Why a simple financial plan is always best

May 28, 2018
Everyone is willing to give you some financial advice about making a budget, getting out of debt or successfully building a “nest egg.” You can certainly use the internet to research budget strategies to see which ones have been successful in the real world. However, the best approach is almost always to be as simple as possible when planning your finances.
Why a simple financial plan is always best


First of all, you need to be realistic. If you have a low income, you are not going to be able to save much money, and unexpected expenses could mean that some months, you will not be able to save anything at all. More than anything else, your financial plan has to be sustainable. This means that you have to be able to follow the plan month after month.

Separate necessities and non-necessities

The best way to get the right budgeting mindset is to decide what you really need to spend money on and what is an extra expense. For example, you need to eat, so you have to purchase food each week. However, some foods may qualify as “extra expenses.” Perhaps you eat out once in a while, or you decide that you occasionally want steak instead of chicken or fish. Regardless of your food preferences, you should consider basic food items as a necessity and non-basic “extras” as non-necessities. 

You can do this for every budget category. Perhaps you decide that you need internet service. That might be a necessity in this day and age, but extras, such as a movie streaming service or a high-speed connection might not be necessary. 

Once you have separated the necessary and non-necessary, then you can choose which non-necessary items you should spend your money on. Once the money allocated for these extras is gone for the month, you cannot spend any more. With your necessities covered in a different portion of your budget, it is really no problem if you run out of “extra” money before the end of the month.


Saving money can be very difficult. However, if you follow the simple budget strategy, you can save a manageable amount every month. This money can go into different savings areas. For one, you will want a savings account that works towards some financial goal: paying for education, investing, purchasing a home, etc. This money will help you build more wealth in the future. 

The other saving category should be an emergency fund. This is money that you can spend if you encounter unexpected expenses such as repairs. If you have a low income, saving any money can be a challenge. You need to decide on a manageable amount that you can realistically save month after month. 

What if I need more than I have saved? Sometimes the expenses might be more than the amount of money in your emergency fund. When that happens, you can use the money in your emergency fund to help pay back an online personal loan. These loans, which have a quick and straightforward application process, are very convenient and can help you cover expenses for a month or two while you rebuild your savings.