday purchases. If there’s money there, I can spend it. If there’s not, I can’t. At least, that’s how it’s supposed to work. The system itself isn’t the problem.
The problem — as I’ve been realizing lately — is what happens when I stop following it as carefully as I should. When I start bending my own rules. When I start running a kind of shadow budget in my head that tells me it’s fine to buy that thing, fine to swipe the card, fine to figure it out later. And the trouble with a shadow budget is that, even if things seem fine on the surface — the mortgage is getting paid, no credit card balances are piling up — it slowly erodes your sense of where you really stand. You lose the ability to see your situation clearly. And clarity, more than anything else, is what a good cash flow system is supposed to protect.
Where It Started to Fray
The thing about shadow budgets is that they don’t start with big reckless decisions. They start with little ones that seem harmless enough.
Like the road trip I took with friends a few months ago. We were supposed to be on a pretty casual itinerary — stop for lunch somewhere, maybe visit a few little towns along the way. Nothing extravagant. But then one of our friends’ phones died, and we had to pull into a dollar store to find a charger. Right next door was an Adidas outlet store. And it turned out they were having a massive sale: 50% off pretty much everything. I wasn’t planning on buying anything.
But then I found a tracksuit that I actually needed — or at least strongly wanted — for tennis season, which was just getting started. And a pair of sneakers that were comfortable, well-made, and frankly just really cool looking. My friend and I each ended up getting the same pair. It felt like a small bonding moment, one of those funny little things you remember later — how you and your friend accidentally became Adidas twins for the day. And the thing was, I did pause. I did think about my flexible spending account. I knew that buying both the tracksuit and the sneakers would put me over my weekly flexible spending allotment. I even made a note in my phone to reimburse my clearinghouse account later. But in the moment, the logic that won out was the same logic that wins out for a lot of people: the deal was too good to pass up, the purchase supported a healthy hobby, the social experience mattered, and anyway, I could always figure it out later.
Later came when my notes app started filling up with little reminders: “Reimburse $100 to clearinghouse.” “Reimburse $60 for dinner out.” “Reimburse $30 for museum tickets.” None of it catastrophic. None of it felt huge. But it added up. And what it added up to was a growing, invisible gap between the system I had set up and the way I was actually operating day-to-day.
Around the same time, I went to see Maria Bamford perform live — a comedy show I had been looking forward to for a while. She’s one of my favorites, both for her humor and for the way she talks so openly about mental health, money, and the weird, often precarious realities of trying to build a life as an artist. Her book, Sure, I’ll Join Your Cult: A Memoir of Mental Illness and the Quest to Belong Anywhere, is worth reading for anyone, but especially for anyone who has struggled with making money fit into a life that doesn’t run on neat corporate rails. It’s not a personal finance book, but it’s more honest about money than most personal finance books are.
Being at her show, laughing until my face hurt, I felt grateful — not just for the night out, but for the reminder that part of what money is for is building a life that feels good to live. All of which made it harder to admit, even to myself, that the way I was managing my day-to-day spending wasn’t actually making me feel good. It was making me feel a little scattered. A little more anxious than necessary. Like I was skating along without really knowing how thick the ice was. And even though the big picture was fine — no credit card debt, mortgage paid, safety net intact — there was a growing sense that if I kept letting these little ad-hoc exceptions pile up, I would eventually lose the thing I value most about financial planning: a clear sense of where I am, where I’m going, and how I’m going to get there.
Seeing the Disconnect
It would be easier if the story ended there — a little overspending, a few notes-to-self in my phone, and a renewed resolve to stick to the system. But that’s not how it really played out.
The truth is, the more I let those small exceptions slide, the harder it became to even answer basic questions about my financial life. How much was I really spending each week? Was my flexible spending transfer enough, or was it too low for the life I was actually living? How much could I really, sustainably save each month without quietly undermining myself with extra charges here and there? When you run a shadow budget — when you rely on vibes and rough guesses instead of real numbers — you start losing the ability to answer even simple questions like that. And you lose the sense of control and agency that good financial planning is supposed to provide.
And what made it harder to notice at first was that the big signals were still fine. I wasn’t missing mortgage payments. I wasn’t carrying credit card balances. I wasn’t draining my safety net. If you zoomed out and looked at the broad strokes, everything seemed solid. But if you zoomed in — if you really looked — the cracks were forming. It wasn’t just about whether I could afford an extra lunch out with a friend or a spontaneous trip to the Adidas outlet. It was about the fact that, over time, spending outside the system becomes normal. You stop seeing those purchases as exceptions. They just become how you operate.
And once that happens, you lose the ability to rely on your own framework. You stop trusting your own numbers. You stop trusting yourself. And it wasn’t just about spending, either. It was about opportunity cost. Because while I was justifying extra dinners and sneakers and spur-of-the-moment comedy tickets — all good things, all part of a life well lived — I was also putting off bigger, more meaningful financial moves. Like setting up a membership at a local fitness studio I’d been eyeing for a while, a place that would support some long-term health goals. Like resuming more regular retirement contributions, which I had paused after going full-time in my business.
Those bigger moves felt too daunting, too expensive, too risky. Not because they actually were — but because I didn’t have a real, grounded sense of what my financial capacity truly was. How could I? I was basing my self-assessment on a vague feeling instead of real numbers. And that’s the irony of the shadow budget: it doesn’t just affect your discretionary spending. It ripples out into your broader sense of what’s possible. It makes you cautious when you don’t need to be. It makes you stuck when you could be moving forward. It keeps you small, not because your situation demands it, but because your information is incomplete.
Once I realized that, it felt less like a budgeting problem and more like a deeper, trickier problem: a problem of clarity, of confidence, of permission. I was still doing many things right — still maintaining a six-month safety net, still earning a living doing work I care about, still prioritizing important relationships and experiences. But I had let myself fall into a habit of thinking smaller than I needed to, just because I wasn’t seeing my own situation clearly. And that’s the real risk with shadow budgets. They don’t just blur your spending. They blur your sense of possibility.
You stop aiming for more, because you’re not even sure if you’re covering the basics. You stop dreaming a little bigger, because you’re too busy feeling vaguely guilty about sneakers and sandwiches. And that’s not how I want to live. That’s not the kind of financial life I want for myself — or for my clients.
A Better Way Forward
Once I understood the full weight of what was happening, the answer became obvious — even if it wasn’t exactly fun to admit. I had two choices.
First, I could double down on discipline. I could say, No more exceptions. No more ad hoc spending. Stick to your original flexible spending transfer, no matter what. In theory, that could work. But I knew myself well enough to know it would be a slog. Every lunch out, every small joy, every concert ticket would feel like a battle. I would be operating from a place of deprivation, of white-knuckling my way through every decision. And even if I “succeeded,” it wouldn’t be sustainable. It would come at the cost of spontaneity, connection, and even my own mental health.
Or — second — I could face the real numbers. I could admit that the flexible spending transfer I had set for myself wasn’t actually realistic for the life I was living. That my habits had changed. That my business was growing, my income was stabilizing, and maybe — just maybe — it was time to recalibrate. Not because I wanted permission to splurge without guilt. Not because I was giving up on discipline altogether. But because the whole point of the system — the multi-account setup I teach my clients — is not to enforce some arbitrary ideal of frugality. It’s to create clarity. It’s to create alignment. It’s to help you move through your financial life without constantly second-guessing yourself. And you can’t do that if your system is built on numbers that aren’t real.
So here’s what that better way forward looks like for me: First, I’m committing to a hard reset. For the next few weeks, I’m treating my existing flexible spending transfer as a hard ceiling — no exceptions, no “just this once.” I need real data. I need to know whether this amount is truly workable if I actually stick to it. Second, if I find that I consistently need more breathing room, I’ll raise the transfer. I’ll acknowledge the real cost of the life I’m living — the real cost of a life that includes seeing friends, enjoying travel, attending live shows, and occasionally buying a great pair of sneakers. And I’ll stop pretending I can support that life on a number that doesn’t actually match reality.
Third, I’ll accept that raising the transfer might mean shortening my runway — that six months of expenses might look a little more like five and a half, or even five. And while that’s not my favorite outcome, it’s better to know. It’s better to see it clearly and plan accordingly than to keep drifting in a haze of half-truths. Because clarity isn’t just about numbers. It’s about agency. It’s about actually being able to decide what you want to do — and then doing it, without all the background noise of guilt or second-guessing. I don’t want to live in a financial fog. I don’t want to keep making decisions based on vibes. I want to know, with real confidence, what my money can support — and what it can’t. And then I want to live accordingly. No more shadow budgets. No more stories. Just honest numbers, and honest choices. It’s not glamorous. It’s not some grand gesture. It’s just the quiet, necessary work of building a life that feels solid and free.
What I Hope You’ll Take From This
I’m not sharing all this because I think my situation is especially unique or dramatic. It’s not. It’s ordinary — and that’s exactly why I think it’s worth talking about. Because when we imagine getting off track financially, we picture something big and obvious. A massive blowout. An emergency. Something you can’t miss. But more often, it doesn’t look like that at all. It looks like slow, ordinary drift. It looks like the little things — the $100 you promise yourself you’ll move later, the sneakers you convince yourself you’ll need anyway, the flexible spending number you quietly outgrow without ever officially changing it.
It looks like tiny, easy-to-rationalize deviations, piling up slowly until the system you built — the system you trusted — stops feeling real. You lose that sense of clarity. You lose the quiet confidence that you know where you stand. And if that can happen to me — someone who teaches this stuff for a living, someone who literally built a course around this system — it can happen to anyone. It’s not about being careless. It’s not about not knowing better.
It’s about how easy it is, even with the best tools and intentions, to slip into a shadow version of the financial life you planned. The good news is, it’s fixable. You can recalibrate. You can look at your system with honest eyes — not to beat yourself up, but to bring it back into alignment with the life you’re actually living today. Sometimes that means tightening things up. Sometimes it means adjusting your plan to match your reality. But either way, the goal is the same: to know what’s really happening. To trust the numbers again. To trust yourself again. That’s where I’m at right now. If you’re feeling some of the same things, you’re not alone. And no, it doesn’t mean you’re bad at money. It just means you’re human.
Closing
I’m still sorting through all of this in real time — but the one thing I’m sure of is that having some kind of structure makes it easier to see clearly when things start to slip. In my next post, I’ll share the cash flow system I use with clients (and myself). It’s not about being perfect. It’s about giving yourself a clear, honest view of what’s happening — so you can make better choices without getting stuck in guilt or guesswork. I’m excited to share it with you.
