If you are a long-time reader, you’ll know that when I get a question like this, the answer is typically “Maybe.”

In my perfect world, every person I work with would have a written budget that is revised and updated annually. But we don’t live in my perfect world, and most people never make a formal budget.

But there are arguments for having a budget.

Gaining Control

If you feel like you’re not fully in control of your money and you aren’t sure where it goes every month, making a budget is the first step to solving the mystery. 

A budget is nothing more than a list of what you earn and all the places those earnings go. You can start your list on a legal pad with a pen; no fancy tools or software required.

Using your bank account and credit card statements as a reference will make the process go more smoothly. If you need some guidance to get started, search “budget worksheet” in your favorite search engine to find a worksheet you can use.

Five Steps to Getting Financially Fit

Reducing Stress

Flying blind can be stressful.

Knowing how much you earn and where it goes can help reduce money stress and help you disrupt and change unhealthy spending patterns. It can also help you avoid nasty surprises from annual or semi-annual bills that can sneak up on you.

Saying Yes (or No) with Confidence

For me, having a budget means I can confidently say yes (or no) to spending money on something I might really want.

If I’ve planned for the expense, even if it’s substantial, I can say yes with confidence and enjoy my purchase without guilt or anxiety.

On the flip side, having a budget gives me the discipline to say no to an unplanned expense because I know I’ve already planned other spending that matters more. 

Making Room for Saving

It’s hard to save if you don’t know how much you have left over each month to set aside. Making a budget will give you a clear picture of how much you can afford to save. If you currently can’t afford to save, having budget will make is easier to find categories where you can reduce expenses to make room for saving. 

How much should I be saving?

Whether you want to take control, reduce stress, be more confident in your day-to-day spending decisions, or start saving for your future, a budget can be a powerful tool for better financial health.

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