Ask A Financial Planner: How Do I Budget Once I Pay Off My Loans? 

We recently partnered with the owner of Brooklyn Plans, Kristen Euretig, to bring you a new monthly feature called "Ask A Financial Planner." While we aim to provide helpful advice through our She Saves section, finances can get really complicated. Send us an email with your personal finance questions, and Kristen could answer them in an upcoming newsletter. 

Dear Kristen,
So many of the budget strategies I see online are complex and geared towards paying off lots of debt. What is the best technique for using a budget if you’re not trying to pay off any debt and already have a separate retirement fund?

Loanless & Lost

Hi Loanless! 
At Brooklyn Plans, my financial planning firm, we conceive of budgeting a little bit differently than other folks. We look at our clients’ take-home pay, subtract their fixed or committed costs and then come up with a monthly, weekly and even daily “safe to spend” number. We advocate our clients view this number as an allowance.

While it takes some upfront calculations, it eliminates the need for expense tracking going forward because ultimately as a financial planner I don’t care how much my client spends on eating out versus on entertainment and neither should they. If their savings goals are met and they are living within their means, that’s all that matters to me.

That’s probably why a lot of budgeting tools seem overly complicated - I agree that they are! The big-picture purpose of a budget is to spend within your means and have room to save. Some people have a better intuitive sense of the give and take that requires. If you know you can’t go out to a friend’s birthday dinner and pick up your part of the tab, buy a new iPad and go away for the weekend the same week, then you are, in a sense, already budgeting.

Whatever method you choose to manage your spending - whether it’s our allowance system, an excel spreadsheet or an app, don’t lose sight of the reason we manage our expenses in the first place: to live within our means, avoid relying on debt and save for future goals. If you can make that happen without a complicated budgeting tool, then it’s safe to say you’re effectively managing your money without it.

Happy Budgeting!