A Written Budget Brings Financial Security and Peace of Mind: How to easily create your own (we did the work for you!)
- Creating and following a written budget is an essential part of personal finance, improving overall financial health, and reducing financial stress.
- A written budget outlines income, expenses, and savings goals so you can make informed decisions about your money.
- A pay-yourself-first budget prioritizes savings, investments, and other financial goals over expenses.
It’s never too late to establish healthy financial habits—and creating a written budget is one of the best ways to build wealth and achieve financial security.
A well-crafted budget helps you stay on track toward your short and long-term financial goals, but more than that, it gives you better control over your money. This blog post will discuss the benefits of having a written budget, how to create one, and the everyday obstacles you may face.
What Is A Written Budget?
A written budget is a document that tracks your income and expenses so you can make informed decisions about your finances.
It helps you identify areas where you can reduce spending and save more money, set financial goals, and track your progress toward them. This type of budgeting can be done either manually or with the help of a software program.
The idea of budgeting can be intimidating, but having a written budget doesn’t have to be complicated.
The Benefits Of Having A Written Budget.
By simply writing down income, expenses, and savings goals, you can gain an immediate sense of control over your finances. This can potentially eliminate financial anxiety in a matter of moments. A written budget can also help you identify areas of opportunity – where you may be overspending or where you can make adjustments to spending habits. It provides a concrete plan that acts as a roadmap toward financial security and success. A written budget is a proactive and responsible step toward achieving financial stability and
peace of mind.
How To Create A Written Budget.
Creating a budget may seem daunting initially, but it can be rewarding.
To start today, you can click
here to download the free template I’ve built for a
pay-yourself-first budget.
What Is A Pay-Yourself-First Budget?
A pay-yourself-first budget is a budget where you save what you need first, and then spend everything that’s leftover. Why is that order of operations important? Because if we spend first and then save later, oftentimes the savings portion is ignored or isn’t enough to reach your goals.
After downloading the spreadsheet, follow the steps below to create your written budget:
- Start with your income: list your total monthly income from a job or other sources.
- Estimate your taxes: consider using SmartAsset’s free federal income tax calculator. (Retired? Check out our free Guide To Tax Planning in Retirement.)
- Determine your savings amount: this can be for retirement, paying off debt, an emergency fund, or other goals. Consider starting at a minimum of 10% and working your way up over the years towards 30%. Automating savings whenever possible is critical to ensure it happens each month. It also saves you time.
- Spend the rest: the best part of this budget is that you are free to spend the rest without fear of falling short of your goals.
With a little effort, creating a written budget can be an excellent tool for achieving your financial goals.
What Are The Benefits Of A Written Budget?
Developing a written budget can help you manage your money, set and reach financial goals, and make informed financial decisions.
Creating and sticking to a written budget might seem tedious, but the benefits are worth it.
First, a budget helps you stay on top of your finances and avoid overspending. It also allows you to prioritize your spending and identify areas where you can cut back and save money. Having a written budget also gives you a clear financial roadmap, which can help you achieve your financial goals faster. Additionally, it can reduce financial stress and anxiety, giving you more peace of mind about your money.
On the other hand, not having a written budget might lead to financial uncertainty and anxiety due to the lack of knowledge about your monthly expenses. According to Intuit surveys,
approximately 65% of Americans have no idea how much they spent last month, and
44% of people reported that money is their main source of stress.
So if you want to reduce financial stress and improve your overall financial health, a written budget may be just the tool you need.
By creating a budget, you can take control of your money and prioritize your spending, which can help you save more and build wealth over time. Not only does having a budget allow you to see where your money is going, but it also enables you to stay on track and avoid overspending. Plus, creating a budget can be empowering and motivating, as it shows you that you can make positive changes in your financial life.
Overcoming Common Budgeting Obstacles: Tips and Strategies.
While budgeting can be a powerful step in the financial planning process, it’s not without its obstacles.
Some of the most common obstacles people face when budgeting include overspending, lack of discipline, unexpected expenses, underestimating expenses, and failure to account for irregular income or expenses.
Fortunately, there are several tips to overcome these hurdles.
First, ensure your budget is realistic by reviewing your expenses for the last six months. This will help you get a feel for spending patterns and spot any irregular expenses, like semi-annual insurance premiums or car repairs.
Second, build an emergency fund to cover unexpected expenses. As a rule of thumb, consider saving at least 3 – 6 months of living expenses in a cash fund.
Third, don’t underestimate the importance of ‘fun’ spending. The budgets that never last are the ones that are too restrictive and don’t include any fun or entertainment spending. So be sure to allocate funds to things you enjoy to increase your chances of success.
Fourth, don’t be too hard on yourself if things don’t go as planned. As best-selling personal finance author Morgan Housel writes:
“The most important part of any plan, is planning on the plan not going according to plan.” The same is true for your budget—it’s likely things won’t always go according to plan, but don’t beat yourself up about it. Instead, just adjust, recenter, and get back on track.
Lastly, remember to keep your goals front and center. The whole reason you’re budgeting is so you can reach your financial goals and achieve financial security. So, whether your goals are to retire abroad, put your kids through college debt-free, or take your family on a dream vacation, do your best to keep these goals in mind to help you follow through on your budget.
Ultimately, a written budget is a powerful financial tool that can help you take control of your finances, reduce financial stress, and improve overall financial health.
And through budgeting, you can save money, build wealth, and achieve your financial goals. Although there may be obstacles to budgeting, these simple strategies can help you get back on track and reach your financial goals. In the end, creating a written budget isn’t always easy or intuitive, but with planning and structure, it is achievable.
Farnam Financial Is Here to Help.
At Farnam Financial, we prioritize putting clients first and helping people achieve their best possible financial future. We’re proud to provide trusted advice, personalized guidance, and reliable solutions tailored to each client’s unique needs. So if you’re looking for support in preparing a sound and effective written budget, don’t wait any longer—
schedule a complimentary intro call today!
