To budget or not

A post on the NewRetirement blog explains why having a budget is so important. Among other reasons there are the following four listed here.

They have it all backwards!

A budget is stressful to establish and to stick to. Saving of all types – emergency fund, retirement – always comes first, not what’s is left after setting a budget. Saving should be set based on necessary goals, lifestyle spending is based on net income after saving.

Budgeting has nothing to do with debt. Set your savings goal – 10-15% of gross income minimum, You have what’s left – after taxes, payroll deductions- to spend each month- but you must never end the month with a credit card balance. That’s spending money you don’t have.

If that doesn’t work after a few months, you take a close look at your spending, what you can afford or not, what you must reduce or if necessary, you seek ways to increase your income to cover the things you can’t afford. But you never cut your saving rates. If you live to spend and then save, your future self will regret it.

What is Budgeting? 

Budgeting is the process of creating a plan for how to spend, save, and manage money. It involves estimating income and expenses over a specific period, typically a month, quarter, or year. (However, for retirement, you’ll want to create a budget for the 10, 20, 30, 40 or many more years you’ll be living without work income.) 

Budgeting is the cornerstone of financial wellness. When you are aware and in control of your income and spending, you can prioritize what is important and set goals. 

Budgeting (monitoring income and expenses) is to financial wellness as: 

  • Diet and exercise are to good health
  • GPS is useful to reaching your destination
  • The foundation and frame of a building holds up the structure

Why Budget? What Are the Benefits of Budgeting? 

Budgeting is important for several reasons. Let’s explore X reasons to track your income and expenses.

1. Enables Savings

Budgeting is not merely about what you buy. An important part of your budget is knowing how much you can and do allocate to savings. Maintaining a budget helps you prioritize saving. Think of savings as your the most important personal expense in your budget.

2. Helps You Achieve Long Term Goals

Because budgeting helps you focus on allocating money toward savings, it will help you achieve your long term financial goals.

Whether you are saving to buy a house, fund kids’ college, or for your own retirement, a budget helps you be accountable to those goals and enables you to measure your progress.

3. Prevents You from Going into Debt or Digging a Financial Hole

When you are maintaining and adhering to a budget, you are less likely to go into debt or dig yourself into a financial hole. You know what you have to spend and are more likely to stay within those confines.

Budgeting is an effective tool for managing and reducing debt. By tracking your income and expenses, you can identify areas where you can cut back and allocate more funds towards paying off debts, thereby accelerating your progress towards financial freedom.

4. Less Stress 

Besides preventing the stress that debt brings on, maintaining a budget helps you avoid the unknown which is scientifically proven to be stressful.

Spending without a budget can be so emotionally fraught. You simply don’t know if you can afford whatever it is you are buying. Or, even if you are sure you can afford it today, you may not know if the expense will curtail you from being able to buy something else you really want or need tomorrow.

By maintaining a budget you can get rid of that uncertainty in your life and feel more confident.


  1. Mr. Quinn:

    This is one of the better short articles I have read on budgeting for retired people as well as others. Your article provides an overall excellent perspective. Please expand upon this with real life examples based upon your wealth of experiences with overcoming obstacles.


    1. This is how we have lived the last 54 years of our marriage. Never paid a penny in credit card interest but did without some things to be able to do that. Always saved something even with three children in college at once. Had two jobs for many years even while in the army. For the last 25 years saved and paid cash for cars.


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