“Don’t underestimate the power of consistency and desire” – Unknown.
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My friends! We have a simple goal here, and the goal is to become rich, not just look rich. So, how do we get there? Well, you have to put your money to work for you. In order to do that, you need to ensure that every single cent that you receive as income has a job to do.
But Joey, what does that mean? It means that you have to prepare a plan, follow that plan and tweak it as necessary. If you still don’t understand or don’t know how to budget, don’t be ashamed. You are not alone!
What I learned from wealthy friends is, they know how much they will make, they know how much has to go towards paying the bills. They also know how much they want to save and invest. Finally, they know how much they will have for fun. Yes, when you prepare your budget, ensure to account for some fun and entertainment too.
Let’s begin with the basics. Before we draw our map, we need to understand what we are doing. We will definitely not learn this on Instagram or Twitter. You have several options. If you know Excel, you can do this a lot quicker than most since the formulas will help you automate the results. If you are not tech-savvy, then you can write it on paper and will probably need a calculator to plug in the numbers and results.
What is a S.M.A.R.T. budget? It is an easy acronym that helps you remember what is important when you are planning and preparing your budget.
Specific – you need to be specific with your financial goal and know what do you want to do with your money. That includes the short term (buying something now) and long term (plans for retirement).
Measurable – as you go, you want to see your progress. That is how you will know if you need to step it up or just keep going with the flow. It will also help you see if you overspent or underspent and where.
Achievable – In order for your budget to be successful, it needs to be achievable. If necessary, you can examine your budget at the end of the month to compare your projected numbers against your actual numbers. Make adjustments as you go and if necessary.
Realistic – you need to be honest. For example, you plan to spend $20 eating out at your favorite restaurants but you know you like to order Dominos, take friends or family to Burger King and pay for them, and end up at the Chinese buffet to end the week. Know your tendencies and patterns.
Time-oriented – In order to achieve your financial goals and meet your timeline, you need to break down the big goals into small steps that will gradually take you to where you want to be.
Now that you have a better understanding of what a SMART budget is, know that making your budget is just the first step. You need to keep planning. Discipline and perseverance will help you sustain it and improve it.
Few tricks to making a budget that works are:
* Ensure every penny of your income has a job to do. If you don’t account for every cent you make and don’t give it a job before you even receive it, that penny will find a place to land and most likely will not be where you want.
* Do not charge your credit cards more than you can afford. A big problem is that many of us use our credit cards when we already used up all of our cash. But we are wrong. The right way to use a credit card is having the funds available in your account. That way it won’t hurt you when it’s time to pay off your card. A rule you can use is the rule of 7. When you are tempted to buy something, wait 7 days. Then ask yourself again if you still want it. More than likely you won’t.
* Review your budget several times for adjustments. You want to have this budget ready before you get paid. Do not wait until you start paying your bills, or your money will have control over you instead of the other way around. It is essential that you sit down, review your budget and make adjustments. Stay on top of your game. The great MLB hitters are the ones that prepare for the pitcher they will face. They don’t wait until the pitcher is on the mount to ask for a scouting report.
* Know how much money you have at all times. Staying with the MLB analogy, life is great at throwing us curve balls. We need to know what we have in order to prepare for the unexpected things that happen every month.
* Always track your spending. Your rent, car loan, and some other bills rarely change. We know we won’t overspend there. But dining out, buying groceries, buying on vending machines at school or work can throw us off. By the way, get cashback and great offers in groceries with Ibotta. Just register for free and see how much you will save each month.
Without further ado, let’s see how a budget should look like. At the beginning of the month, we use projected numbers but at the end of the month we use actual numbers to know what adjustments are needed.
Let’s begin with:
All of your income, paycheck, wages or whatever and add any extra income you make, like answering surveys online, washing cars, paint houses, cut grass, etc.
Projected Housing expenses:
Mortgage / Rent, Phone, Electricity, Gas, Water and sewer, cable/internet, waste removal, maintenance or repairs, supplies, other
Personal loans, student loans, credit cards, etc.
Projected transportation expenses:
Vehicle payment, insurance, gas, maintenance, other.
Savings will vary by individual needs. You can use a percentage of your income. If you choose that option, then do this step first before anything. Another option is to use a specific amount. Option three is taking an amount from what is left after paying all bills.
Movies, concerts, sporting events, other.
This is what you projected as your income and subtract all the expenses and savings. Ensure this number is positive. This is the amount that you will have left for your personal use or whatever you decide to spend it on.
Tools used to aid with budgeting:
Acorns – automated savings, investing and cashback rewards, rolled into one. Just $1 monthly fee. (full report)
Credit Sesame – raise your credit score and follow their tips. You will be able to get lower rates in future loans, hence pay less and save money. (full report)
Fundrise – easiest way to save and grow your money while becoming a landlord without the hassle. The best part is you can start with only $500. (full report)
Gabi – is a service that will help you find the lowest price you can find for your car insurance. I saved $936 when I switched. And it took me no more than 10 minutes. (full report)
Ibotta – Save on groceries, get offers and rewards every week. Bonuses and cashback. (full report)
Inboxdollars – watch videos, answer surveys, search the web, get paid, transfer to your paypal account. I use it for extra income (full report)
Lucktastic – extra income, scratch digital lottery tickets, join different contests to win free groceries, free gas, or cash. (full report)
Swagbucks – extra income, get paid to watch videos, search the web, answer surveys and much, much more. (full report)
LendingClub – is my number one (#1) choice to save, and grow your money substantially. But, it is restricted to the United States and some states can’t invest either. Cross your fingers your state is in and not out. Also, you will need some money saved to begin. In order to get all the bonuses, you need to begin with $5,000. If you don’t want the bonuses, it is recommended you begin with half of that. (full report)
Paribus – will verify your emails, keep track of the price you paid for items and get your money back when the item’s price drops. Also, can get you compensated when your shipment is late. Everything while you sleep or go about your day. (full report)
Robinhood – my number one platform for trading. Commission-free and simple. Plus get a free stock like Amazon or Coca Cola when you sign up. (full report)
S’more – easy extra income, download to your phone, get paid every morning when you unlock your phone. Get extra points when you watch videos or complete surveys. Redeem prices. (full report)
Sweatcoin – more extra income, download to your phone, get paid to walk outside your house or building. The idea is to give incentives to individuals while helping them to get or stay in shape. (full report)
Truebill – save on monthly bills and stop overpaying for them too. This app will search for refunds and it will also negotiate on your behalf to get better deals. (full report)
Wish.com – Is my favorite site to buy items coming from China, cutting the middle man out of the picture. Cheaper than eBay, Amazon, Walmart, you name it. Use code: PJXXZYH (full report)
I will leave you with a picture so you know what it needs to look like. At the beginning of the month is going to be projected, but ensure that you keep track of your numbers throughout the month and do it again at the end of the month with your actual numbers. That is how you know, what type of adjustments you have to make. Also, modify it as necessary. Everyone’s circumstances are different.
I hope it helps! Leave your comment below.
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