Budgeting/Spending Plan
A WRITTEN GAME PLAN FOR YOUR MONEY
“If you don’t tell your money where to go, you will wonder where it went.”
Dave Ramsey
“Whoever can be trusted with very little can also be trusted with much” Luke 16:10
Check below for different budgeting methods and tips to help you create the future you desire.
Choose one, mix and match, or get ideas to create your own method. Do what is right for you.
(Don’t forget to tack ALL your expenses and add a miscellaneous category to catch anything you might have forgotten to budget for.)
Sunflower Budget Worksheets
Sunflowers are a symbol of vitality, intelligence, happiness, and even good fortune and luck.
They can help brighten any day, so I hope these sunflower worksheets can help you on your wealth-building journey.
Paycheck Budget Worksheet
Monthly Bills Tracker
Yearly Bills Tracker
Calendar
What is a Budget?
A budget is more than just a list of expenses and income; it’s a strategic plan or roadmap for your financial future. A budget will also help you stop bleeding money which is very important if you feel we are coming into recessionary times. It can help you prioritize essential expenses and savings and avoid unnecessary spending. This will help you stay on track with your financial goals. Additionally, cutting back on non-essential expenses can better position you to capitalize on opportunities that may arise during a market crash or recession. A well-structured budget is one of the most powerful tools at your disposal.
Here are a few basic steps for creating a well-structured budget:
Identify your essential expenses. These are the non-negotiable costs that you must cover each month, such as:
Housing: Rent or mortgage payments, utilities, and maintenance.
Food: Groceries and dining essentials.
Transportation: Car payments, fuel, public transit, and maintenance.
Healthcare: Insurance premiums, medications, and medical bills.
Allocate Savings: Once you’ve accounted for your essential expenses, the next step is to allocate funds toward savings. This includes:
Emergency Fund: Aim to save at least three to six months’ worth of living expenses.
Retirement Savings: Contribute regularly to retirement accounts like 401(k)s or IRAs.
Short-Term Goals: Save for upcoming expenses such as vacations, home repairs, or a new car.
Cut Back on Unnecessary Spending: Review your discretionary spending to identify areas where you can cut back. This might include:
Entertainment: Streaming services, dining out, and hobbies.
Shopping: Clothing, gadgets, and other non-essential purchases.
Subscriptions: Evaluate and cancel any unused or unnecessary subscriptions.
Regularly review and adjust your budget to ensure you are meeting your objectives and making progress toward your long-term goals.
By cutting back on unnecessary spending and building a solid financial foundation, you can better position yourself to take advantage of opportunities during market downturns. These might include:
Investing: Buying stocks or real estate at lower prices.
Starting a Business: Using saved funds to launch a new venture.
Education: Invest in courses or certifications to enhance your skills.
Remember to regularly review your budget and adjust as needed to ensure you are making progress toward your long-term financial goals.
Building a budget is a crucial step towards financial independence and security. By prioritizing essential expenses, allocating savings, and cutting back on unnecessary spending, you can stop bleeding money and stay on track with your financial goals. Moreover, a well-managed budget can help you seize opportunities during economic downturns, setting you up for long-term success.
Below are different Budget Methods to help you create one that works best for you.
The Zero-Based Budget Method
by Dave Ramsey
This is planning where every dollar will go before you get it. Every dollar has an assignment before you get paid. It is on paper, on purpose, and you are the lion tamer making your money do what you want it to do.
Rachel Cruz (Dave Ramsey’s daughter) says a budget gives you control of your money, and it can give you permission to spend (for all the spenders out there), just make sure you have it listed in your zero-based budget.
For this strategy, make your budget every month, before the month gets started by taking all your expected INCOME minus all your expected EXPENSES, and it should equal zero. This is assigning every extra dollar you might or will have to pay off debt or savings. Again, don’t forget about the miscellaneous category to catch anything that comes up unexpectedly or that you might have missed.
Budget by Paycheck Method
by Kumiko from The Budget Mom
Kumiko states that if you get paid once a month, doing a budget a month at a time is fine, but if you get paid twice a month or weekly, you should be doing a budget for every paycheck.
Do not just budget your bills, also include variable/miscellaneous spending along with savings. Include every aspect of your financial life as this is an overall financial plan for your money.
Calendar Method: Write down all your bills and expected expenses on a calendar for when they are due, and then assign which paycheck that money will come out of. You can, if you like, then create a paycheck bill tracker spreadsheet to easily see and track what has been paid and what still needs to be paid with that paycheck. The Budget Mom has one she made that includes the cash envelope system in this video.
Before you sit down to create a budget, start by tracking your expenses for a month. This will help you get real-life numbers for your budget.
Envelope Method
by Jordan Page from FunCheapOrFree
Jordan Page from FunCheapOrFree
Jordan says to just focus on 3 budgets:
1. Family (things that keep the household/family going) *Use Checking acct
a. Bills & Utilities
b. Mortgage
c. Debt payments
d. Home or car repairs
e. Piano lessons
f. Medical expenses
2. Grocery/Supplies (consumables) *Use Envelope
$100/per person-per month. (starting at $300)
Example: Family of 4 = $400 per month or $100 per week.
Family of 5 = $500 per month or $125 per week.
3. Other (anything else not included in the other two) *Use Envelope
**Could add entertainment as a section (such as eating out, going to do fun things) or leave entertainment included in Other.
Jordan’s envelope example for a family of 4 below. Write the two categories on it, split up by weeks (with the dates written on the side), and whenever you spend money from that section, you write the amount on the envelope in the corresponding square and put your receipt in the envelope.
If you go over one week, Jordan suggests not borrowing from the week below, but borrowing from the other side category. So, if you spent $120 in groceries one week, that only leaves you with $80 for the “other” category for that week. She says you can only borrow from side to side, never down because that could cause problems and leave you with no money at the end of the month.
Pay Yourself First Budgeting Steps
by Rose from Investing with Rose
Investing with Rose - Budgeting for Beginners (8 PLACES YOUR MONEY NEEDS TO GO)
1. Pay yourself first: Make all these automated, so you don’t see and miss this money.
401(k) – up to employer match
Checking account – main hub for your money to go to where you can distribute your money from
Emergency Fund – save until you build up at least $1000 or better yet, your 3-6 months emergency fund
Roth investment account – consider contributing $500 to get you to the $6000 yearly limit.
2. Pay your living expenses:
example: rent, groceries, gas, etc.
**Know what a “need” versus a “want” is.
3. Save for non-retirement short term savings goals:
example: cars, house, trips, etc.
4. Then you can have
Guilt-free spending
More investing (add more to 401(k) or open a taxable brokerage account.
Rule of 5 and Climb Budget Rules
by Jaspreet from Minority Mindset
Jaspreet Singh from Minority Mindset – The 5 BIG REASONS You Can't GET AHEAD FINANCIALLY!
Rule of 5
This applies to non-necessities and states that if you can’t afford to buy something five times, then you can’t afford to buy it one time. This can help you get out of the Net-Zero/Broke lifestyle (meaning you spend all you bring in) and help you to be able to build wealth.
This rule is a great tool to use when thinking about purchases to ensure you can actually afford the items you want. A couple of exceptions could be when purchasing a house and maybe a car. The idea is to not spend every penny you have coming in as that will always leave you broke living paycheck to paycheck, no matter how much money you make. If you only had $500, that doesn’t mean you can afford to buy something for $500 as you will again not have any money and be broke.
Example: Using the Rule of 5, if you would like to purchase something that costs $500, then you should have $2,500 that is not allocated to anything else. If you only have $500 that is unallocated, then you should only purchase something up to $100 (as $100 x 5 = $500). I feel this concept could be done with any number you feel would work best for you, so depending on your circumstances, you could use the Rule of 2, 3, or 10. Doing this can help keep you out of the net zero lifestyle of living paycheck to paycheck, so you can better afford the ability to build your wealth and give you the freedom to live the life you want.
Another take on this budgeting rule is that for every dollar you spend, you should also invest a percentage of the purchase price. Some do this as a 1-for-1, meaning that for every $1 they spend, they will also invest $1. (Example: If you bought something for $100, then you should also invest $100.) However, if you are not at a point where you can do a 1-for-1, then try cutting that down until you can get to that higher investing rate. Maybe for every $1 you spend; you invest ¼ or ½ of the purchase price.
The point of this is to ensure you are not spending every dollar you bring in, so you will have money left over to invest. Whatever method or amount you choose; these can be great tools to help ensure you have money to grow for your tomorrow.
Financial budget rules Jaspreet suggests:
75/15/10 plan is for individuals who have people relying on them financially or who have a lot of financial responsibilities.
75% for spending, 15% for investing, 10% for saving
Example: If you make $6,000 a month (after taxes) and you follow the 75/15/10 plan, here’s what your budget should look like.
$4,500 a month to spend on rent, groceries, going out, clothes, etc.
$900 a month to invest (This is the money you are putting to work for you. This money is working to attract more money.)
$600 a month for saving
After one year of investing $900 a month, you will have put aside $10,800. A 10% return on your money, means you’ll earn an extra $1,080 a year from your investments alone. After just 5 years, you will have put away $55,000 which is earning you more money. With the same 10% return, that's an extra $5,500 coming into your pocket each year.
P.S. Watched this YouTube video on How Millennials Can Start Generating Passive Income? You’ll be surprised to see how many ways you can start generating passive income - even if you don't have a lot of money.
50/30/20 plan is for individuals who do not have people relying on them financially or who do not have a lot of financial responsibilities. (You have a folded opportunity to build something huge while you are still young. Take advantage of it.)
50% for spending, 30% for investing, 20% for saving
Example: If you make $6,000 a month (after taxes) and you follow the 50/30/20 plan, here’s what your budget should look like.
$3,000 a month to spend on rent, groceries, going out, clothes, etc.
$1,800 a month to invest (This is the money you are putting to work for you. This money is working to attract more money.)
$1,200 a month for saving
These budgets are not set in stone. Use what is right for you, or use another variation if needed, just remember, that the more you invest, the faster you will reach your financial goals.
Create a system that ensures you are taking this set amount or percentage out to save/invest every time you get paid so this money does not get spent on non-assets leading you to wonder where it all went.
Sometimes this can be easier said than done, but Jaspareet suggests thinking of it as a tax. If the government came to you saying you now had to pay more in taxes every time you got paid, you would have to somehow figure out how to pay this money or there would be serious consequences. You would do everything you could to ensure you were paying that extra amount, so you should do that here also. Do all you can to ensure you are saving and investing your set amount every time you get paid so you can make it up the mountain.
