[00:00] Well, well, well, look who's ready to finally learn how to budget. And lucky for you, I'm going to show you how to budget in a way that doesn't suck.
[00:13] We're going to cover five simple steps to make a budget, and I will create one before your very eyes. But before we get going, make sure to hit those like and subscribe buttons. It helps us help more people, consider it your good deed for the day.
[00:26] Now I used to think budgeting was reserved for broke people and excel loving accountants. Turns out, I was broke until I started doing a monthly budget. It was the major key that helped me go from broke to millionaire. But budgets, they get a bad rap.
[00:38] A lot of people think they're just an annoying set of rules that limit their freedom to spend. And in this year, country, no one limits our freedom. A real American would never want to know what's in a hot dog. So it's no shock that over half of Americans don't do a monthly budget, and well over half,
[00:52] live paycheck to paycheck. Coincidence? Me thinks not. Let's get into how to budget. Step 1. List out all of your income. I mean, all forms of income. That's your paycheck, any side hustle money, and the crisp $50 bill that Graham Graham sent
[01:04] you on your birthday. And by the way, this is your reminder to thank Graham Graham. A face time is nice, handwritten note, even better. Step 2. List your expenses. Again, all of them. We're going to start with your regular bills and your four walls.
[01:16] That's food, including groceries, housing, utilities, and transportation, which includes gas. Now some of these you might need to estimate because you don't know exactly how much it's going to be, but you can get nerdy and more specific by looking at your bank account and
[01:28] your bank statement to get a more accurate number. After that, we're going to include any irregular bills that are due for the upcoming month. This could be bills like insurance, subscriptions, or HOA fees that aren't due every single month. Step 3.
[01:40] Subtract expenses from income. You know that feeling of, I made $5,000 this month that I'm confused as to where it all went. Well, when you do a zero-based budget where your income minus expenses equals zero, you'll never have that feeling again because you've assigned a category for every single dollar.
[01:54] Now, to be clear, this does not mean that you have $0 in your bank account at the end of the month. It's a good idea to have some buffer that you keep in there. You don't want to ride this thing right to the edge of broke. Now, if your expenses are higher than your income, your budget just revealed to you that you're
[02:08] not living on less than you make. And we're going to cover how to fix that problem in just a bit. But first, we're moving on to step 4, which is track your transactions. This is how you avoid overspending, keep yourself accountable, and understand your spending habits.
[02:21] If money comes out of your bank account, your rent mail, or your Hulk-A-Maniah-Vell-Crow-Wallet, it needs a home in your budget. And you can adjust as you go. Your budget is not set in stone, so make changes when you need to. Think about it this way. You can make a plan to lose weight, but if you're not in a calorie deficit and you're not stepping
[02:35] on the scale, you're not going to know if you're making progress, and you're significantly less likely to hit your goal. And that's why this step is so important. And finally, step 5. Make a new budget before the next month begins.
[02:47] No two months are the same. You got to think about weddings, birthdays, holidays, bar mitzvahs, kinsinieras, trupacabras, you name it. What was the last one? You also want to look at the previous month to see what adjustments you need to make for the next one.
[02:59] What worked and what didn't. Just be sure to make your plan before the next month starts. You don't want to build a plan while still in the air, Boeing tried it. Boeing burned. But unlike Boeing, I'm not going to leave you high and dry.
[03:14] So fast in your seat belts. I'm going to build a budget from the ground up in 5 minutes or less, or your budget is free. That's right. I will give you a budgeting app for free if I can't do it in under 5 minutes. Before we get to that, let me tell you about today's sponsors in 60 seconds exactly.
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[03:56] just click the link in the description below. And while you're learning the best way to budget, you should also know the best way to save your money. Quick hint. It's with a high yield savings account like the one offered by Online Bank from Laurel Road. They've got a very competitive interest rate at 4.8% APY right now, and there's no minimum
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[04:27] below. Boo-yah! They said it couldn't be done. The haters doubted. And here we are. We persevered. We conquered. Victory Screech! Alright, let's do this.
[04:39] I'm going to build a budget in under five minutes using my favorite budgeting app every dollar. And yes, before you jump in the comments, our team at Ramsey created this app and know they don't force me against my will to use it. I genuinely believe it is the simplest, best, zero-based budgeting app out there.
[04:53] Let's go. For this example, we're going to use a couple that makes $6,500 a month take-home pay and they have one child. Let's go. Alright, his paycheck, we're going to call $3,000. Her paycheck, $3,500, let's go queen.
[05:08] Giving, we're going to say $6.50, we're going to give 10% to our local church here, emergency fund, we are good because we have some debt to pay off. We've got $1,000 saved, so we're going to move on. Next up, we've got housing.
[05:20] They've got a mortgage of $1,900 a month. They have a water bill of $50 a month. They're natural gas. We're going to say is $45.
[05:32] Electricity, we're going to call $100 for that. Cable. Who needs it? We're going to go ahead and delete it. Swipe. Left. Goodbye. And then we have trash. We're going to call that $15 for trash collection.
[05:44] Okay, we're moving on. Gas, they spend $150 on gas per month, and we're going to add auto maintenance at $100 a month to cover oil changes, repairs, and so on.
[05:57] Next up, we're going to move on to the food category. They spend $600 on their groceries, and they're currently spending $200 on eating out. We'll talk about that in a bit. Moving on to the personal category, clothing, we'll say $50, I've got to keep that baby
[06:10] cloth. They're currently spending $100 for their phone plan. All right, fun money. They're spending another $100 on fun money. Here in Cosmetics, you got to keep it high and tight.
[06:23] $60 a month for that. Subscriptions. They have $35 worth of subscriptions. Okay, moving on to lifestyle. This is a lifestyle. They have a child. They're paying for childcare. We're going to call that $13.75 for childcare.
[06:39] Our entertainment will say they spend $50 on entertainment. Little mini golf here there, never hurt anybody. And Mr. Laney, this is kind of a catch-all for the ankle-biter stuff, $100 for that. Moving on to health insurance, that's covered through their employer.
[06:52] So it comes out of the paycheck before it hits. So we're good there. We're going to leave that. Life insurance, we're going to say they pay $100 for life insurance between the two of them. Auto insurance. They have a sinking fund, and we're going to call that $200 a month to cover that by the
[07:06] end of the year. That their homeowners insurance is already covered in their mortgage. So we're skipping. Now, down to the debt. They've got some of it. They've got a discover card. So we're going to add discover here. The current balance, we're going to say $6,000.
[07:20] And their minimum payment is $140. And we're going to ignore the interest rate because we are doing the debt snowball method. The next debt they have is a car payment. So we're going to add Toyota Finance here. All right, I can't spell Finance.
[07:34] Here we go. The balance is $15,000. And their minimum payment is $300. All right. And their final debt is from Dunder University. They're still paying off the student loans, and we have, oh, we're doing good.
[07:48] OK, I'm going to make this. Dunder, not a Dundee. Why did auto corrected Dundee? Dunder University. Current balance is $30,000. All right, the minimum payment is $175.
[08:01] All right, so we're going to add in our minimum payments here. And the plan section, because that's how much we're going to start paying. So $140 on the Discover card is what's going to go there. And then on the car loan, we're going to make the payment of $300.
[08:18] And then for the student loans, that's $175. Buy a big, buy a boom. We've got a budget. Now, here's the problem. We are $95 over budget. Remember, we want a zero-based budget income minus expenses.
[08:30] So we're going to have to make some tweaks to this budget. So I'm going to go back through and see where we can cut some. Right now, I'm noticing our phone bills are $100. We're going to cut that down to 50, because we're going to start using Tello, 25 bucks in line for unlimited everything.
[08:43] And we're going to cut out restaurants completely and get real intentional. Now we've got $155 left to budget. We're also going to take on a side hustle. And we're going to call that $100 a month.
[08:57] That's minimum. $255 now, we can start adding to our smallest debt, which is our Discover card. So I'm going to add $255 to $140, which gets us to $390, $5, $3, $9, $5.
[09:10] It's an every-dollar budget. Under five minutes, buy a big, buy a boom. So there you go. It's an every-dollar budget in under five minutes. And I know what you're thinking. You were hoping I went over so that you would get a free budget.
[09:23] Well, I'm feeling very generous today. So I'm going to give you that budgeting app for free. You can go to everydollard.com slash George to get started for free or use the link in the description below to do this for yourself and your own money. And here's the cool news.
[09:35] The stats show that every-dollar budgeters discover up to $400 they can use toward debt and they cut their monthly expenses by nearly 10%. Just by doing a budget and paying attention. And remember, budgeting, like any other habit, takes some time to get good at.
[09:48] I found it takes most people 90 days to dial it in and get in a group. So just promise me you will not give up after your first month of budgeting. Because while the first cut is the deepest, the first budget takes the longest. So once after that, you'll knock out in a few minutes and every dollar makes it easy
[10:02] to duplicate last months and make some tweaks. And if you do the budget and realize you've got a lot of expenses, there are so many ways you can shave that down. So be sure to watch this next video on the 12 rules you need to know to live a frugal life. I'll also drop a link in the description below.
[10:16] Thanks for watching. We'll see you next time.