Budgeting

Essentially, it's the most crucial instrument in your toolbox for accumulating wealth. A few days before each month begins, we review our financial plan for that month. Dave Ramsey frequently states, "If you don’t instruct your money on what to do, it will act independently." This couldn’t be more accurate. How often have any of you sat down and pondered how much money you earn, only to conclude, "I earn all this money yet have nothing to exhibit for it," or, conversely, you find yourself in a tight spot this month but still manage to pull through? It all revolves around directing your money! If you're making a substantial amount but have nothing to show, it indicates there are gaps to address! A financial plan can help with that ☺. It's commonly acknowledged that when you sit down to create a financial plan for the first time, you may end up giving yourself a raise.

Firstly, let me offer this disclaimer: This site primarily focuses on PERSONAL FINANCE. It's personal, meaning there isn't a one-size-fits-all approach; what works for me may not necessarily work for you. If you simply search online for budgeting $, you’ll find a myriad of budgeting ideas, including the 50/20/30 rule and others. Budgetsaresexy.com provides free templates available upon registration. In The Total Money Makeover, Dave Ramsey offers insights for a budgeting strategy. The important thing is to find one that fits you and stick with it!!! At Wise Roots Financial, we have 3 budget templates. Shoot us a message and we'll get them over to you.

Dave Ramsey introduced me to the personal finance realm; The Total Money Makeover sparked my journey. Naturally, I adopted his budgeting plan when I began. The advantage of his plan is that it covers nearly everything and specifies how much you should ideally spend. By the end of the budget sheet, you should be at $0 remaining. Every dollar you earn should be allocated somewhere YOU DESIGNATE. If you don’t, it will leave, I assure you of that.

When most people examine their budgets, the initial focus is on the Final Sum. They think, “Look, the final sum is positive; I can pay my bills this month and have some extra… Yay!” However, that’s not the goal. We shouldn’t just aim to survive but to thrive financially, so our primary focus should be on ensuring the significant categories align with our recommended percentages (of our take-home pay).

Housing (25–35%)

Transportation (10-15%)

• Insurance

• Gas

• Car Payment

Food (10-15%)

Utilities (5-10%)

Savings & Investments (15-20%)

Lifestyle & Entertainment (5-10%)

Other categories

• Charitable Giving (0-10%)

• Personal Development (0-5%)

Debt (5-15% ~ aiming for 0)

Does everything align? If yes, great, you can proceed to finalize your sums. If not, it’s time to make adjustments. It's not rocket science… just like managing your weight revolves around calories in versus calories out, so does money management pertain to money in (income) versus money out (expenses).

Spending money tends to be more about altering habits than anything else. You may be so accustomed to doing things a certain way that it feels obligatory. But I have news for you: IT DOESN’T HAVE TO BE THIS WAY!!!!

www.MrMoneyMustache.com unveils an entirely new perspective on how to live with a sense of empowerment that allows you to feel good about making necessary reductions.

We initiated this budget plan in November 2013 after I had been unemployed for 4 months and was about to start a state job. We had just experienced a $45,000 pay cut, and we needed to understand our expenses and identify necessary cuts. Ultimately, we went over budget in our Transportation category, ending up $200 in the red (-). The payment on my truck was $372. Easy decision, the truck needed to go, which brought us to a positive cash flow of $172.

The first budget is likely to be a disaster. DO NOT, UNDER ANY CIRCUMSTANCES, GIVE UP!!!! It will improve, it will become easier. You will adjust, fine-tune, and quickly find your path to financial success. There are many more elements to cover within the budget, which I address in other posts, but for now, work with this framework. Use it as your initial limits. Commit to it unless faced with a life-threatening emergency. Every day presents an opportunity to live better and more intentionally.