Money Talks, So Should You

Q&A: Why do I need to bother with a budget?

Laura Scharr-Bykowsky
by Laura Scharr-Bykowsky, The Garrett Network  (@LauraScharr )

I don’t think you need a budget where you review every one of your expenditures on an ongoing basis, but I do believe in value-based budgeting.

Value-based budgeting is when you create a cash flow plan that aligns with your values and goals. Review your spending habits from the past to establish where you are currently allocating your money.

Often people are surprised to find that they are overspending in areas that are not extremely important and would benefit from cutting back in those areas to increase their savings or expenditures elsewhere.

READ: How can I set a budget when my paycheck fluctuates?

Realign your expenditures to make sure they are consistent with your goals and values.  Once you have done this, it will provide you with a baseline to set up three main buckets.

The bucket method of budgeting





You Control

Goals and Dreams

Mortgage, Utilities

Dining, Entertainment

College, Retirement


You should calculate the amount of basic living expenses that are fixed each month and automatically deposit that amount into your checking account from your paycheck.

Now set a target amount based on your flexible spending goals from above and sweep that monthly amount into a debit account. If you have this specific amount in a debit account you will not overspend like you would with a credit card.

READ: Why you can't stay out of debt

Finally, sweep target savings amounts into separate savings accounts that are designated for your specific savings goals. You may have an emergency reserve account, auto reserve, retirement accounts, as well as vacation account.

By sweeping your amounts into these specific buckets it will force you to conform to a plan that you created based on your important life goals.

After a few months of this process you will find that saving is now on autopilot and you are finally starting to see a positive increase in your savings as well as improved peace of mind, without hassling with itemized budget expenditures every month.


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Laura Scharr-Bykowsky is the founder of Ascend Financial, a fee-only financial planning firm located in Columbia, SC. She has been providing fee-only financial planning services since 2008 and is a regular contributor to Columbia, S.C.-CBS affiliate WLTX for their Money Monday segment.