Budgeting can feel pointless or scary.
It is not as complicated as we often predict in our heads.
Spending reflects our daily lives. If you saw what I spent on a monthly basis, you would know as much about me as my Google search does.
Spending is often a reaction to the hustle, bustle and following that we can get caught up in. If we are to view ourselves as leaders as of our own lives, then Budgeting is an important habit to embrace.
A budget is a pause.
It's where we get to declare our intentions.
Who we want to be today, tomorrow, and 5 years from now. It keeps you on track to being you. It helps you say yes to things that light you up, and no to the things that are no longer in your best interest.
It's a very, very noisy world out there and a budget is a reminder of the intentional decisions that you made. Here are a few tips on things that can help you create and stick to your intentions.
We're going to start with Elizabeth Warren's 50-30-20 rule, but I would like you to think of it as a Guideline. The most important number in the 50-30-20 rule to me is 20%. This the money that you take as soon as you get it, and you put it away towards long-term savings, you lock it away. You don't invest it into crypto, you don't go on vacation with it. It's taken out and it's invested intelligently in a place that you can't access it. The big number, 50% is about your essentials like your housing, transportation and utilities. It's a big number, so we're going to circle back to it in a second.
If the income that you take home is 100%,
and you're taking 20% out for your long-term savings
and 50% you're trying to keep for your essentials,
that leaves you with 30% for fun for you! It's your vacation, a fancy car, the puppy.
What happens if you don't keep your essentials to 50%
If your essentials exceed 50%, it chews into that 30%. If you buy a house that's too big for you, you're going to be termed as house poor.
Sometimes, when people spend too much on their essentials, instead of clipping back on their 30% for fun, they take it out of their long-term savings.
So, that's why I say - take that 20% and put it away - It's a habit. We talk about this in our podcast, and within our app, but the 20% is a habit.
Take it out, then work with the 50% and the 30%.
We have a budget template you can use, and if you find you are spending more than 50% on your essentials. It's okay - this is your chance. This budget template gives you awareness and gives you a chance to adjust. It also will give you tips.
I have definitely in the past had more than 50% going to my essentials and I had to do things like move back home for a few months. I used to hold parties at my house at my university so that I can take the bottles the next day and turn them in so I could buy $10 worth of noodles for the week. There are many other sacrifices that I've made.
So, just know that just because other people may pretend like they're okay, they're probably experiencing the same challenges you are. Be the first person to make a bold decision, whether it's to take on a roommate, move back home, sell your car, take the bus or opt for a smaller home.
Don't be afraid to do it. You're playing the long game here.
Please access the podcast , blog, and our template with tips to help you declare intentions and stick to them.