Why Do I Need A Budget?

Take control of your money, instead of your money controlling you.


Let's first start by talking about what a budget is. A budget is simply a plan that YOU have given for your money before the month begins. You take all your expected income and distribute it between your giving, spending, and savings categories, much like what is shown below.




For example, you see that a little less was spent in Food, Transportation, and Spending Money. We now know that we have $110 dollars leftover at the end of the month to spend toward one of the remaining categories (Savings, Debt reduction, etc.).


Mechanically running a budget is not a hard concept. However, it requires some mental strength and discipline to gain the most benefit. This is where knowing and understanding your "Why" is extremely important.


So why do you really need a budget? Even if you are able to save every month and put some money aside, I'd like to pose a couple points for your consideration.


  1. Planning for Retirement - Chances are, if you don't have a working budget, you don't have a solid idea of the amount you are saving from month to month. When looking at retirement you'll likely ask yourself the question, "Am I doing enough to set myself up for retirement?". If that answer is no, you'll need to plan on saving and investing more to meet that goal. Having a plan set allows you to easily see if those goals are possible.

  2. Planning For a Stay at Home Spouse - With no plan in place and no idea of what your monthly expenses are, you don't know what it takes to actually run your household from month to month. Now let's say your spouse wants to stay home with the kids and without the proper plan in place to keep track of your income and expenses, you won't be able to accurately determine if it's a possibility or what you need to do to make it a reality.

  3. Short-Term/Long-Term Goals - If you have a short term need, like buying a car, and you want to pay for it with cash, having a number of what you are able to save and which categories you can cut back on gives you a really good idea of how long it will take you to save up for that car. Likewise with buying/paying off your house.

In short, having a working budget allows you to be in control of where your money is going and makes planning for your financial goals a lot easier and more attainable.


If at any time you feel like your budget is restrictive or doesn't allow you to do something you want to do, remember that you set the budget at the beginning of every month. If you don't like it, change for next month! But make sure you have your "Why" clearly defined or sticking with your budget will become frustrating and near impossible.

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