LEARNING TO MANAGE YOUR BUDGET LEADS TO WEALTH!
Najee Hannigan, a 26-year old entrepreneur from Philadelphia, encouraged his friends and cousins to put aside $50 a week so that they could all collectively invest in something big. Two years later, they have successfully accumulated enough money to purchase their first own real estate property. THE POWER OF BUDGETING! They will also use budgeting to manage renovation cost and successfully rent this property. Congratulations Majee Hannigan and friends.
2020’S UGLY REALITY
Over 46 million Americans lost their jobs in 2020 and applied for unemployment. Small businesses employ over half of Americans and ~40% of those may permanently close their doors. In other words- over 10 million Americans may have permanently lost their last jobs. If you are hurting from a very rough first half of 2020 and do not have a budget, I suggest you keep reading.
BUDGETING
I am a nerd, geek, engineer, etc., and I HATE budgets! {I may get kicked out of the nerd club!} Although budgets are to me boring, the utilization of budgets facilitated building wealth! Budgets, allow me to track where my HARD-EARNED MONEY IS GOING AND HOW I CAN SAVE MORE OF IT.
Building Wealth is actually simple: SPEND LESS THAN YOUR EARN; SAVE THE REST AND INVEST THOSE DOLLARS.
MASTERING BUDGETING WILL HELP YOU ACHIEVE WEALTH!
CREATING A BUDGET
Creating a budget was more critical when I was in college, broke and landed my first job out of college. It is easy to believe you are in great shape when you get that first check. And then you realize there is that nasty thing called taxes. FYI- you will pay taxes, unless you look good in prison attire.
Actually, he looks good in prison attire! But his tax burden is zero so early parole. Nine months served and free at last!
YOU NEED TWO PIECES OF DATA TO BUILD YOUR BUDGET:
-
Your income
-
Your expenses: The HUGE sum of money pouring out of your wallet each month. Typical expenses include:
- Rent or mortgage
- Phone and cable
- Groceries and supplies
- Health care expenses (including insurance.)
- Home servicing expenses (like housekeeping, lawn care, or other regular home and property servicing.)
- Any educational expenses
- Credit card debt.
- College loans
- Auto loan payments
WHAT IF I TOLD YOU THAT BRAND NEW DREAM CAR IS COSTING YOU ~$800,000 OVER THE NEXT 30 YEARS? STILL WANT IT?
- Gas, oil and regular auto maintenance, if applicable
- Other transportation costs (buses, trains, Uber rides.)
- Entertainment costs (i.e., dinner, other meals out, cocktails, and movies.)
- Clothing and accessories
NEXT – USE A BUDGET APP – IT’S THAT SIMPLE
When I was in college there were no apps or spreadsheets. I used pencil and paper and eventually a simple excel spreadsheet. Here are a few apps you can try:
MINT: https://www.mint.com/how-mint-works
See everything in one place “We bring together everything from balances and bills to your credit score and more. It’s your financial life, in one place that’s easy to understand.”
PERSONAL CAPITAL: https://www.personalcapital.com/blog/personal-capital-news/how-to-stay-in-the-black-focus-on-cash-flow/
“Allows you to easily create a budget, set a monthly spending target, and view your progress in real-time. If you select your income profile within the Personal Capital dashboard, you can see all forms of income broken down by date and source. This software is completely free and does not rely on ads to make its money. Instead, the company makes money through their wealth management services, which users never have to touch if they don’t want to.”
YNAB: https://www.youneedabudget.com/our-app-lineup/
“With YNAB, if you have your phone (and we know you do), then you have your budget. Your budget goes where you go—on all your devices, all the time. But before you get creeped out, think of the possibilities: the closer you are to your budget, the closer you are to your financial goals.” YNAB is $12/month.
EVERYDOLLAR: https://www.everydollar.com
“EveryDollar helps you create a monthly budget so you can achieve your money goals. Say goodbye to money stress and hello to confidence in your financial future. Create your first budget in less than 10 minutes. This app is free and the premium version of the app is $99 per year. However, even if you decide to stick with the free version.”
None of the above work for you, simple go to your App store and search for budget apps. Find one that works for your needs.
PREVIOUS BLOG: EIGHT STEPS TO BUDGETING WITH VARIABLE INCOME
https://wealthbuildingpowers.com/2018/07/05/eight-steps-to-budgeting-with-variable-income/
Building Wealth is Simple: SPEND LESS THAN YOUR EARN; SAVE THE REST AND INVEST THOSE DOLLARS.
CONCLUSION
Reading this post and downloading an app is useless without creating and managing your budget. If you take no actions, nothing changes. Knowledge only works when combined with action! Take action today and turn your dreams into reality.
PREVIOUS BLOG: REASONS WEALTHY PEOPLE KNOW THEIR NET-WORTH
https://wealthbuildingpowers.com/2020/01/06/three-reasons-wealthy-people-know-their-net-worth/
PREVIOUS BLOG: NEED FOR EMERGENCY SAVINGS – MORE IMPORTANT TODAY THAN EVER!
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger, with a NC State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I had a desire for making a difference as a speaker and writer, to help others. I was blessed to be coached and mentored by strong women and men in both my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate and happy to share my personal finance and investment lessons learned with you.
However, I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog, as recommendations for your personal situation. For individual finance advice please seek your own licensed CPA or fiduciary financial advisors.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.
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