Hey there lovely!
So, you look up to find it’s the end of the month. You’ve been using your planner every week, sticking to your plans, and checking things off your to do list.
For the most part, life is good...
But at some point you find yourself wondering where the heck all of your money went.
This happens month after month until finally it’s the end of the year, you see how much money you’ve made, but none of that money is in your bank account. WTF.
If you pride yourself on being someone who is pretty smart and ambitious, then you probably end up wondering where all of your hard earned money is going. If that sounds at all familiar, then this article is for you, my dear.
Today you are going to learn exactly how to tell your money what to do so that you can save more, invest more, and do more of all the things you love.
Why? Because I believe you can have it all.
Plus, you can download a PDF of our exclusive budget template that we use with our clients. Download it now so that you can follow along.
Did you know that a budget is the cornerstone of your financial success?
Your budget is basically a blueprint that outlines how you want to allocate your money. Could you imagine someone building a house without a blueprint? There would be utter chaos. The builders would not know where to put anything, where to connect the electricity, or even what materials to buy. And to make it more personal, think about what your life would be like if you didn’t plan. It would be a mess!
Well guess what… often that is what we do to our money. We go to work and put in our blood, sweat and tears but we don’t make a plan for how to allocate those hard earned dollars.
That’s crazy, right?
Once you create a budget it becomes the cornerstone of your financial success. It’s certainly not the only thing you need to do, but it is the first point of action to take control of your finances once and for all.
Here are 4 steps you can use to create a rock star budget.
Step 1: Understand Your Top 3 Values
Now, you might be tempted to add stickers, washi tape, and new notebooks to the top of you value list, but that’s not what I’m talking about. This is you opportunity to dig deep and think about what really matters to you in your life on a financial level.
That might be financial security, travel, fun, investing, growth, charity, peace, or any number of things.
Whatever it is, your values are there to help you prioritize how you allocate your money. If it’s something you value, it should show up on your budget. If it’s not something you value then it should not dominate your budget.
For example, if you value financial security then it would make sense for you to have an emergency fund that you contribute to. On the other hand, if you find yourself spending hundreds of dollars dining out and it does not support anything that you value, that is something you definitely want to look at.
Simple, yet powerful.
Go ahead and write down your top 3 values in the first section of your worksheet.
Step 2: Know Your Monthly Income
You would be surprised how many people don’t know how much money they bring home on a monthly basis.
Let’s be clear: If you do not know how much money you have coming in every month, it is impossible for you to successfully and productively allocate your financial resources.
If your monthly income is relatively steady, then your job is easy! Just look at your pay stubb ot your direct deposit.
But, if your income changes every month there are two options I usually recommend:
- Take a look at your income from the past 3 months and come up with an average. Look at what you have coming up over the next 3 months and make an estimate based on what you see.
- Set a realistic goal for your monthly income and do everything you can to reach it. If you fall short… don’t!! if you have a surplus, allocate it based on your goals and priorities.
Your income is the source of your personal financial ecosystem and the starting point of your financial breakthrough. Don’t ignore it. Oh, and make sure that you are using your AFTER TAX income!
Enter your income in the dedicated section of your worksheet.
Step 3: Identify Your Monthly Spending
When it comes to outlining your monthly spending don’t try to do it from memory. It’s not that I don’t trust you but… let’s verify with some receipts.
First, Print out your bank statements from the past 3 months. Then, you want to highlight your expenses, bills, and debts. Each with a different color.
Do yourself a favor and don’t be too hard on yourself about how much you’ve spent on etsy… or even Amazon Prime. We all have our weaknesses.
Once you’ve highlighted your printout start looking at any patterns you notice. Tally up how much you’ve spent per month on the areas we’ve deemed most important.
Ultimately, write down your average monthly spending on the appropriate line.
Step 4: Calculate Your Uncommitted Income
Once you have done steps 3 and 4, it’s time for the grand finale. Subtract the number from section 4 from the number in section 3. This is your uncommitted income.
Your uncommitted income is the source of your income productivity. This is how you generate assets, build empires, and live full life.
Once you have determined your uncommitted income, you know how much money you can use to save, invest, and pay down additional debt. Wahhooooo. That's a pretty big deal.
But the real question is... once you know how much money you have to work with, how do you know exactly what to do with it? Well, if you want to find out more, stay tuned for details!
Stay tuned for our next blog post!