Do you want lots of money??? Learn to Budget and Save - (W4:D3) Debt Free Millionaire Podcast and Personal Finance Course

Debt-Free Millionaire

Simplified Explanation: It is always best to track saving and budgeting, throughout the year. At the year’s end, it is good to see how you stuck with your goals and/or budget. Consider this your annual review.

Real Life: How much do you spend each year? How much do you save? Would you like to save more? And lastly, why would you like to save more money? These are questions everyone should ask. Then comes the bigger question: how are you going to live your life?

BUDGET: Here is a word everyone loves to hear: budget. This is where you become intentional with your money. A budget is basically giving every dollar a job and telling it where you want it to be spent. Write out this budget right now - give every dollar you earn a place to be spent or saved. If you have any money coming in each month, you should create a budget. If you receive extra money, have a place for that to go, as well (so you don’t just think “extra money” and then go spend it anywhere). You can even say, “this is spending money,” but make sure you allocate it as such beforehand.

BUDGET ITEM

WANT TO SPEND?

WHAT DO YOU SPEND?

Essentials

Rental/Mortgage

Debt Payments

Utilities (Gas, Electric, Phone)

Less Essentials

Food (Groceries, Home Goods)

Donations

Savings

Medical

Transportation

Non-Essentials

Entertainment:

Dining Out:

Streaming Services:

Gifts:

Toys:

Other:

ESSENTIALS: Start with your essential items, when figuring out how to spend your money. After you list those items, and how much you want to spend on each, calculate how much of your income goes to essentials. Is it more or less than your income? If it is more, then you will need to scale back and shrink some of your other categories. This should also worry you, because you cannot spend more than you make; even a credit card will come due at some point, and you will need to repay. If your total is less than your income, this extra money can be paid towards debt or non-essentials. Remember, the less debt you have, the more you can spend on non-essentials.

DEBT PAYMENTS: How much do you spend each month on debt payments? When you are finding the initial numbers, just take from the payments of the past. After you have written up your budget, if there is any money that is not allotted to something, focus that extra on your debt. Whatever the amount, try to double it, or at least increase it as much as you can afford, to pay off these debts as fast as possible. Look at tomorrow’s section (W4:D4) titled ‘New Debt’ and see how you can get out of debt faster.

UTILITIES: How much do you normally spend each month in utilities? During the year, this may fluctuate by the type of utility, but most households that use gas and electric spend nearly the same amount every month. During the winter, your furnace uses more gas, but less electric, while during the summer, your AC uses more electric and little gas. For this reason, list the amount of utilities as one, including water, trash, gas, electric, phone/internet. How much do you spend in the winter and summer, and which one is more? Take the higher number and put that in your budget. If this money isn’t spent each month, then put it in the savings account.

LESS ESSENTIALS: While these are still essential, you do not need to spend money on these to survive. That is why they are essential, just less essential.

FOOD: Take a month or two and watch how much you spend on food. Track every dollar spent on food and other goods (toiletries and household disposable goods) that you buy each month. How much do you spend each month? Add that to your budget, above.

Did you know that you do not need to spend much on food if things are very tight. There are food banks around the United States that will provide you with the essentials of life while you get out of a bad situation. If you need to, never think you are ever above help. If you feel better about it, ask if you can volunteer there and get first picks of the food that is available.

DONATIONS: Do you donate to a local church or non-profit organization? If so, how much do you donate, and how much do you want to donate each month? List this in each column.

SAVINGS: Unlike the game, in life you do not just have excess money at the end of the year, unless you are intentional. You must be intentional if you are to pay off debt or save money. Throughout the year, pay yourself first, and place it in a savings account. If you have your paycheck directly deposited into your bank account, automatically put a certain amount into a separate savings account.

CONSTRUCTION: If you own a house, you should always plan for a possible emergency. You buy insurance, but every time you make a claim or call to inquire on making a claim, your premium will increase. Start putting money in a bank account for a rainy-day fund. After it hits a certain amount, say $1,000, then you can hold back. You can always change this fund into money saved specifically to buy a house, and put away a certain amount for your down payment. Or, if you have a home improvement in mind, start saving for it, with this fund. Put away $100 a month and keep it growing until you need it.

MEDICAL: Everyone will have a medical need sometime in your life. If your health insurance provides the ability to have a HSA, Health Savings Account, then start sending money to that account every year. When you put money into that account, through your paycheck, or after you are paid, allot the max contribution (which is somewhere between $3,500-$4,000, tax free). Even if you spend that money when you are very old, you will most likely need it at some point, and should save money by doing it tax-free.

TRANSPORTATION: Transportation includes bus, train, and maintaining, or buying, a car. There is a certain amount you will need each month for public transportation fees, or gas. Allot a certain amount to pay for these items, and then put whatever is left into another savings account. Like your construction fund, begin saving specific money in this account. If you don’t spend it on maintenance, then, after it has grown, spend it on your next car. The longer you save, the nicer your next car can be (if you even want a nice car).

NON-ESSENTIALS
This category is last for a reason. At this point, add up your expenses and the money you have already allotted in your budget; is there anything left over? If not, and you have over-allotted funds, adjust them, so you only spend/save money you already make. If you don’t make enough, then look into starting a side gig. Non-essentials on the other hand, are for when you want to relax and do things with your money. After you’ve given every dollar an assignment in the essential categories, if you have extra money, think of paying off more debt first. The less debt you have, the more money you can spend on the non-essentials in the future. Start off with a small amount for the non-essentials. You really do not need that much.

ENTERTAINMENT: We want you to be as intentional as possible, but we also want you to have some fun - especially if you have kids. Give yourself a specific amount to spend each month on being entertained. Most of the time you will allot these together into the category of entertainment, but for this chapter we want you to break it down into how much you spend for each and how much you want to spend for them. How much do you spend on entertainment, not in those other categories below? How much do you want to spend? Write it down.

DINING OUT: How much do you spend each month on fast food or going to restaurants? Do you really have the money, or do you simply hope to have the money? Do you buy food when at work? Can you bring a packed lunch, instead? Can you brew your coffee at home? Consider where you can cut, to save money. Remember that the more you save, the more you can spend somewhere else.

STREAMING SERVICES: The average household has 3.8 televised streaming services at an average of $10 a month. That’s an extra $40 a month or $480 a year, which can add up. How many streaming services do you have? Do you have Netflix, Prime, Disney Plus, Apple TV, Hulu, ESPN, and some other monthly service? Do you watch all of them, all the time? Think of doing this. Cancel all your streaming services except for the one you will focus on. After 3 months, cancel that subscription for a new one you want to focus on. Watch everything available on that service over those three months and then cancel it. The great thing about streaming is that everything is recorded. After a few months, when you return, there will be more new programs you will want to watch. Try this strategy if you do not have enough money in your budget to pay for so many services. You aren’t just saving money, but you are also saving your time; if there is nothing to watch, go outside or find something more energetic to accomplish.

GIFTS: We want you to be generous with your money, but not as much while you are getting out of debt, and/or reaching a comfortable position financially. The more you donate while you are doing these two goals, the slower it will be to get out of debt, or become sustainable. Think of doing your monthly donations to your church or your local organization, and then spend the rest on getting out of your own hole. This will free up more money to go towards being generous when you are ready. What would you rather do with your money: pay more of your money to interest, while donating a lot, or getting out of debt, and spending those funds that would be paid as interest to banks, instead of the local organizations that need your help. At the same time, you can have very little and still share. Always be generous with what you have and when you have more, give more.

TOYS: This is the biggest struggle for most people, they want, and yet, they are not willing to wait. You can afford it faster, when you get out of debt and place yourself in a financially secure place.

When you reach these milestones, then you are ready to splurge on toys and other activities that are less important towards your survival and comfort. Learn to save first, and then, when you have a comfortable buffer, spend money on the things that are less important in moderation.