Why you need a budget, even if you don’t want one

Some people resist doing a budget because they think it’s going to restrict them from spending the way they want. Or they don’t want to face the reality of overspending.

Don’t go there. Just think of it as your monthly cash flow and a saving/investing plan. Give yourself permission to decide where and how you spend your money.

Before you can start, you need to know what’s coming in and where it’s going. Then, pay yourself first. Or think of it as paying your “goals” first … meaning, save and invest toward the goals you set. The rest of the money is yours to decide how to spend.

So, let’s get started.

  • Look at recent bills plus bank and credit card statements to give you the facts. (Be realistic. No cheating.) Jot down your numbers.
  • Adjust. Prioritise. Revise, as needed. (Fixed = bills you’re committed to paying. Discretionary = you have some control over what/how much you spend.)
  • Make note of your monthly take-home pay. Subtract your new/revised budget. See what’s left that you could put towards your goals.

For each of your goals, check whether it’s fulfilled or needs more funding, and if it’s a “critical” goal.

  • Decide how much of the extra money you’ve found could be put toward your critical short-, mid- and long-term goals. Log it on the worksheet. Once you’ve made good progress toward the critical goals, start tackling the rest.

Budget still coming up short?

Don’t panic. Now that you know what your budget is – you can start looking for ways to adjust your spending and saving throughout the year. You may also want to consider looking for ways to earn more income – which can help you make faster progress.

More income … can mean faster progress

Of course, more income helps, too. Lots of people have a side hustle for extra money. Maybe you can teach a community education class about container gardening, make funky furniture for local art fairs, or rent the guest room in your home as an Airbnb host. Search online for "side hustle ideas" to get started.

Is now the time to ask for a raise at work that you feel you deserve?

If you’re considering a job or career change, will you have a higher salary? That could help you meet your financial goals faster. Well, as long as you don’t change your standard of living and actually put the extra income toward the college fund for your kids, the beach vacation with your friends, or the credit card you’re paying off. (Whatever your goals are.)