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The Single Most Powerful Personal Finance Tool

  • Matt Bell
  • Updated Nov 15, 2018
The Single Most Powerful Personal Finance Tool

If a tool was available that would give you a strong sense of control over your finances and help keep your financial stress low, wouldn’t you use it?

If a tool was available that served as a financial roadmap, showing you clearly how to live within your means, be generous, and save or invest for future goals, wouldn’t you use it?

And if this same tool helped create a sense of financial teamwork and trust in your marriage, wouldn’t you use it?

What is this magical tool?

Why, of course, it’s the lowly, much maligned, much misunderstood budget – or, as I prefer, Cash Flow Plan.

It’s what enables us to live out the third of my 11 principles for simple, meaningful success: Plan to Succeed.

What Rich People Know

When some people think of a budget, they think only certain types need one. People with lots of debt.  People with a low income. 

The wealthy?  No way, or so they think.

In fact, one of the most interesting findings from the classic book, “The Millionaire Next Door,” is that over half of all millionaire households use a budget to guide their finances. 

As authors Thomas Stanley and Wiliam Danko explain, “Planning and controlling consumption are key factors underlying wealth accumulation…Operating a household without a budget is akin to operating a business without a plan, without goals, and without direction.”

Succeeding to Plan is Planning to Succeed

Haven’t ever used a budget?  You could start today.

I walk through the four steps to setting up and using a budget in the Budget Quick Start Guide that’s available for free on the Resources tab of my site, so I’m not going to repeat them here.  You’ll find my Recommended Spending Guidelines there as well, which will help you develop your plan.

The Guidelines cover four different size households (1-, 2-, 3-, and 4-person households) and nine different incomes, ranging from $30,000 to $150,000.  Just find the one that most closely resembles your circumstances.

You’ll see that these are ideal plans, meaning they assume no debt other than a reasonable mortgage.

If you have other debts, you’ll have to adjust your spending in other categories to allow for the debt payments.

But, But, But…

Whenever someone comes to me with a financial dilemma – they’re deep in debt, can’t find any money to save, can’t stop fighting about money with their spouse – I always ask whether they’re using a Cash Flow Plan to guide their household finances.  The vast majority of the time, the answer is no.

And the “no” is often accompanied by a quizzical look as if I didn’t understand the question.  “But what I was really asking…”

I did understand.  It’s just that I need more information.  Objective, factual information. 

To be sure, there’s a ton of emotional stuff involved in managing money – temperaments, moods, stressful circumstances, the emotional imagery used in advertising.  We often get in trouble with money when emotion overrides logic.

A well-designed Cash Flow Plan gives us the logical, factual information we need to live within our means, be generous, save and invest, avoid debt, and spend smart.  Assuming there’s enough income to meet basic needs, that’s true for every income level and household size.

Are You the Type?

I firmly believe everyone would benefit from the use of a budget.  Rich or poor, young or old.  Everyone

It isn’t drudgery, and it isn’t something you go on like a diet.  It’s simply the single most powerful tool available for successful money management.  Why not start putting this tool to work in your life today?

What questions do you have about using a budget?  Let me know by leaving a comment.

Other posts in this series on the 11 principles that lead to simple, meaningful success:

Matt Bell is the author of three personal finance books published by NavPress, leads workshops at churches and universities around the country, and serves as Associate Editor at Sound Mind Investing, America’s best-selling investment newsletter written from a biblical perspective. To learn more and for a free subscription to the Sound Mind Investing blog, go to

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