It’s Time To Lock In

I sent out an email like 2 weeks ago about this, but I’m going to say it again.

Don’t wait until next year to start working on your goals. Most people fall off at the end of the year.

You’re going to look around at most people spending money on the holidays. Eating less healthy. Taking a break.

And it’s going to be tempting to do the same!

I’m not saying work through the holidays.

But don’t check out and tell yourself you’ll pick things back up in January.

It’s easy to start bad habits, and hard to kick them.

And so as part of locking in, I wanted to provide some guidance on how you can successfully start budgeting.

You may have downloaded a budgeting app or even started using my budgeting spreadsheet recently and thought to yourself, “What in the world am I doing”?

It’s not always incredibly obvious how you make a budget the first time.
But once you do, making the budget is the only easy part of budgeting.

The hard part is sticking to it. This is why I always tell people that their budget should change each month. If you break it, refine your budget and get back on that horse.

But there are multiple types of budgets that you can build, so I want to share a few options for you in case the idea of tracking all of your expenses feels overwhelming.

What Are My Options?

The simplest type of budget, which is actually a budget that my wife and I have been choosing to follow is called a pay-yourself-first budget.

This just means when we get paid at the beginning of the month, we immediately invest a % of our income and don’t worry about the rest.

The reason we’re able to do this is because we’ve been living in our current house for multiple years now, and all of our bills at this point are steady.

We have no debt (other than our mortgage), so focusing on every dollar would start to become almost unhealthy for us at this point.

And, we both are incredibly frugal, so we know neither of us is going to overspend on things we don’t need.

This might be the right option for you too, especially if you have no desire to put in effort with your budget.

If you try it and it doesn’t work, the good news is that you can try one of these other options.

The reason this budget works is that at the end of the day, the purpose of your budget is to help you build security (check) and help you use money to enjoy your life (check).

The next type of budget I’ll point you to is the 50:30:20 or the 60:20:20 budget. They are both the same concept, just different % allocations that you are putting into various budgeting buckets. Either 50% or 60% of your income would be going toward Needs. 20% or 30% into Investing. 20% or 30% going toward Wants.

This is really helpful if you’re trying to figure out housing. How much you should be investing each month based on your income. If you’re overspending on things that you don’t need.

I find that this type of budget is great for people who feel like they should have more money left at the end of the month.

It requires that you track your expenses. And the most important part of that process would be somehow identifying which of those 3 buckets each expense falls into.

The last type of budget is the one I’m going to spend the most time on. It’s a Zero-Based Budget.

If you follow along with Ramsey, this is the same as an Every Dollar Budget.

In this budget, you track all your expenses, and at the start of the month, you assign every dollar that you make a job.

Meaning that all of your money is accounted for.

If you’re in debt or struggling get out of the paycheck-to-paycheck cycle, this budget is going to give you the most control over your money so you can achieve your goals.

Planned vs Actual Spend

A key piece that I want you to understand is that budgeting is a two-step process. And they are both equally important.

You have to make a plan for what you are spending money on.

And then you have to account for whether you actually stuck to that spending plan.

Just because you make a plan doesn’t mean you’re going to stick to it.

And just tracking what you’re doing isn’t going to get you to your goals. You need a plan.

There will be surprises that come up the first few times that you do this.

You might realize that you were too tight in one area and it’s really hard for you to sustain that. Food will likely be an area where you do this.

You might also find that you were wasting a ton of money on something, and increase the money that you have to spend each month.

There will be surprises. And there will be excuses.

Making the Budget

The first thing you need to do is get your CC and Bank Statements.

You’re going to need this to understand where your money goes, so you can make a plan for where you want your money to go.

You can use my free budgeting template if you’d like - link here.

You could also just pay $1 and get access to Origin for a year - that way, you don’t have to worry about this part. Download Origin for $1

If you’re using my template, the first thing you’re going to do is put each transaction from the previous month into the Monthly Expense Tracker tab.

The key things you want to understand are how much the expense was, what category the expense was, and if it was a need or a want.

Once you’ve gotten all of your expenses in one place, you can start to analyze what you’ve been doing and search for opportunities to save money in the next month.

In my template can also filter this down by Needs and then click over to the Budget Breakdown and start to add things to your Needs Expenses based on what you were spending previously.

Make sure you separate your debt from your expenses because you’re going to make a plan to pay those off.

At the very bottom of the Budget Breakdown (Template), you can add some of your planned Want expenses. Make sure to budget for them if you are going to be spending on them. You don’t want to build a budget and not account for your wants.

On that same tab, you’ll notice a section that summarizes all of your Planned Spending.

At the bottom, you’ll see the New Amount Remaining. That’s money that you are going to either allocate toward debt or toward investing/ saving. If you have debt, toss it all at the debt.

You could stop here. Technically, you made the budget.

But this is your chance to comb through things, see where you can get better. Are there opportunities to negotiate bills? Could you cancel some subscriptions? Should you try to get a side gig and what would that additional income do for your budget?

This is stuff that can be automated with Origin.

I’m still getting used to Origin but basically it automatically categorizes your expenses like so.

And yes, I’m investing $5,200/mo right now into Budgeters Anonymous. I’ve hired an agency to help me with YouTube - so if you want to support it, that would mean a lot! YouTube Channel Here

In Origin, you can also use the AI Agent to see where you could be saving money.

I know that’s a quick fly-through. Please email if I missed anything so I can continue to make budgeting an easy process for you.

That’s it for this week.

As always, please let me know how I can help.

Thanks,

Dan