You were probably expecting some long drawn out answer to this question but the quick answer is yes you do. In fact rarely have I ever seen someone organize their financial life and become debt free without a written monthly budget.
Why so? You wouldn’t build a house without a set of plans right or learn to fly a plane without reading the flight manual? Same principle. A plan that exists only in your mind and not on paper is nearly impossible to execute. An honest written budget will allow you to see where all those wasted pennies are being spent each month. Once you know that, everything changes.
I once spent two years exercising and building muscle which is a hard thing to accomplish when you are slim and have a high metabolism. During the summer, I decided to take a few days off from the gym because I was feeling lazy. Those few days turned into a few years and the two years of painstaking muscle building disappeared within three months. Budgets are the same. If you stop using them, all your hard financial work can regress and your bad habits can re-appear quickly.
Recently I helped an American friend write a budget. He desperately needed medical care and was terrified he wouldn’t be able to afford his upcoming hospital visit. Through budgeting, we switched his mobile phone plan, cancelled unnecessary insurances and uncovered $500 per month in wasteful spending. With the saved money he was able to purchase health insurance. Having a written budget changed my friends life.
The first time I did a written budget, I couldn’t believe how much money I was spending eating out. I had been complaining about having too much month left at the end of my money and not having enough to invest in a retirement plan. Once I identified where I could cut spending, I was able to invest for retirement.
Budgets help us stay on track and more importantly, hold us accountable for our spending.