Updated: Jan 1
“New year, new budget,” the saying goes. Or “New year, no budget,” depending on your approach to financial goals.
Among those who give personal finance advice, there is a debate over budgets. Some say a budget is the only way to keep spending in check. Others say they can put people off looking at their finances altogether.
Both theories can be too black-and-white or one-size-fits-all. Many people fall somewhere on the spectrum between hands-off—think automated or “no budget” approaches—and hands-on techniques focused on finding out exactly where every dollar goes.
The important thing is distinguishing which behaviors pull you toward action, reflection, and self-discovery, said Preston D. Cherry, a certified financial planner and Ph.D. candidate at Texas Tech University.
In his research, Mr. Cherry studies how personality types and traits can relate to budgeting styles. “In money situations, particularly with scarcity and abundance, we have to start with the beliefs and attitudes first, before we even get to the money,” said Mr. Cherry.
For those looking to cultivate an abundant mindset, which focuses on the possibilities careful money management can create, some financial advisers recommend the “reverse budget.” This approach involves moving money to savings automatically.
See Concurrent Financial Planning in the rest of the WSJ article here: