Budget can serve many purposes this post is the introduction to the series Creating and maintaining a real budget covering budgeting the right way.

Creating and maintaining a real budget


There are several different reasons why one should consider creating and maintaining a real budget. As a low income family you need every tool available, to allocate the few dollars you make to the proper places and things. As a middle class income household that is in debt, creating a budget will expose where and why more money is spent than is being brought in. Having that budget will then allow you to redirect funds and save where possible.  For upper middle class families (that are not in debt, otherwise, see middle class income household that is in debt) a budget can help in figuring out how to maximize investments, savings for retirement or college for the kids. For those close to retirement a budget will shed light on whether it is even possible to retire and if not where to make changes to make it possible.

You get the picture, there are plenty of reasons to get working on a budget.

Full disclaimer: I didn’t create a budget until I was eight years into my plan on becoming a millionaire. To our plan, a budget wasn’t really that relevant. We’ve always lived below our means, never accumulated debt and always had enough money left over at the end of the month to do some consistent investing. Only when I saw the light at the end of the tunnel for our financial plan, did I create a budget to see what would come next. Next being; what would it take to be financially independent. What would be the minimum investment income required for us to sustain our lifestyle.

In order to figure that out I needed to know exactly what we spent and where we spent it. Based on that, a budget was created and we would have been financially independent only two years later, living on that budget. Our investments would have brought in enough to sustain the lifestyle we lived the time. Due to reasons discussed in my book, we moved away from Georgia and ended up Wisconsin with an entirely different financial landscape. The budget changed in ways, causing us to no longer get us to financial independence.

This brings up an important aspect of budgets: Budgets change all the time and need constant (or regular) monitoring and adjustments. Hence the “maintaining” part of the title for this series.

Sound board by Michael Saechang

Sound board by Michael Saechang

A budget is an evolving entity that, in order to be useful requires regular maintenance. I like to liken it to a sound mixing board. Each category in your budget has a lever and can be controlled up and down according to demand or desire.

Now that we no longer bring in more money than really needed, a budget has become a very important tool in controlling what we spend and in planning our finances. I know exactly what we need any given month of the year and thus I know exactly when it is time for me to cash in some of my investments, not reinvest dividends or maybe even go out and join the workforce again.

Whether it is to get out of debt, figure out retirement or simply to get some insight in your finances, creating a budget is a good place to start.

Even though some articles will try to make you believe, budgeting is no more than looking at last month’s bills and receipts and multiplying it by 12, in order for you to create a budget that actually represents your spending patterns and needs, it takes a lot more than that.  In the following articles I’m going to break the process of budgeting  down in four major steps.

  1. Know what you spend
  2. Organizing your expenses
  3. Creating the budget
  4. Live by and maintain the budget

I will publish a post for each of these 4 steps as it would make this post kind of long and in some respect each of them can be useful in its own right.

At no point in these following articles will I pretend that budgeting is easy. It takes a lot of work (sometimes tedious), patience and persistence. The good news is there are tools out there can help you on the way.

Even after your budget is done, the process of budgeting will remain ongoing as your finances never stay the same and neither will the budget you create. A budget requires regular maintenance in order to stay effective.

If you are serious of starting a budget I like to invite you hop right over to the first step of budgeting which is Budgeting: Know what you spend

Good luck reaching your financial goals.


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About Maarten van Lier

Maarten came to this country with a suitcase and a diploma. He created a financial plan and goal to become a millionaire in 10 years. He successfully turned his financial goals into reality, wrote a book about it and now blogs actively in hope of inspiring other to do the same.