As we move quickly along into a new year and embrace the opportunity of fresh starts, we often experience feelings of hope, inspiration, and anticipation. A new year is a natural time to pause and evaluate what has gone well in the past and what we want to improve in the future. We set goals, make resolutions, and envision the future we want to create. Many individuals have goals relating to their finances. For some this may be to save for a large purchase or trip. For others this may be to save a certain amount for retirement or ensure that you can maintain your desired lifestyle throughout retirement. Whatever the financial goal, a great place to start in accomplishing that goal is creating a budget. In my role as Director of Retirement Plan Services at Carlson Capital Management, I work with employers and employees to help create optimal retirement outcomes. When we meet with plan participants, budgeting is one of the key foundational items we discuss in terms of future success. In this article, I highlight why budgets are important in various stages of life, the benefits of maintaining a budget, and five steps to starting a monthly budget.

Why Budgets Are Important

A budget is one of the most basic and powerful financial tools available. It can serve as a road map, helping to create a pathway between where you are and where you want to be. Regardless of your age or stage of life, a budget can be a central component of meeting your financial goals. During the working/asset accumulation phase of life, a budget can help facilitate responsible saving and spending habits to ensure that you are saving enough for retirement. During the spending/retirement phase of life, a budget can provide a source of reassurance and confidence that you are wisely spending the assets that you worked so hard to accumulate. When CCM provides retirement modeling scenarios for clients, the output from the models depend on the accuracy of the spending assumptions used. As such, a budget is not only necessary for young individuals trying to accumulate wealth, but also for retirees stewarding it.

There are many benefits to maintaining a budget. Some of the most compelling include the following:

  • Improving sleep and reducing stress
  • Improving relationships with your spouse and family
  • Creating an actionable plan to eliminate debt
  • Securing your future by enhancing your ability to save
  • Promoting awareness of spending to ensure alignment with retirement modeling
  • Ensuring spending decisions are consistent with values
  • Getting on a solid foundation for financial freedom and independence

Five Steps to Starting a Monthly Budget

  • Know how much money is coming in and going out.
  • Automate essential, recurring living expenses (mortgage, utilities, etc.).
  • Set savings and debt payoff goals. Make your financial goals as detailed as possible to increase the likelihood that you’ll follow through with what’s necessary to achieve them.
  • Choose your method to track expenses (more on that below).
  • Update your budget continually as it is a living, breathing document.

There are many tools available to make budgeting  painless and simple. You may prefer to save all receipts and create a spreadsheet to track expenses. Alternatively, there are websites and phone apps that can link to your accounts to do this tracking for you. A few popular apps include*:


Your CCM Advisor would be happy to discuss this or other related topics with you. If you don’t currently work with an advisor at CCM and would like to learn more, please contact us for a conversation.

* Links to non-CCM sites are provided for convenience only and are accessed at your own risk. The information available on these sites has been produced by unaffiliated third parties and CCM does not guarantee their timeliness, sequence, accuracy, adequacy or completeness and makes no warranties with respect to results to be obtained from their use. Any opinions or recommendations expressed therein are solely those of the third party information providers and are not the opinions or recommendations of CCM. No endorsement of third party products, services or information is expressed or implied by any information, material or content referred to or included on, or linked from or to this website. 

NOTE: The information provided in this article is intended for clients of Carlson Capital Management. We recommend that individuals consult with a professional adviser familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.