Is it important to have a written budget? Why or why not?

Lest someone starts misconstruing some sermonising for hypocrisy, first thing I need to do is ’fess up.

Here goes: I’m a financial adviser and … I’ve never done a personal budget.

As Aunt Kerrin (right) points out, some people have a sixth sense of the incomings and outgoings of the household budget. I guess I’m one of those.

But my “inbuilt budget calculator” has felt several tsunamis. Like the $7000 dentist bill for Mrs DebtMan’s tooth implosion, just after we’d bought our first home. And a string of incidents that obliterated savings in 2010.

Spending clampdowns were required. Sure, it was painful, but thankfully also instinctual. Nights out get replaced by nights in. Before every single purchase, the question gets asked: “Do I need this, or want this?” The latter doesn’t get purchased.

But … enter the sermonising … that won’t work for everyone. If you’re constantly scratching around before payday, or watching savings diminish, or hanging out for your bonus, developing a budget could be critical.

There are many simple-to-operate online tools to track income and expenses. But there’s just one golden rule – spend less than you earn. If you don’t, you’ve got a problem.

For others, a “grand plan” for what you want your finances to look like in one, five or ten years’ time might be more beneficial.

Is it to have saved a certain amount, to have paid off your home, to have bought an investment property? To be able to retire?

How will you get there? Inevitably, that will involve an “investment budget”. Now, that I do have.

Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and principal adviser with Castellan Financial Consulting.