Financial Opinion and Insights

Do You Need To Budget?

Jim Lorenzen, CFP®

Jim Lorenzen, CFP®

Let’s face it, spending is fun!  We enjoy taking trips and indulging our desires; but everything has a cost.  Like the man says, “Pay me now, or pay me later.”  The truth is, one way or the other, everything has a price.

My parents grew up in the Depression-era, so they knew the value of a dollar.  I grew up in a middle-class home that resembled the Cleaver’s and didn’t think much about money other than the fact I had to mow the lawn and do other chores to get an allowance.  My dad worked hard and excelled during his career and ended-up moving us to Alexandria, Va., just prior to the Kennedy administration, as he took a new position in Washington, D.C.   For the next fifteen years he rose even further and when he retired, at age 62, he never had to worry about money again.

I wasn’t in the financial world then.  But, now that I have been for nineteen years, there are some memories that have begun to crystallize. 

I began to realize:

  • We never took expensive trips.  We did have a summer cottage on a beautiful lake two hours outside Washington; and, that’s where we spent vacations – while he was building equity.
  • Despite his success – he had more than a thousand people below him – my parents never bought a second car.  My dad rose at 5:30 each morning and walked to a bus stop more than three blocks from home to commute to downtown D.C. – even in the snow and ice of January through March.   The second car money paid for the cottage, I guess.
  • Both my parents were budget conscious.  They weren’t frugal, but they were extremely practical.  Dad wouldn’t buy tires unless they were on sale and while mom always bought ‘quality’, she insisted we take care of our clothes, etc., so they would last.
  • They ate out seldom; but, when they did, they looked for ways to save.   One couple they spent time with were quite well-off – he was a prominent physician – and also from the Depression era.  They would have before-dinner cocktails at home before going out in order to save spending the extra money in a restaurant (we all know that liquor and desserts are the high-markup items).
  • As I said, we were always a one-car family.  And, that car always lasted nine years.  I remember my dad had a ’50 Plymouth, then a ’59 Dodge, then a ’68 Dodge which lasted until the day he retired.  When he retired, my parents – and all their friends – all moved to an island off the coast of Florida and they all purchased homes on the water complete with a boat dock and, of course, the boat.  Then they all bought Lincoln Town Cars – paying cash.  They all lived in comfort for the next thirty (!) years in retirement!

Not all of my parent’s friends ended-up that way.  I remember a few who always seemed to have money to spend all their lives… until they retired, which not all were able to do.  In that group, even the ones that could retire at all soon ran into problems as inflation began to eat away at the purchasing power of their dollars.

They didn’t plan.   They didn’t budget.

Corporations have budgets.  Sound businesses have budgets.  But, for some reason, many people believe the natural laws of the financial universe have somehow been suspended when it comes to their future.  It’s called ‘denial’.

Don’t be one of them.  Those who fail to plan are surely planning to fail.

I learned those lessons growing up and they’ve been confirmed during my years helping people navigate the financial marketplace as their advocate.

If you’d like to learn how – and why – many investors fail, just give me a call or contact me through our website by using the Request Info button.  I’ll send you a copy of a report I think you’ll find interesting.


The Independent Financial Group is a fee-only registered investment advisor and does not sell products earn commissions, or accept any third-party compensation or incentives of any description.  IFG also does not provide tax or legal advice.  The reader should seek competent counsel to address those issues.  Nothing in this post should be accepted as investment advice which is provided only to IFG clients.  Opinions expressed in this piece are those of the author.