Do we NEED a budget? Nah, but we still want to and this is why…


When I started this blog, goals had to be made. Not all of them were achieved, but one in particular really stood out. Our savings ratio. We crushed our target goal of 30% by the ending 2016 with an average savings rate of 41%! It was the first year we fully tracked this, and boy was I wrong about what we actually managed to save already. And than I started thinking… How can we ever improve this awesome result?

We notice only tracking our income and expenses do not give us a motivation to change it. Yes, we know were our money is going and what we spend on. But we don’t really use it in order to lower our (non)immediate expenditures. With the new year all motivating us to set up new goals and resolutions I wanted to make some changes. Instead of using an excel, I want to start using professional tool. And make it easier at the same time, ha!

In comes the budget tracker. By actively budgeting our money we are forced to make decisions before we spend money, instead of afterwards. So for this year I made it a goal (or habit) to budget every month of the year 2017 and make improvements along the way. It will be a goal of making process and discovering how and if this works for us.

Goal for 2017: start budgeting in order to not only get more insight, but also to influence our spending habits.

The most used tool by many of our fellow personal finance bloggers is Personal Capital. And although I would love to sign up, it’s not available in Europe 😦

So I searched for alternatives and found YNAB (You Need A Budget), well known in our country and pretty easy to use, according to the many reviews online. Like here, here, or this one.

Although not everyone is satisfied using it after the upgraded to the newest version.

I wont go into details about how it’s used. But the core focus is as following.

“As soon as you get money, you’ll decide what it needs to do—whatever is most important to you. Then, instead of deciding to buy something based on your mood, or the big (or small?) pile of money in your checking account, you’ll decide based on a rock-solid plan according to these rules:

1 Give Every Dollar A Job

2. Embrace Your True Expenses

3. Roll With The Punches

4. Age Your Money

I started out with the 34 free trial version, and if satisfied will buy the subscription plan as well. Currently I’m still updating everything manually, so I can set up all the budget categories I want and need. Later on I will try to update automatically by connecting my bank info.

I said we don’t really need to budget. But we are still going to do it. There are 2 main reasons why we are doing this.

  1. We like to influence our expenses BEFORE we buy anything. This lets us think on how much we want to spend on each category after the bills are paid. It pushes us to budget actively and make it a habit to check up on how we think we spend our money vs. how we actually spend it. We hope to implement minor changes, while keeping our expenditures as low (or even lower) as they are now. And with the income rising our savings ratio will grow accordingly.
  2. Normally, because we don’t know how we spend our money beforehand, we try to save as much as possible every single month. It might seem far-fetched. But by budgeting our money like this, let us spend a bit more money as well….  At least, we want to spend more money on the things we are currently missing out on. It works like this:Every month we spend money on numerous things and any time something pops up that needs payment, we spend the money. Like buying gifts for birthdays, dining out with friends or fill up the gas tank because we drive more over the winter. On other categories like clothing or sports we spend as little as possible in a months time. So the balance between those categories is a bit lost. In order to find the right balance we want to use this budgeting method. This way we know early on how much we can spend in each category, and still save the money we want each month. Our goal is to feel more freedom by spending money on the right things.

We already automated our savings AND our bills, so the main reason we budget is to settle with the non-immediate expenses. First step is to become aware on how much money we spend on which category, which is why we use our last years tracking system for. Next step is to tweak them by setting up budgets. And lastly adjust them whenever needs to. We still want to stay flexible, right?

So why should you start budgeting if your financial situation is all nice and steady?

Well, first of all it helps you with both saving AND spending your money. Keeping a budget makes you aware which categories takes which portion of your money. By doing this you can better manage where your money is going and spend it on the categories you want most. It organizes all your bills, expenditures and savings making it easily to track but also adjust accordingly.

Second, budgeting is a pro-active form of tracking your money. The active part of budgeting is the part where you decide upfront on which categories to spend money. Not the part where you add each and every transaction into a excel or software tool. By doing so, you decide where to spend your money on BEFORE you actually spend it.

Thirdly, it gives you total control of your money. We almost never experience that we have not enough money to buy something (because of our minimal lifestyle). But it does happen that we have to extract money from our savings account when an unexpected expenditure arises. We know how to grow our investments, but our savings account has still the same balance as 2 years ago. Budgeting will help us give total control and to grow our savings so we can make larger expenditures (like buying a motorcycle).

And for the more frugal people out there: it also helps you decide if you want to sacrifice minor expenditures (like coffee)  in exchange for long-term saving goals (like traveling).

There are many more reasons to name why you should or shouldn’t use a budget. You might want to escape from the paycheck-to-paycheck lifestyle, or need help with paying off a long-term debt. Whatever your money goals are, keeping track of your financial status is always a plus.

Is there anyone already budgeting? Just starting out? Or maybe you’re satisfied how everything is going and don’t need (or want) to budget? Any thoughts on why you should or shouldn’t use a budget? We love to hear you’re feedback, so please leave some in the comments!

8 thoughts on “Do we NEED a budget? Nah, but we still want to and this is why…

  1. We don’t have a budget. Used to, a long time ago but I don’t find them particularly convenient. We’ve internalized a lot that and our spending is pretty consistent without having to count every penny. Likewise, I have no idea what my savings rate is.


    • I always wondered what budgeting could mean for someones financial situation. For some it might be a lot, for some none. Picking pennies is not something we’re aiming for, but I’m all about insight and tracking numbers.

      As long as it works for you it’s the best! It’s still called ‘personal’ finance for a reason 🙂

      Thanks for the comment!


  2. Hi divnomics,

    If you don’t know how / where you spend money, it’s impossible to optimize it. But whether you need or want to optimize it, is a personal decision. I don’t have a fixed budget but I do estimate my future spending for a year and track my actual spending against it. I revise the budget twice a year as it’s an easy blog post 😉

    But a simple way to save money is look for your four biggest expenses and see how can you reduce them. It’s great saving 10% of a grocery bill, but perhaps more money can be saved by changing car insurance or some other large expenses. Finding the balance between spending & saving is key.

    Anyway, congrats on a 41% savings rate – I think that’s fantastic!

    Thanks for sharing!
    Best wishes,


    • That looks like a very efficient way of tracking your finances! I agree that the most can be won with the saving on the major expenses. We already did some last year. I might be focusing too much on the small things now, but it’s also a way of figuring out which balance will work best. Thanks for the extensive comment!


  3. Very nice savings rate! I’ve tried to budget more over the last few months as I started blogging more. I think a budget is absolutely necessary if you want to achieve financial freedom. It’s basically the blueprint to success.

    One of the things I really like to budget is food. It feel somewhat like a game to make it within the limit and still eat great 🙂


  4. We can enjoy our life without prepare any budget. But, I have a habit of spending more money on restaurants that are not good right? If you are Budget in your life, you can save little or more money on every month. It will help you later in your life.


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