Oh no…not the “B” word? Oh yes…. the dreaded “B” word – Budget! So many of us do not like doing these, but the truth is, budgeting is the cornerstone to wealth building. How will you ever find the disposable income to put towards investments, if you do not have a clear picture of the other financial obligations you have? The answer…you will not, and therefore you will not invest consistently, and make your wealth building journey that much more difficult. If you are a free spirit that spends money without tracking it, the chances of you ever building wealth are decreased dramatically, no matter your income level. There is also a high probability that you have no idea where a good percentage of your money is going, or how much of it is going towards impulse/small transactions that are adding up over the months and years.
All of this can be eliminated by taking note of your expenses each month versus your income. If you do not organize your money, and tell it what to do each month, you will wonder where it went at the end of the month. There is a reason every corporation and government agency budgets. It is crucial that we forecast our spending, track it, and make adjustments to the budget as the month unwinds and we spend our money. If you do not pay attention to your money now, one day you will be forced to pay attention to it – and it will probably be under stressful circumstances. Make the decision to do a budget today. There are many ways to build a budget and track your money – from written tools to spreadsheets and apps. Find one that works for you and get started today. It will not be easy when you start, but you will be glad you did once you get the hang of it.
If you need a financial coach to help you organize your finances, email me at: or I also do speaking engagements on personal finance.
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I am a financial coach that focuses on improving personal finance behavior. I do not sell investment products or manage investments.
If you’re trying to get a grip on how You spend your money you want to have One of these [Music] What’s up everyone thank you for Stopping by the achieve financial Coaching channel where we believe In breaking the chains of debt and Talking about all things related to Personal finance I’m kenny simon your personal finance Coach and today i want to talk about Something that is absolutely critical if You are serious about organizing your Finances and that Is the b word budget it’s a bad word in Some households Many people don’t like it but if you are Serious about organizing your finances And giving yourself A solid foundation from which to build Wealth or just get your money organized A budget is absolutely critical please Like the video Subscribe to the channel drop a comment And share with friends Let’s get started so let’s start the Budget discussion with a formal Definition of what a budget is A budget is an estimation of income and Expenses Over a specified future period and is Usually compiled and re-evaluated on a Periodic basis
So for most of us that period of time is A month right estimation of Income and expenses over a month budgets Can be made for a person A group of people a business a Government or just about anything else That makes or spends Money a couple of quotes that i love That speak to the importance of managing Your money or having a budget or just Tracking your expenses One is a quote by moses tan and it says Those who don’t manage their money Will always work for those who do also Benjamin franklin once said Beware of little expenses a small leak Can sink a great ship I have personally seen this happen to Many people that i know And care about so they’re really two Main questions i want to answer in this Video today The first question is why is budgeting Important And there are several reasons and i’ll Just rattle off a half a dozen or so But there are many more than just this First of all A budget is important because you Maintain financial control You can prevent overspending and things Like that by organizing your finances In a budget it also budgeting eliminates A huge stress factor
We have a lot of stress associated with Money not handling it Right not having enough of it for things That come up in our lives Also budgeting helps you avoid Proactively avoid monthly Cash flow shortfalls which could lead to All sorts of drama And then also by budgeting you can Eliminate that debt trap i like to call It or just the process of accumulating Debt Because you’re spending and buying Things but you’re not really tracking What you’re spending Also having a budget you all know this Is one of my favorite things to mention And i mention it in just about every Video It allows you to create an emergency Fund for the unpredictable things That we know will happen also budgeting Allows you to set And achieve both short and long term Financial goals And ultimately budgeting is the Cornerstone to building wealth you will Never accumulate A decent amount of wealth unless you Just make a ridiculous Amount of money without having some type Of a budget So if budgeting is so important because Of all the reasons we rattled off then
Why don’t we do a budget Well i’ll just tell you about some of The things that i’ve heard throughout my Life And um with some of my clients that i That i coach Uh on you know my personal financing Coaching practice i think the number one Reason is there is guilt And shame about our financial situation People don’t like to talk about money For this very reason people are you know They feel guilty about not handling Their money right They have shame about the financial Situation they find themselves in Especially people who make enough money To not be in that situation but we need To learn to get past that There are also myths about budgets right Budgets are overly restrictive budgets Are only for poor people Just some very silly things being put Out there and so people believe that They take it and run with it And then some people believe budgets Take a long time to create And manage i think it’s a lot longer Time when you don’t have a budget and You’re struggling to manage your Finances personally some people just Flat out don’t know how to do a budget But you need to learn It’s not that hard you just need to sit
Down and take time to do it and then Some people just have no discipline or Patience when it comes to their money They make their money they want to spend It how they want to they don’t want to Sit down and really You know allocate every dollar and then The second thing is you may live with Someone or you may have grown up in a Family where family members are not Supportive of having a budget Why would you do a budget why do you Want to do that why do you want to track Your money that closely You may be married to someone like that Or live with someone like that And that is a major reason so these are The reasons why we don’t budget But we need to really take stock of all Of these reasons Why budgeting is important and why we Don’t budget and we need to figure out a Way to get past those things because it Is limiting Your financial future the last thing I’ll say about why is budgeting Important or why we don’t You know why we don’t budget is that Listen You have huge fortune 100 fortune 500 Corporations and government agencies Although government agencies aren’t the Best at budgeting But if corporations and government
Agencies think a budget is important And they set budgets and they deal with Billions sometimes Trillions of dollars then why don’t we With our incomes It just doesn’t make any sense we need To budget so quickly i would like to Talk to you about what i call budgeting Fundamentals these are some things that Will be critical In establishing your mindset and then Things you need to think about as you Start to build your own budget The first thing i like to do is have People Really assess their financial reality so The first question what is your current Financial situation you really need to Just acknowledge where you are Doesn’t matter how poorly you’ve managed Money in the past you have to start here Where am i currently second do you know Your numbers Right what are your numbers how much Money do you actually make if you sit Down and write down every little piece Of income you make And how much debt do you owe who do you Owe right and What are the interest rates you need to Know all those details intimately And you need to know where your money is Going take the time to track your money Over a month
And see where you spend it i have Clients that spend so much money on Things they didn’t even realize They were spending it on right and then I think lastly when you’re trying to Assess sort of your financial reality What do you want to accomplish what are Some goals that you have For your money let’s think about those Four things As you are really assessing your Financial reality so after you’ve Assessed your financial reality there Are four things i like for you to think About in terms of like Just being a philosophy or a construct That you have in your head as you go To build your budget first one is we do Zero based budgets All that means is every single dollar You make has an assignment So if you make a thousand dollars a Month you have to tell each one of those Dollars where they need to go Second thing is if you as you start Building your categories For your budgets you need to prioritize The things that are important That is food that is clothing that is Shelter and transportation Those things go into the budget first You put the big rocks into the budget Categories First next is you know after you have
Or as you’re starting to to organize Your budget you need to make sure that You are allocating enough money to build An emergency fund Um if you do not have one and then i Want you to think about the ratios after You’ve built your budget holistically Take a step back and say Where’s my money going when i look you Know at the bigger picture I like for people to have 50 going Towards needs So really you’re spending half your Money on needs 30 Towards wants and then 20 is being Invested okay 50 30 20. you’ll see other Ratios out there Um some are 70 20 10 but you need to Think about these things As you’re building your budget so we’ve Answered a couple of questions Why is the budget important and why Don’t we budget and we’ve talked about Some fundamentals but i quickly want to Just take you through a few steps on how You actually do a budget Number one start with your income you Make a thousand dollars in a month So um you know that right and so now What you want to do is Line up your expenses and itemize your Expenses Until every dollar has an assignment so You make a thousand dollars
You’ve itemized your expenses to equal One thousand dollars some goes to fixed Expenses like a mortgage or rent Some go to variable expenses like Groceries right which kind of change From month to month depending on what’s Going on So you do that and then you forecast Especially the The expenses that aren’t fixed like you Know like the groceries right you Forecast how much you’re gonna spend You’ve itemized everything You’re forecasting that i’m gonna spend You know 200 bucks this month on Groceries And then as the month proceeds you track Your expenses When you make a quick trip to the Grocery store you spend 50 bucks You put that into your budget i don’t Care if you’re writing it on a napkin a Piece of paper Construction paper you have it in a Fancy app or a homegrown spreadsheet Find something that works for you to do Your budget so you’re tracking your Expenses now now If you go over your forecasted amount For any expense You have to pull that money from Somewhere else because at the end of the Month Right you cannot go over what your
Income is and in this case we talked About it being a thousand dollars so you Can’t now just spend You know twelve hundred dollars because You wanted to buy more groceries That is the discipline that is required Right nope i went over by 200 bucks in Groceries i pulled that money from Something else right some other expense Um That has some flexibility some other Variable expense so that’s what you do You literally start with your income you Itemize it out you forecast What your expenses are going to be and Then you track them and you modify as The month goes And then guess what you do it again next Month you actually do A budget every month so When the month starts ending you’re at The end of let’s say you’re at the end Of march Right you start planning for april’s Budget because it might have some Slightly different things In april’s budget based on what is Happening in april So don’t just set one budget and use the Same budget every month you can use the Majority of it But there will be some unique things That happen every month so you And your accountability partner someone
You’re married to your girlfriend Boyfriend whoever lives with you And shares money with you need to do a Budget every month Remember this you can achieve much Greater things than where you are today If you’re willing to put into work Conceive it believe it And achieve it i’ll see you next time if You enjoyed this video Please consider subscribing to the Channel liking the video Dropping a comment and sharing with Friends i’ll see you next time