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Why you should personalize your budget

There's no single 'right' way to spend. Your needs and goals are unique, and your budget should be, too.

By Donna_Freedman Aug 22, 2012 5:36PM
Image: Couple with paperwork (© Christina Kennedy/Brand X/Corbis)A recent Seattle Times article concerned a "money makeover" for a young couple who'd recently declared bankruptcy. One piece of advice got my attention.

The financial planner suggested that they not put money into retirement or their young daughter's education fund. Instead, they should focus on building a cash reserve equal to six months' living expenses.

Yet shouldn't people in their late 20s be throwing money at retirement, because of the magic of compound interest? And isn't a three-month emergency fund, or even a $500 emergency fund, acceptable these days?

Wait . . . that would mean there's more than one way to budget. Can that be true?

Yep. Here's how the planner phrased it: "Their family budget won't look like other families' budgets, but it doesn't have to. It should instead reflect their unique priorities and constraints."

Stop thinking your spending plan has to mirror your brother's, or your friend's, or Dave Ramsey's. Your needs and priorities are as unique as you are, and your budget should be, too.

One size doesn't fit all

There's no single "right" way to do it because not every piece of money advice applies to every situation. MSN Money columnist Liz Weston addresses this in "3 money tips for every income," noting that, for example, "guidance that makes sense for a middle-income household might not apply if you're under the poverty line."

Certain rules are pretty absolute: Pay your bills, pay your taxes, craft some kind of emergency fund, think about retirement. But the way you do these things is different from what anyone else does. (Post continues after video.)

Understand: I believe that everyone needs a budget. (Or a spending plan, a spending intention plan or whatever you want to call it.) This can be done on paper, with online budgeting software found at sites like Adaptu and, or even in your head.


I'm in that third camp. My budgeting isn't so much a series of line items as it is a general way of life. Specifically, I live as well as I can on as little as possible so I can fund my retirement and set aside money for those rainy days. Frugality means that I have everything I need and some of what I want.

The way I live, and budget, wouldn't work for everyone. But not everyone looks like me.

Your mileage may vary

A budget means freedom. That sounds like a contradiction in terms, since "budget" connotes rules and regulations. But when you know you've got enough to cover your obligations and still plan for the future -- while also allowing for some fun in the present -- then you sleep very well, thanks.

How you get there is up to you.

Educate yourself; MSN Money's "Personal finance" pages are a good place to start. Be intentional about spending, rather than letting dollars dribble aimlessly out of your wallet. Envision the future instead of thinking, "I'm too young to worry about retirement."

Think about what you want and set out to get it. But don't turn yourself inside out to keep up with some imagined "right" way to budget. Your spending plan probably won't be exactly like your best friend's. Remember: It doesn't have to.

More on MSN Money:

Aug 23, 2012 9:36AM
You made some really good points here Donna. I read a lot of financial advice and I even listen to Dave Ramsey occasionally.  However, I don't follow any one plan perfectly.  I have taken tips and advice from different financial gurus and use it to taylor a budget for the needs of OUR SPECIFIC family and beliefs. I think the most important line in the whole article is "Be intentional about spending rather than letting dollars dribble aimlessly out of your wallet".  So many people have no idea where their money is going.  Have a plan; make a budget; and live within your means.  It's not really rocket science, but people make budgeting more difficult than it needs to be.       
Aug 23, 2012 4:29PM

Some communities offer money management classes.


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Donna Freedman's Frugal Nation blog is for readers who want to live cheaply -- whether due to necessity or a lifestyle choice. It explores living sustainably and making life more meaningful at the same time.


Donna Freedman

Donna Freedman, a writer based in Anchorage, Alaska, writes the Frugal Nation blog for MSN Money. She won regional and national prizes during an 18-year newspaper career and earned a college degree in midlife without taking out student loans. Donna also writes about the frugal life for her own site, Surviving and Thriving.