Hey ya'll! We are continuing the conversation with budgeting month. Keep in mind that a budget is something that you create for yourself. Make sure you create a blueprint and guide for a financial plan that works best with your lifestyle. Regardless of how it’s done, you have to have a plan!
Budgeting Baseline: Stacks and the City Style
Ya’ll already know what this is: the money that goes in to your account. This can be paychecks, residual income, alimony, sugar daddy money- get it how you get it. Income makes your bank accounts grow.
This is the money that goes out of your account. Subtraction and deduction. Where does your money go out each month? Who gets what? Outcomes make your bank account small.
Understanding the careful balance between the two is essential for growing and building your account. Remember- you want more money coming IN and going OUT.
3) Fixed vs. Variable Costs:
Fixed Costs: Tried and true expenses- bills that come every month that generally have a FIXED amount. Think Rent/Mortgage, car notes, debt repayment etc…
Variable Costs: This is more of your discretionary income. Think gas, groceries, shopping, eating out. The amount of money you spend VARIES by month.
Organizing your finances is paramount to generating and building wealth. Make a T-Chart with one side FIXED costs and the other side VARIABLE costs. Think about who you give your money to each month and write it in one of the slots.
4) Time to Divide: The Pie Chart:
There are various methods to dividing how much you should be allocating funds to but my favorite and most comprehensive one is absolutely Senator Elizabeth Warren’s 50/30/20 rule. She suggests 50% of your finances go toward needs 30% goes toward wants and the 20% goes toward savings/debt repayment. Evaluate your lifestyle choices and fill what should go where. More information on her 50/30/20 rule below:
5) LOOK WITHIN!
There are two parts to this: Look at your account balance, credit card statements, banks statements, ev-er-y-thing. Don’t be afraid! Look at patterns and see what you bought that you don’t remember and if it was even worth dropping the coin.
Look at yourself. Evaluate why you want to educate and improve your finances. What does financial independence look like to you? Does it mean saving for a trip? Paying down debt? Not living paycheck to paycheck? Think about what you want to accomplish and make it nasty. J
That’s all for now! I look forward to hearing from you all soon! You can do it!
Listen to the episode here and Subscribe on iTunes here!