Creating a budget is no doubt an integral part of anyone's financial journey. One of the first budgets I ever created was on a piece of paper. Now, you may be wondering, What on earth is a CPA doing creating a budget on paper? Aren't there more sophisticated tools and apps that can help you create a budget? To which I say: You’re right. But the reality was, when I first started my financial journey, a piece of paper worked for me. It provided me with what I needed to know, unlocked information about my current financial state, and offered insights into better questions and answers about my future financial goals. More importantly, it provided me with valuable information I could act on—and it was free. Who doesn't love free?
A couple of years ago, I finally decided to break down and invest in financial software I thought was "the right thing to do" and what "every great financial professional was using." Fast forward, and a couple of hundred dollars later, I realized that this financial software was providing me with great information but simply didn’t make sense to me. Sure, it could show my spending over time or even generate a fancy chart of my most popular spending categories. However, what I really wanted to see and understand was how I could make better-informed decisions about when to spend my money. Put another way, my most pressing question at the time was not, Which areas can I cut back on? but rather, How can I spread out my purchases so I'm not hit with a massive bill all at once? And yet, while this fancy budget app was great, it couldn't answer that question.
After going through all the hoops and education of becoming a certified financial professional, I can still confidently say that a piece of paper can be just as valuable as an expensive app. It all boils down to what works best for you and your personal situation. What I've found in my financial journey is that if your budget is not providing you with information you can a) learn from and b) act on, then it's not doing its job, and it's time to find a different solution.
My two cents: There will never be a one-size-fits-all solution to your financial problems. What works for some might not work for you—and that’s OK! While there are concepts and systems (like budgeting) that work well for most people, I recommend thinking about your most pressing financial questions and then determining if your systems are giving you information you can a) learn from and b) act on. Creating a budget just for the sake of creating a budget is no fun and doesn’t provide you with any value. However, if you create a budget that allows you to see and learn about your most pressing financial problems, that's where the real fun begins. And who knows? Maybe a pen and paper is all you need.
If you're feeling stuck and looking for a solid starting point for budgeting, take a look at my Budgeting Template found here. After years of trial and error, I’ve found this template to be an excellent starting place. Plus, if you need assistance filling it out, feel free to send me an email at jslimitedgroup@outlook.com & I'll help you get started, for free! So, what do you have to lose?
Comments