In my book, Money Mastery, I teach you the Triple X Factor to building wealth. The First X is the starting point, which is money that you work for. The goal here is to increase your income while decreasing your debts so that you can move on to greater financial opportunities. In order to do this, you need to operate on a budget.
Now, I know this doesn’t sound fun, and it isn’t. However, it is a necessary step to building wealth. It will help you keep track of how your money is coming in and where it is going out to. If you are looking for your first step in building wealth, this is it.
How to Create a Budget
Track Your Money
The first step is tracking all of your money. List out the amount you have coming in, including from your job, assets and anything else. Then, write down all of your expenses. These are necessary expenses, such as a mortgage, insurance, and car payments. Once you figure that out, take a look at the last few months of your bank statement and outline how much you spend on groceries, entertainment, eating out, and any other non-essential expenses.
Make a Plan
This plan needs to be as close as possible, if not exact, to what you will spend each month on each item. You will include all of the information from the first step, as well as adding things like saving, tithing, and investing. Make sure that this plan is accurate and realistic because if it isn’t, you aren’t likely to stick with it. It can be helpful to take cash out for each of these items throughout the month so that you can stick to it and make sure you don’t go over.
Set Goals, Remember Your “Why”
Cutting back on expenses can be painful, but it will be easier if you can remember why you are doing it. Think about what your financial goals are. How much do you want to have in savings? Do you want to buy a new house, or have enough to pay for your kids’ college? Write a list down, and put it somewhere where you can look at it often.
Some tips on adjusting your habits…
The first thing that usually gets cut in every budget is entertainment experiences like going to the movies, and going out to eat. These can be hard, so I have some ideas to make the transition to a healthy budget easier!
- movie night at home
- have a picnic in the park
- take advantage of the library
- volunteer at activities in your area
- look for community events; they’re often free!
- create a spending limit on gifts
- get involved in community sports
- teach yourself a new skill
- self-guided walking tour of your city!
- visit the museum or zoo on free days
There are plenty of free ways to have fun, you can just google your area! You can make budgeting
I hope this post has helped you consider your financial situation and has helped you create a budget. It truly is the first step towards creating financial freedom. Do you struggle with personal finance? Leave your questions in the comments below! For more information on how you can master your money, you can purchase my book here!