Once the fact-finding has been completed, it is time to categorize income and expenses into the following categories. <\/p>\n\n\n\n

• Primary Income — Income from your job that is stable and consistent. <\/li>
• Secondary Income — Income that you make not derived from your primary job ex: side hustles<\/li>
• Fixed Expenses — Expenses that do not vary month to month and that you have no option but to pay them. Ex: Rent, mortgage, insurance, etc… <\/li>
• Flexible Expenses — Expenses that are a necessity but that fluctuate from month to month. Ex: Utilities, groceries, etc… *<\/li>
• Fun Expenses — Expenses that can most easily be described as wants. <\/li><\/ul>\n\n\n\n

  It is important that in this stage we are not making any adjustments until we have all of this information in front of us and categorized. <\/p>\n\n\n\n

  * What about seasonal or unexpected expenses? As we all know, life happens, so that’s why we have our budget to prepare for the unexpected. When we budget, we create financial margin so that we can handle those unexpected expenses. So inside the flexible expenses category, I would set a dollar amount for an emergency, you may not always spend it, but it needs to be accounted for in your budget. <\/p>\n\n\n\n

  4) Design Your Budget<\/h2>\n\n\n\n

  When designing your budget, there are several different methods you can choose. I will talk about two of my favorite methods below. A quick note before we dive into types of budgets, finances are personal so look at these as references for framing a budget that works for you! The ultimate goal of budgeting is to make sure you save so you can achieve your goals. However, you do that is a good thing!<\/p>\n\n\n\n

  50-30-20 Method<\/h3>\n\n\n\n

  The 50-30-20 method is great for getting started with budgeting without feeling overwhelmed. It is extremely easy to set up and conceptualize. All we are doing is dividing our earned income into three major categories. <\/p>\n\n\n\n

  The first category is Needs which represents 50% of our budget. The next category is Wants which represents 30% of the budget. Savings represent the remaining 20%. As long as each given category is within its specific threshold (50%, 30%, or 20%) then you are on track with your budget.<\/p>\n\n\n\n

  Here is an example of the 50-30-20 rule that would apply to an individual with an after-tax income of $4,000<\/em><\/strong> a month.<\/p>\n\n\n\n

  Categories<\/th>	Amount Allocated<\/th><\/tr><\/thead>
  Needs<\/td>	$2,000<\/td><\/tr>
  Wants<\/td>	$1,200<\/td><\/tr>
  Savings<\/td>	$800<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n Of course, you can change these numbers to match more of your spending preferences, but this is an excellent rule of thumb and starting point when beginning to budget.<\/p>\n\n\n\n If this method doesn’t get you as much clarity as you want into your finances, the zero-out method might be for you. <\/p>\n\n\n\n Zero-Out Method<\/h3>\n\n\n\n This is my favorite budgeting method. Where the 50-30-20 is more of a top-down approach, the zero-out method is a bottom-up approach. This budget does take longer to set up and maintain but I have seen fantastic results from those who stick with this!<\/p>\n\n\n\n Step 1) Deeper Categorization<\/h4>\n\n\n\n We already have done a good job of general categorization of our income and expenses, but for the zero-out method, we need a little more detail. We want to know how each dollar that we have earned is being spent. If we are purposeful with our budget, our finances will thank us. Start by defining all of the elements you spend\/earn into a list as I have below: <\/p>\n\n\n\n Food<\/li> Health\/Medical<\/li> Housing<\/li> Personal <\/li> Pets<\/li> Utilities<\/li> Travel<\/li> Debt<\/li> Transportation<\/li> Gift<\/li> Emergency<\/li><\/ul>\n\n\n\n Bonus<\/li> Paycheck<\/li> Investments<\/li> Side Hustle<\/li> Savings<\/li><\/ul>\n\n\n\n Step 2) Subtract your income from your expenses so they equal zero. <\/h4>\n\n\n\n It is important to note that I treat investments and savings as expenses for this method. I prefer to focus on my fixed expenses and investments first, and then the remaining balance I use to allocate for everything else. At the end of each month, we want our income minus all of the categories to equal zero. If it is greater than zero, your income is higher than your budgeted expenses. Fantastic! <\/p>\n\n\n\n If it is less than zero, you are spending more than you are making. First things first, if you find yourself in this situation, don’t panic. Budgeting like this takes some time to get used to. The whole point of this type of budgeting is that each dollar has a purpose to it. So when you are succeeding or struggling in a given area, you know exactly where it is you need to focus. <\/p>\n\n\n\n This method can feel daunting to people because it requires a little more work and getting used to than the 50-30-20 method. I find this method, albeit more work, serves to maximize my savings each and every month. <\/p>\n\n\n\n Here is a quick example of a zero-out method budget.<\/p>\n\n\n\n Monthly after Tax Income: $4,000<\/h5>\n\n\n\n Categories<\/th> Amount Allocated<\/th><\/tr><\/thead> Rent<\/td> $1,200<\/td><\/tr> Utilities<\/td> $300<\/td><\/tr> Groceries<\/td> $400<\/td><\/tr> Phone Bill<\/td> $100<\/td><\/tr> Gas\/Car Maintenance<\/td> $250<\/td><\/tr> Insurance<\/td> $150<\/td><\/tr> Entertainment<\/td> $100<\/td><\/tr> Retirement<\/td> $800<\/td><\/tr> Emergency <\/td> $100<\/td><\/tr> Loans<\/td> $225<\/td><\/tr> Clothes<\/td> $75<\/td><\/tr> Internet<\/td> $100<\/td><\/tr> Travel Fund<\/td> $100<\/td><\/tr> MISC<\/td> $100<\/td><\/tr><\/tbody> Amount Remaining<\/td> $0.00<\/td><\/tr><\/tfoot><\/table><\/figure>\n\n\n\n 5) Take Action<\/h2>\n\n\n\n Now that you have created your budget, it is time to start implementing this into your day-to-day life. You will need a way to track the progress of your budget and make sure that the budget is working for you and your lifestyle. <\/p>\n\n\n\n Google Sheets is a great way to track your budget. It has free budget templates, but it does require manual entry and extra diligence to record each transaction manually. Mint is an entirely free option and tracks your expenses and bank account balances, which makes it easy to compare for budgeting purposes. There is also U-VEST which offers financial coaching in tandem with their full financial planning app. <\/p>\n\n\n\n Needless to say, you have options to choose from; just make sure you have a way to execute your budget and a system to track your progress over time. <\/p>\n\n\n\n 6) Keep At It<\/h2>\n\n\n\n Whatever budget you deploy, make it a habit! Budgeting is one of the most effective ways to increase your financial margin. Yes, it can feel uncomfortable, but change normally is. If you are married, make sure you and your spouse are together on this. Talk about what is important and hold each other accountable. Accountability is critical to making a permanent change. <\/p>\n","protected":false},"excerpt":{"rendered":" So… Let’s Talk About Budgeting Budgeting. Some of you just cringed at the very mention of the…<\/p>\n","protected":false},"author":1,"featured_media":229,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"aside","meta":{"nf_dc_page":"","om_disable_all_campaigns":false,"WB4WB4WP_MODE":"","WB4WP_PAGE_SCRIPTS":"","WB4WP_PAGE_STYLES":"","WB4WP_PAGE_FONTS":"","WB4WP_PAGE_HEADER":"","WB4WP_PAGE_FOOTER":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[34,22,32],"tags":[],"yoast_head":"\n