Do I Need A Budget? (Your Advice)

Budgets are a main foundation for a lot of people trying to get their finances in order, but is a budget always necessary? That is a question from one of the readers:

I keep reading about the importance of having a budget and I’m wondering how important it really is for someone that is spending less money than they are making? I am able to save about $1000 a month from my salary and I’m afraid to create a budget because I think that it would end up doing more harm than good for me.

This is my dilemma. If I create a budget, I think it will show me areas where I could save more money and increase my savings, but I also think that it will make my current life more miserable. I enjoy the things I’m doing and not worrying about how I spend my money, and I feel if I create a budget, I will start to obsess and deprive myself of things that I want to do and buy because a now know how much it costs. The result will be that I save more, but I won’t be happy doing it.

As I’m already putting aside some money each month without a budget, is there really a need for me to create one?

With this personal already able to save money, is there a need for her to create a budget? Is it important to know where all your money is going if each month you come out in positive territory? What advice would you give?

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9 Responses to Do I Need A Budget? (Your Advice)

  1. Debbie says:

    I think this reader already has a budget in her head. The point of a budget is to help people focus their spending on their priorities.

    It sounds like this person is already spending based on her priorities and saving enough to make her happy. So I don’t think she needs a formal budget.

    It may still be helpful to write down everything she spends for a month or so in case she finds some surprisingly easy way to save money.

    Also, that would help create a “before” picture which, in case her finances change later, she can use to compare to her later picture. For example, if she found she was only able to save $800 a month for several months in a row, she could track her spending for another month and see exactly what had changed, remembering that she had been happy with this “before” picture.

    Overall, though, my guess is that this person should focus her planning efforts on some other part of her life that could use more work!

  2. Teri says:

    Honestly, if you are meeting your goals and doing well I don’t think you need a budget.

    I am not a big budget person. We only bring out the budget when things are tight and we are having trouble meeting our goals. Even then we don’t generally track it dollar for dollar every month. I use it as more of a guideline to know how I should be spending my money in certain categories.

    On the other hand I think you need some accountability to yourself. Maybe you could do better with little effort or pain. I would recommend maybe an annual review. Tracking your expenses and income and just looking at the big picture annually. Do you with you had more for “x”? Can you beleive you spent so much on “y”? I think for many that can be more helpful than a strict monthly budget.

    For the most part though it bugs me when people say you have to have a budget even when you are doing well. If it ain’t broke, why fix it. Our rule of thumb has always been not to live up to our raises or rely on a second income. It has the same affect of a budget without all the work.

  3. As long as she is spending less then she is making I don’t think a budget is necessary. She already has great control of her money, saving $1000 a month is great! Why would you need to save more? You do have to enjoy living now as well as the future. If you’re not worried about your spending habits then you don’t need a budget. If you’re just curious where all your money is going then look over your statements at the end of the month and add up the different categories you spend in. See where you stand and go from there.

  4. A Marino says:

    It sounds like this person doesn’t want to know the truth about his or her finances.

    Elizabeth Warren wrote a book ALL YOUR WORTH and in it, she pointed out the importance of knowing where your money goes to. She uses %’s and by that, you can see whether you are even spending enough on your wants and explains why that category is important and what it says about you.

    For years we sort of lived on a budget, I.e. the bills got paid and everything else did too. When we started getting out of debt; we made our first budget and it was like a picture of everything that we had done wrong with our finances. I think that left to ourselves, we do what we want and the budget keeps you on track. Even now, I can go back through the year and see where we are on any category. I don’t keep a hard and fast rule on a budget. If something comes up and it needs to be paid or we want it; I will adjust another category that I’m not using to have it.

    A budget totally puts you in control of your money, instead of your money controling you.

  5. Ryan Courech says:

    Reading this reminds me of the saying “If it ain’t broke don’t fix it”

    As long as your are happy, saving some money, and enjoying life there is probably no need for a budget. Just about any budget you can squeeze to save more money, but why spend the time and energy if your happy with your current situation?

  6. Kevin says:

    I’m pretty fanatical in my belief that you need a spending plan if you really want to meet your goals. If you don’t have a really good grasp of finances you may still make your general goals, but you aren’t going to get there as fast or reliably.

    More specifically, I *strongly* advocate a weekly spending plan.

  7. Tracey says:

    I don’t think she needs a budget if she is saving as much as she wants to save. I save about that much a month too, and I’m trying to save a bit more (I want to buy a place and it’s expensive up here). I’ve told myself pay rent and utilities and beyond that only $15 a day for the month for everything else. It does make my life somewhat more miserable and it’s probably going to save me about $100 to $200 a month. So I’ll probably scrap it.

  8. Stein says:

    My feeling is that you can always do better with a plan. Having done both, I can say we will run a budget forever, even if we somehow make a million a year. Money has a tendency to disappear if you don’t tell it exactly what to do.

  9. margot says:

    You’re far ahead of the game. If you don’t want to, I see no reason to do so. Your happiniess is more important than a few more dollars saved.

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