Simple Steps To Budget and Save Money IMMEDIATELY
With everything that is happen in the world right now you may be finding you need to learn how to cut expenses and start to budget.
I’ve been through so many different budgets over the years, none of which worked, until I created this strategy for how to create an easy budget in 15-20 minutes.
In this video I’m going to show you how to create a budget and start saving money immediately.
Write Down All of Your Regular Expenses – 1:18
Calculate Your Expenses Based on Your Pay Cycle – 4:00
Take Your Income After Tax and Minus Regular Expenses, Can You Live Off What’s Left? – 6:00
Look at What You Can Cut From Your Regular Expenses – 7:49
Set Up Your Budget and Automate Everything – 9:55
Automate Savings For Big Bills and Paying of Debt/Savings – 18:28
Look At It Daily and Do Weekly/Monthly Adjustments – 19:43
The Most Important Part: Now Focus on Making More Money!!! – 20:40
The 2-Year Financial Freedom Strategy – TBA
with everything that’s happening right now you may be finding yourself in a situation where you really need to cut expenses for your life and you need to learn how to budget and if you haven’t really learned and mastered budgeting up to this point you might be frantically thinking oh my gosh what do i do and so in this episode i’m going to show you the simple steps that you can use to create a budget and to start saving money in your life right now i’ve tried so many different budgets over the years tried lots and lots of different strategies failed at all of them until i came to this way of budgeting which can be done in as quickly as 15 to 20 minutes and then you can automate a lot of it as well so you don’t need to continually think about it so this simple budgeting strategy i have found really helpful in my life and i think you might find it helpful to any of you staying till the end of the video that’s actually the most important part because once we’ve set up our budget once we’re saving money that’s not necessarily going to get us to where we want to be financially and to improve our lives so that is the most important point which we’ll talk about at the end of the video so how do we actually go about creating a budget and what is the steps that i use so the first thing that i do is i grab a pen and a piece of paper and i sit down with a cup of tea like i’ve got right now with your spouse with your partner or you may want to do by yourself and the first step is to write down all of your regular expenses that you have in your life so this stage we’re not looking at things like how much do i spend on coffee per week how much am i spending at the supermarket i get takeout every night because i’m a terrible cook how much should i spend on petrol etc those things i call discretionary expenses or living expenses and they fluctuate week to week and each week each day we get to make conscious decisions about those so every day if i go to the petrol pump i get to decide how much petrol am i going to put in my car today when i go to the grocery store i get to decide how many groceries am i going to buy when i’m at the coffee shop i get to decide am i going to buy a coffee and we’re going to make tea and coffee from home so their discretionary expenses and we’re going to do with them a bit later the first thing we want to do is grab our pen grab a piece of paper and write down all of our regular expenses those so things that happen recurring in your life so this is everything from your rent or mortgage repayment your phone and internet maybe you’ve got a gym that might be frozen at the moment but normally gym things like netflix things like car insurance and registration electricity will be in their gas maybe debt repayments as well if you got credit card debt or bad debt and car debt that you’re paying off what are those repayments go ahead write all that stuff down also include in there if you want at this stage how much you’re saving each week or want to save but we can also come back to that later so i like to come back to the savings later you can choose to do it now if you want but basically write down all of those things on a piece of paper and write down how much they cost and how often you’re doing it so if it’s rent that might be weekly so you write down what your rent rent is and then write per week if it’s your phone an internet that’s likely monthly so you write that down and then write per month if it’s something like car registration you might write down that figure and then write per year because that’s an annual expense you might also want to add in car servicing there might be every six months so write down that figure and write every six months or double it and write every year so you want to have the figures down and you want to have the frequency of the figures as well so go through the list think about anything in your life that you’re paying on a regular basis and that you may not have thought of you can usually do this pretty quickly within about five or 10 minutes to write down these things the next thing you want to do is actually go ahead and calculate those expenses based on your pay cycle so i find it easiest to budget based off my pay cycle i pay myself monthly through my business so i do my expenses monthly you might get paid weekly you might get paid fortnightly you might get paid monthly and so what we want to do is adjust our figures based on our personal pay cycle so to do this let’s say for me it’s monthly let’s say i’m paying rent weekly what i want to go ahead and do is work out what is the monthly figure for that rent i think to get from weekly to monthly times by 4.33 but i can never remember so what i always do is if it’s weekly i times it by 52 weeks in a year and then divide by 12 to get to the monthly amount if i’ve got annual things like my car registration then that i will divide by 12 months in a year so take that figure
divided by 12 that’s monthly how much I actually need to put aside for my car registration. Let’s say you get paid weekly instead, the annual expenses like car registration divided by 52. In order to get your wigs, let’s say you have, let’s say you’re paying your mortgage monthly, but you get paid weekly. Okay? Well, let’s work out how much is your mortgage every single week by dividing by 4.33. Or I think, I think it’s that otherwise, it will pay monthly times by 12. To get the annual figure then divide by 52. To get the weekly figure, I should have worked out this math before I started recording. But anyway, what you want to do is write down all those expenses based on your pay cycle, weekly, fortnightly monthly, whatever it is, and then you want to add them all together to adding our rent any iPhone and internet, adding our gym and Netflix and everything? How much is the total cost of our regular expenses throughout the year? How much does that come to? And we want to now compare that to our income. So we take out income after tax, the money that actually goes in your bank account, and we minus all those regular expenses. So let’s say I’m getting $5,000 per month after tax into my bank account, and my regular expenses are $3,000 per month, just using an example. So I take the $5,000 that I earn, minus the $3,000 that I’m spending on these regular expenses per month. And then I work out and I started to think about, hmm, can I live off $2,000 per month for my coffee, for my groceries, for going out for clothing for petrol, and all of these discretionary things. And that’s kind of the next step. And that’s a bit more nitty gritty, you got to kind of think about your life and think about the money that you’re spending, always find this process really hard. I can never understand off the bat, can I live off that or not? Sometimes it takes some trial and error to say, Okay, let’s see if I can live off this and see how I go. Sometimes the answer is yes, sometimes it’s no, but you can start to get an idea. Sometimes you’ll do this, and you’ll be like, okay, here’s my income, here’s my regular expenses. I’ve got $300 left for myself and my family for the month, can me and three children live off $300 a month. Not that it’s just not going to happen here in Australia. And so sometimes you get to this situation where you’re like, No, I can’t live off that money. That is just a ridiculously small amount of money. And I now understand why I’m going into debt, because I’m paying all these regular expenses. And all I’ve got left to live off is this pittance. And so obviously, I’m using the credit card to supplement that. And so you can start to say, oh, wow, I actually can’t live off this amount of money. Now the next step is to kind of go back into say, Okay, what can I cut out of these regular expenses? Or what can I lower? Can you lower your phone bill from $100 a month to $30 a month by going with a cheaper VA provider and going prepaid? Can you cancel the gym or cancel your Netflix or adjust your debt repayments to get a cheaper interest rate or to adjust those? Can you get cheaper car insurance. Or if you’re in a really bad position, maybe you’ve just lost your job or you’ve had to take your pay card. Sometimes this is the time to swallow your pride and swallow your ego and say, okay, those debt repayments on the car and insurance payments on that expensive car got, I actually can’t afford that. I may need to sell this car and get a cheaper car. Or maybe you’re living somewhere that’s too expensive. Maybe it’s that really hard decision to say, Okay, I actually need to move somewhere that’s more affordable. Or maybe I need to move back home with my parents for a time until I can get on top of this. So hopefully for you, it doesn’t come to that. But it may come to that. And that’s the time to sit and to say, Okay, what do I need to sacrifice? And sometimes you can go through this and run different scenarios and say, Okay, if I got rid of Jim, how would that adjust my weekly figures? If I got rid of Netflix? How would that adjust it? If I you know, change this and get to the point where you say, Okay, what am I willing to sacrifice? What are we willing to sacrifice, and each time you sacrifice something from that list, it adds to how much money you have to live off for your discretionary spending. And basically, you want to continually adjust this till you reach a point where you’re like, Okay, I can afford to live off the money that I have leftover after my regular expenses. That is the majority of actually doing the budget and actually writing it down. And that can only take 10 1520 minutes to kind of go through that process. Maybe the deciding what to cut might take you a little bit longer, but it’s not a difficult process to go. The next step is actually to set up your budget.
And at the end we’re going to talk about the most important step. so i do encourage you to stick around for that and if you are finding this useful make sure you smash that like button as that helps more people see this and consider subscribing to the channel as we got more videos like this coming out around this time to help you help you in your financial circumstances help you thrive through this and achieve your goals of financial freedom so we’ve reached this point right where we have our regular expenses and we have the money leftover the way that i budget and if you want to try and drop this for yourself then by all means go ahead is i now start to automate everything and i create one account with a bank card that is my living expenses and so now we’re going to go through the process of okay how do we set up this budget automate everything and how do we get to the point where i’ve got one card that i live off that each week i make decisions based on whether i buy food coffee go to the movies whatever it may be all i had to look at is that one card how much money is left in there tells me how close i am to running out of money for the week and how i’m doing with my budget so you automate everything else to the point where all you have to think about is this one thing so to do that i set up two bank accounts i use img because the barefoot investor recommended them their accounts are free i also have a card with up which is a new bank because it just looks really sexy so i got one of those and but at the moment i’m primarily using img you can sign up for free they will post you out your cards you can set up two bank accounts you can also set up joint bank accounts so what i’ll do is i’ll go ahead and i will set up two bank accounts with img and i like to start fresh or maybe you’ve got your bank account that all your regular payments are already coming out of your pay is going into you want to keep that go ahead and set up a second account that has a card attached to it and now we want to start the process of automation so this process of automation is pretty easy to set up with most banks so the idea here is you got one bank account that i call my part so i call it the part because the big mixing part that everything goes into so your income goes into this part and stays in there your regular expenses like your netflix like your insurance like your rent come out of this pot okay and then what you want to do is actually have a separate little silo and a separate little bank account for your living expenses and so for me i’m doing things monthly but i like to have my living expenses on a weekly basis so my monthly income goes into the pot my monthly expenses come out of the pot and each week i actually create an automated thing that happens in my bank account that each week money comes out of the port and goes into my spending account and i’ve got a card with that that i can go and spend but that account is separate and each week money automatically gets transferred so basically i set it up in my bank account and you can do this by setting up a recurring payment pretty much every bank out there should be able to do this that every week on a certain day x amount of dollars gets transferred from the pot into my spending account and so that’s what i that’s what i do for spending and then the idea here is that you’ve worked out your regular expenses and how much you have to live off for me i’ve worked out how much i have to live off that goes into my spending account the idea here and what makes this budget so simple is i now have one account and i’ve got one card that i can use and that’s how much money i have for the week so let’s say that $300 for the week okay when i go to the petrol station i can pull out my phone and i can look at how much money is left in my bank account okay i just started the week i got $300 left i’m going to fill up the tank and that’s going to cost me $50 i now know i only had $250 left for the week so when i go to the grocery store later i know there’s only $250 left let’s say i spend $150 on food for me and the kids now i’ve only got $100 left for the week oh my gosh it’s just the start of the week and i’ve only got $100 left i now know i’ve only got $100 left for the next six days it’s pretty stressful situation to be in but at least i know that i’ve got food for the week i’ve got petrol so when it comes time to be like should i eat out for dinner should i go to the movies should i go and get coffee and not only get coffee but i’m going to get a cake and toasted sandwiches well that’s going to cost me $30 at the coffee shop i can say i’m going to
get $100 left for the week no i’m not going to do that because i need that money and so it’ll allows you on a day by day basis and transaction by transaction process to actually decide what to spend money on. All of my regular expenses are already accounted for, they’re already being paid for, I don’t need to think about my rent in my budget, I don’t need to think about my insurance in my budget, I don’t need to think about my car registration, or my phone or my internet, because that’s all going into the pot and getting taken out of the pot that’s sorted, that’s automated, I’ve got that set up. All I need to think about now is what I’m spending on a week to week basis. And maybe I make different decisions. I’m at the petrol pump, and I say I’ve got $300 for the week. And I think I’m not going to be driving much this week. So I’m just going to put $15 in my car, and then I’m at the grocery store, I think I’ve already got some food stocked up at home. You know, because of everything that’s happening, I’ve got heaps of canned stuff that I can eat, I’m only going to spend $50 at the grocery store this week. And so now I spent $65, I’ve got $235 left. So in a couple of days time when you know I’m having a hard day, and I’ve got $235 left and only three days ago, do I want a coffee? Look, I think I’ve got enough money to make it to the end of the week, I’m going to go and get a coffee because I’m having a rough day. And that’s just gonna make me feel good. And so then I can make that decision. And it’s not taking everything out of my life, but it’s giving me the choice to decide what do I need to spend money on every week is going to be different some weeks, I need to buy $8 worth of shoes for my children, or sometimes even more than that, when they all grab the shoes at the same time. And it’s like, okay, I’ve spent money on shoes this week, it’s gonna be a tight week. For me, it’s just gonna be shoes, groceries and a little bit of petrol and my bags it. And other weeks you don’t have those expenses. And so okay, I can go out to the movies or take my partner out to dinner, or whatever it may be that way. But it kind of it gives you that flexibility in your life to decide on a day to day and transaction by transaction process, what do I want to spend money on. And also, it for me just gave me the freedom rather than deciding when I set my budget that I’m going to spend X amount of money on coffee per week, some weeks, I don’t want coffee, some weeks, I’m working at a cafe and drinking coffee there. And then I’m making coffee at home. And so now I don’t need money for coffee in my budget, or some weeks, I’m working from home more. And it’s a struggle, and I want to do it. And so it gives me that flexibility. Whereas previous budgets, I was like, Oh your coffee budgets, 15 hours a week or $10 a week or whatever it may be, in some ways I’d want more somewhere because I want less. And I still I didn’t like that it didn’t give me freedom. And I couldn’t live within that. And always just spend $150 on groceries, you know, always been that exact amount. Because sometimes you need to spend more, sometimes you spend less. And so this I found just really gave me the flexibility in my life that all my bills are paid for. But I have the flexibility to decide how to spend my money. And the key with this as well is that you automate everything. So you made sure all the money’s going into the pot, my legs go and everywhere you make sure all the money’s going into the pot, your automated gear expenses out of the pot. And I guess for this things like car registration, where you only have to pay it once a year, you can’t just pay that every pay cycle whether if that’s a weekly, you can’t pay it weekly. But what you can do with IMG and with other banks is set up online savings accounts. And so what I would do for things like car radio, is that each pay cycle. So for me, it’s monthly, I would have after I got paid the next day, an automatic transaction would happen to take money from the pot, and to put it into an online savings account called car registration. And so money will actually come out, go into car registration, and over the next 12 months, money will actually store up in car registration. And then when my car radio is due, I pulled the money out of that online savings, put it into the pot, and then pay my car registration. And so that’s how we automate things that you know aren’t direct debited from our accounts is we put them into online savings silos for car registration or for insurance or for whatever it may be. And we save those up. And then when a bill is due, we move the money out and we go ahead and pay it. So you can set up all those automations in your bank account. That’s quite easy to do. And I guess, also you want to be looking at this on a daily basis. I found that when I’m looking at my money and saying okay, how much do I have to spend? When I’m looking at on a daily basis, I do well with my budget.
If I’m not looking at it, I’m just doing the blind, you know, the blind tap where you’re like, Oh, I have money in there. I hope this goes through. When you’re doing that you tend to not stick to your budget. So looking at daily keeping that updated is important and then also i like to do weekly or monthly adjustments so i may spend too much money and i get to the end of the month and i need to relook at my budget and say okay i spent too much this month what went wrong or you know i need to pull money from here or maybe i need to spend a bit on the credit card because i went over and so then i need to make adjustments to all the money that’s around to set myself up for the next month and ideally spend less the next month so i can pay off the deficit that i have accrued that month so you’re going to need to make those adjustments now this is the most important part so if you waited to the end then i applaud you because this is the most important part and this is what no one talks about when they’re talking about budgeting and this is so important we go through this this is how to live within our means this is how to save how to live within our means but this is not going to set us up for success in life and this is where most people start they just set their budget they’re living their life they’re doing their thing and then wondering why in five and 10 years they’re not any better financially than where they are today what we want to do now we’ve set up our budget we’ve automated everything this has taken so much mental energy that we now no longer need to spend because everything’s automated we just got our weekly living expenses that we’re focused on and spending mental energy on now we need to focus not on our budgeting but now we need to take the time to focus on how can i earn more money how can i be more productive and actually earn more money that might be with your job and actually getting a pay rise with them might be negotiating with them might be taking on more responsibility and then negotiating later and might be moving jobs so you can get a pay rise or it might be doing something on the side to earn more money maybe it’s spending time to sell those old iphones that you’ve got kicking around that you’re never going to use and so they might sell for 100 or $200 for those old iphones that’s money that you’ve now saved because you put energy into doing that that money can go towards paying off debt that money can go towards savings for investments and for growing your wealth or maybe you start a side hustle or side business maybe you start a nice website like what i do or maybe you start a lawn mowing company and you are you walk dogs or you take your skills that you have so for me it could be seo and website design and content creation and actually go out to businesses and freelance for them to earn extra money so reduce your budget live within your means but then focus on how can i make more money because as you make more money if you’re already living within your means then you’ve got that extra money to invest to grow your wealth to generate passive income which begins that upward cycle of moving towards financial freedom the more passive income that you have means that you’ll never be in this situation again where you’re like
oh my gosh tough times of here how am i going to budget if you’ve set yourself up for financial freedom if you’ve got that passive income coming in then you know that you can get through these tough times and that times will get better so that’s the biggest tip that i have for you is once you’ve done this now take your energy now focus on ways to make more money and that’s not gonna happen overnight and you got to go through hurdles and make mistakes sometimes lose money in the process or work on things that don’t make as much money as you thought they would but over time you’re going to get smarter and you’re going to get better spending time could be educating yourself as well on money could be educating yourself on business or investing or property investing or whatever it may be but spend some mental energy there so you can grow your income so that will grow your wealth over the long term rather than just focusing on budget and then that’s it we earned through your job that’s done no how can i earn more money and that’s the biggest tip that i want to leave you with today is how can i actually earn more money and grow my passive income and i’ve got a really exciting video coming out shortly on how you can actually set yourself up for financial freedom in just two years and so if you’re in a good financial position if you’re ready to invest in just two years of hard work you can set yourself up you won’t be financially free at the end of those two years but you can create a foundation of financial freedom foundation to set yourself up doesn’t have to take an extremely long period of time and then once you’ve set that foundation that foundation will then go on to pay itself off and grow over time and eventually deliver you financial freedom but in just a couple of years you can actually set yourself up for success so i’m going to go ahead and link up to that video so go ahead and check that out once it’s out watch that have your mind blown by that because now you’ve got your budget in place let’s focus on how can you earn more money and grow your passive income so check out that video and until next time stay positive