Do You Need a Budget If You're Already Saving Money?

by Maurie Backman | Updated July 17, 2021 - First published on Oct. 1, 2019

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Budgeting can lend to better savings -- but what if you're already excelling in that arena?

Budgeting can lend to better savings -- but what if you're already excelling in that arena?

There's a reason we're generally told to stick to a budget: Without one, you'll have no idea where your money goes month after month, and if that's the case, you might struggle to eke out cash for savings. (Incidentally, you might also land in serious debt if you consistently spend more than what you earn.)

But what if you're naturally a good saver? What if you have a healthy emergency fund and are already making consistent contributions to a retirement plan, like an IRA or 401(k)? In that case, do you really need to go through the motions of setting up a budget and reviewing it month after month? Or can you get by without one?

The benefit of budgeting

The beauty of having a budget is that it can give you real insight as to where you're spending more money than necessary, thereby prompting you to make positive changes to your financial situation. For example, you might think you only spend $300 a month on groceries, but if it turns out that figure is closer to $400, it might serve as a wakeup call to shop more frugally and get better about seeking out bargains. 

Now, many people find it difficult to save money without a budget, because they're not only clueless about where their income goes, but they also have trouble exercising self-control. If you're not one of those people, then technically you don't need a budget. This especially holds true if you have your savings automated so that you're putting money into either a bank account or a retirement plan off the bat. 

Even if your savings aren't automated, you can probably get by without a budget if you're in the habit of living considerably below your means and your main expenses eat up a relatively small portion of your income. For example, we're generally advised to keep our housing costs to 30% of our earnings or less. If housing only takes up about 12% of your income, that's extremely low, and that alone might make saving money pretty easy, even if you don't have a budget to follow. The same holds true if you're a generally frugal person and don't tend to spend a lot relative to what you earn. 

That said, you never know when your bills might take a turn for the more expensive. Your rent could increase by $80 a month. Your car insurance could climb by $150 a year, and your promotional cable plan might expire, thereby adding $50 a month to your total spending. These costs can add up before you know it, so just because you're managing to save now doesn't mean you'll continue doing so in the future. But if you take the time to create a budget, you'll be better-equipped to handle changes in your finances without your savings taking a hit. 

Creating your budget

If your absent budget is due to the fact that you don't know how to set one up, fear not -- it's a fairly easy process. Just open up a spreadsheet and list your recurring monthly expenses. Then, factor in once-a-year expenses you should be setting money aside for each month (like your roadside assistance plan or warehouse club membership fee). Once you've totaled those numbers, you can see how your spending compares to your earnings. And if at any point you find that you're no longer able to save as well as you are at present, you'll be able to make adjustments easily.

Of course, if you're really opposed to having a budget and are a strong saver, then you can probably continue living budget-free. But if you're willing to put in the time, a budget could be just the thing that helps your savings stay on course. 

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