Lucas Brenner » Articles » The Return of the Budget Plans

People who keep a budget plan are often labeled as stuffy. Yet this form of financial planning should be used more often in today's consumer society.

I keep a financial spreadsheet so I can see what I'm spending my money on at the end of the month or year. I try to automate as much as possible: Savings plans ensure that I put money aside, and the rest that stays in the account I can spend. Every Sunday, I fill out an Excel spreadsheet[1] in a few minutes. Alternatively, you can do this at the end of the month.

There are some challenges to watch out for, but in general budget plans are very good financial tools in combination with a good financial system.

Spend Money Consciously

If you keep a budget book, you value money more and think about what you spend it on. This is not to say that you become cheap! On the contrary, spending money consciously gives you the opportunity to invest specifically in your hobbies.

The point is not to spend little or less money overall, but to use it for the right things. There is nothing wrong with buying expensive paints if you have a passion for painting. On the other hand, it makes no sense to buy expensive cars just as a status symbol, even though you have no interest in them. You shouldn't get too cheap because the opposite of pleasure is depression.

When you save money, you can consciously spend more money on things you love.

Save More without Realizing It

It pays to automate your finances as much as possible. This is very easy to do with savings plans: every month, a certain amount is either transferred from your account to a savings account or invested. This timing should be set as soon as possible after you receive your salary.

Since the savings rate is deducted shortly after the income, one can spend the leftover money with a clear conscience without having to worry about saving. A budget plan is a system rather than a goal.

Of course, you should always have a buffer in your checking account so that you don't accidentally slip into a negative balance. You should also make sure that your salary is transferred reliably so that the savings rate is covered or can be suspended if the money is not there.

Keeping Track

Probably the biggest advantage of budget plans is that they give you an overview of your financial situation. No one can make wise decisions if you don't know your basic financial situation.

Of course, unexpected expenses can still occur, for example if something breaks, but you're better prepared. It's comforting to know that you have your finances under control!

Overall, budget plans shouldn't be labeled as stuffy and people who keep one shouldn't be thought of as cheap. Financial overviews are very effective and useful tools to help you control your cash flows.

Try keeping track of your spending for a week if you don't already! You don't even have to create an Excel spreadsheet to do this: there are countless apps and even services offered by banks that let you automatically create a budget plan.


[1] I use a German Excel template from “Finanzfluss” as a budget plan, which I have adapted for my needs.