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Should You Have a Budget?

Should You Have a Budget? - Join Wealth Advisor
Mike Ersser

By Mike Ersser, Wealth Advisor CFP®, ABFP™
Published On 09/06/2022


Budgeting: Determine an approach that makes sense to you


Budgeting. You may have embraced the concept, or more likely, avoided it altogether, which is very common. Sometimes we feel obligated to complete a budget, but more often than not, we find it hard to implement and even tougher to maintain. So, should you budget? Is it worth your time to create one? What if you don’t complete one? How does having a budget help? This article will outline the benefits of creating a budget as well as provide a foundation to get started.

As wild as life can be at times, a financial budget can bring clarity to a household and help alleviate anxiety around spending. Quite frankly, that is exactly the point. Without a budget, spending can bring a level of stress that may overshadow the excitement of a given purchase. Having a budget in place allows you to know where your dollars are going and can provide the ultimate relief in terms of achieving guilt- free spending. This applies to those saving for retirement and those who have already shifted into retirement. Below are a couple types of common budgeting approaches. Keep in mind that no one size fits all, but there are options.

Types of Budgets:

Zero-based budget

Track specific income and expenses to understand exactly where all your hard-earned money is going. This is the most difficult budgeting style to start, but it will bring the most transparency to your finances. This method takes a lot of maintenance and is more suited for those who enjoy the process. Engineers and accounting professionals, I am talking to you. Microsoft Office offers several Budget Templates that can help jump-start the process.

General steps:

  • Gather data from bank accounts, credit card statements, investment accounts, etc.
  • Organize the data into categories, typically fixed versus variable inflows & outflows
  • Utilize software like Excel to accurately map out household cash flow


Reverse Budget

Start with savings amounts and/or debt payments and then proceed to allocate what is left over to general expenses. This is the easiest to start and focuses on prioritizing savings targets. The downside to this approach is that it can leave you shorthanded when it comes time for very real expenses like groceries or utilities.

Merriman’s own Geoff Curran wrote a great article a couple years ago that highlights this method in greater detail: Reverse Budgeting


50/30/20 budget

This method takes an alternative approach and categorizes spending into three main categories: Needs (50%) / Wants (30%) / Savings (20%). The percentage per category may change given the individual creating the budget, but the focus remains the same – categorizing what is essential versus what is deemed “extra”.

General steps:

  • “Needs” may consist of rent/mortgage payments, utilities, groceries, etc.
  • “Wants” generally include items like travel, entertainment, restaurant spending, etc.
  • “Savings” targets carving out money for near-term purchases and, most importantly, retirement savings.


There is no one correct method to use, and that is the part most people struggle with. A crucial element of budgeting is very similar to maintaining a sound financial plan: choose a method that works for your situation, one that can be maintained over the long run. If you have budgeting questions or want to explore the methods mentioned in this article, please reach out to Merriman. We would like to help you find an approach that works for you.


Disclosure: All opinions expressed in this article are for general informational purposes and constitute the judgment of the author(s) as of the date of the report. These opinions are subject to change without notice and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material has been gathered from sources believed to be reliable, however Merriman cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.  Merriman does not provide tax, legal or accounting advice, and nothing contained in these materials should be taken as such.

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Mike Ersser

By Mike Ersser, Wealth Advisor CFP®, ABFP™

Mike came to Merriman after several years spent in corporate finance and brought with him an innate sense of discipline. Whether surfacing through routine, structure, or a desire for predictability, discipline often guides his decision making. He enjoys helping clients determine goals and create a plan to achieve them. He sincerely believes you can accomplish all you set out to with the right structure and discipline.

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