Should I have and follow a budget, before I get life insurance?

Life Insurance is important but so is your total financial picture. Would you believe that less than 33% of all people have a budget? Many life insurance agents have a find the money program to help people be able to afford the products they sell. The best positive financial picture is a surplus of money every month and the best place to start with is a good budget. I usually use Excel to start mine, but if you don’t have Excel remember Office Libre and Google Docs are free. In fact, I placed a template on Google docs to share with you.

Let’s go line by line through the budget I linked you to.

  1. Retirement: This needs to be first on everyone’s budget once you get your match for your 401k place a little extra into a Roth IRA. To prepare for retirement creates that nest egg that makes it so you will not need life insurance in the future or at least needs less of it.
  2. Rent/Mortgage: This is everybody’s major expense. It should be paid first because it is the hardest one to pay. Also, no one wants the hardships that come with not paying rent.
  3. Car Payment: Your car gets you to work. This one needs to be paid next. If you don’t have a car payment, put money in your emergency savings account for your next car.
  4. Groceries: I usually have one line item for groceries and as I shop at different grocery stores I subtract from the main grocery line item putting less in that line item and keeping track of my whole grocery spending.
  5. Right below Groceries is Costco which let’s face it is mostly food items. Replace with Sams club or any other warehouse club you might belong to. Take a list of what you need it’s easy to stock up on stuff you don’t need at these locations.
  6. Restaurants/Fast food and Bars, This is where all your convenience eating should be whether it is going to a nice 5-star restaurant or Taco Bell place it in here. This is a good place to put entertainment that might be combined such as bars, of course, delete this part if it is not relevant or if it is, make it its own line item.
  7. Credit Card. We all know credit cards are not beneficial but whatever your minimum payment make sure to stick it on auto-pay to ensure you don’t have late payments. Make extra payments when you can.
  8. Gas Vehicular: Gas for your car is not cheap. Especially if you commute. This should be an average of gas used for your vehicles.
  9. Electricity: I would line item every single one of your utilities. Put the most expensive one at the top. Remember your utilities can let you do an even pay program so that electricity does not spike during the summer.
  10. Gas House (Natural): Most of us use natural gas to heat our houses put this line next. Of course, if you use propane or something else swap this line item out.
  11. City Utilities: This is where I put my city utilities like water and trash that are managed by the city.
  12. Car Insurance: Car Insurance is usually a monthly bill if you pay it every six months place it in here then
  13. Internet and Television: I usually combine the Internet and Television bill together as most people purchase these together. If you have them from different providers make each one its own line item.
  14. Netflix: We all have Netflix it’s a low cost but all subscriptions should be tracked on their own line items.
  15. Hulu: My cable TV replacement they brought the price down to 5.99.
  16. Redbox: We have started doing movies from them since Netflix Blu rays were not making it back one time.
  17. Timeshare/Vacation: I have a timeshare that I pay monthly maintenance. Either way, you need a vacation once a year saves for that vacation on a monthly basis to take the bite out of it.
  18. Amazon: The thing about Amazon there are some products that can only be found here. Track your total Amazon purchases together from the beginning of the month. Make a separate line item for each purchase.
  19. Activities: Whatever activities you do whether it be mini-golf, real golf, skiing, or movies they should be tracked. If there are many give them their own line item.
  20. Medical (Prescriptions): If you have reoccurring medical costs make a line item for them.
  21. Emergency Fund: Everyone should have an emergency fund put something in this every month.
  22. Vices: Whether you head to the liquor store or the candy store make a line item for this.
  23. Term Life Insurance Premium: There is where you schedule in what you can afford toward that life insurance premium.

Discuss Roth IRA alternatives with an Advisor!


Do you share finances with a spouse or other loved one? Spend the time to go through the budget with them monthly. Get an agreement on how things should be spent should create greater harmony throughout your household. Use your Google Drive to share the file with them so you can update it live to ensure you are aware of what the other one is spending. There are plenty of other budget tools out there like Intuit’s Mint or Dave Ramseys EveryDollar budgeting app.

Let’s hope this article inspired you to create a budget. Life Insurance is important, you need it to protect your family. Having a good budget along with life insurance will help bring that total Financial Health Picture. If you have questions about your budget or life insurance don’t hesitate to call or contact us at Wasatch Smart Finance.