It’s something of a given in the personal finance world that every single person needs a budget – that every single person must account for every cent of their money, or they are doomed to a life of endless credit card bills, uncontrollable debt, and living on dog food.

The truth is, you may not need a budget.

When do you need a budget?  If your spending is out of control.  If you run out of money before you run out of month.  If you’re saving for something big like a deposit on a house.  If you don’t know where your money is going.

If that’s you, then sure, build a budget.  Look through your bank statements to determine where you’re spending money, and where you can cut back.  Set limits for yourself to keep your spending in check.

When don’t you need a budget?  If saving comes easily to you.  If you buy what you need (and occasionally what you want) and then save the rest.  If your monthly bills aren’t a worry, because you know you will always have the money in the bank.

Budgets were never really a ‘thing’ until stores started to extend credit as a way of getting people to buy more stuff.  Then, suddenly, that magic word appeared.  Want something you can’t afford?  Buy it on credit!  Set up a budget and you can repay it at with little as $5 a month!  That’s right – the concept of personal budgets came about only as a way to get you to spend more money, not less.

And a lot of the time, that’s still how it works.  If the money is there in the budget, you spend it, whether or not you need to.  Say you budget for $100 of “fun” money a month.  What happens if you get to the end of the month and you haven’t spent it?  Chances are, you will – after all, it’s in the budget!  But if you don’t budget for it – Well, some months you might spend it anyway; but other months you won’t.

It all comes down to what sort of person you are.  Are you a spender or a saver?  If you know you will spend every red cent that comes into your hands, you need a budget.  If you know you won’t, you probably don’t.

If you’re worried your spending is getting out of control, or if you’d like to save more but can never manage to do it, or if you’re trying to save up for a big purchase, make an appointment with your financial planner today.  He’ll have some great ideas to get you started to help you stretch your money further. If you don’t have a financial planner then contact us on 03 5338 7455 or for a free, no obligation appointment.


Peter Angel

Authorised Representative of Aon Hewitt Financial Advice Limited

Authorised Representative No. 1234567

 Aon Hewitt Financial Advice ABN 13 091 225 642 AFSL No. 239183

This information may be regarded as general advice.  That is, your personal objectives, needs or financial situations were not taken into account when preparing this information.  Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it.  Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.