Tag: personal finance

08/13/2015

Budget Like A Millioniare

Wouldn’t life be easier if we were all millionaires?

Every financial woe would disappear.

We could eat Twinkies out of 24k gold wrappers.

Just imagine!

But – truth be told – no matter how much money you make, if you don’t budget it well you won’t have it for very long. Which is why guys like Ryan Broyles of the Detroit Lions deserve a huge pat on the back.

He’s a third year wide receiver that signed a 4-year, $3.6 million contract with $1.42 million guaranteed (a.k.a. he got $1.42 million on the day he signed a piece of paper). But what’s he done with the money since then?

Set himself up for life.

It turns out, since making it to the NFL in 2012, he and his wife have lived on an annual budget of $60,000 — just $9,000 more than the US median household income.

The reason?

He knows his time in the league may be limited and he doesn’t want to squander the monetary benefits. He even talked about having to learn to set and keep a budget for the first few months, but once he got the hang of it, it was easy to maintain.

What Not To Do
Now contrast Ryan with the recent news of 50 Cent’s bankruptcy filings and let the head scratching begin. 50 Cent makes a reported $185,000 a month off of royalties and investments – i.e. that money is working for him, so he’s not lifting a finger to bring it in.

But even on a passive $2.2 million income, 50 can’t pay his bills. He’s spending $108,000 a month…$5,000 of which is for his gardening! (And he also has a sizable lawsuit filed against him…but that’s a blog for a different topic on self discipline…)

My point is, you get the feeling that 50 is all about spending whatever money he makes with little concern for the future (he still likes to parrrty like it’s your birthday).

My goal, and hope for anyone that reads this, is to not be like that, regardless of income level.

Take time to make a budget. Live below your means. Have an emergency fund. It’s practical stuff that can remove a lot of headaches down the road (or right now). And in the end, you could very well be a millionaire instead of just looking like one.

01/13/2015

3 Benefits of Budgeting

Last week, we talked about the importance of using a zero balance budget and said we’d come back to discuss some less-than-obvious benefits of budgeting (you know…besides staying on budget). So here we go.

Improved communication
If you’re married/have a significant other/someday want a significant other, being able to co-manage and discuss money fairly is imperative. In fact, money issues are a leading reason for divorce in the US.

In my marriage, we sit down at the first of each month and discuss where exactly we’ll spend our money. It forces us to plan and think ahead, to be intentional with our spending and to set honest expectations with one another when it comes to making purchases. You build trust knowing that you’re each on the same page, and some months, you end up working through unexpected problems that (inevitably) pop up – which is what marriage is all about!

It gives you a clear goal to dream about
I haven’t done extensive research on the subject, but I’m pretty sure most people fall into one of two money categories: those with debt and those without debt.

Regardless of which category you’re in, let your money goals motivate you!

If you have debt, let your budget get you excited about paying it off and finally getting the monkey off your back! With a budget, you’ll be able to extrapolate out how much time you have until you’re set free from those payments. So even if it’s just a small light at the end of the tunnel, use that end-date as motivation to stay on track.

If you’re debt free, dream about what you want to do next. Set a budget to save for a new car, a vacation, a puppy or whatever! Delayed gratification is the key here. Use your budget to pay for things with cash. These goals are obviously a little more fun to dream about, but being rid of debt helps them come to fruition so much faster.

It’s personally empowering
When you have a plan, you feel more prepared. When you feel more prepared, you have more confidence. And I don’t know about you, but having confidence is a pretty critical element to anything I do.

Even if you’re projecting to be short on your budget for the month, you’ll know it on day one. That means you have 30 more days to put in hard work and find enough money to make ends meet. You won’t be caught off guard with three days left in the month to pay a bill.

If you have a surplus, that means you have the chance to give and make a difference in someone’s life. Or you can go shopping knowing that your budgeted “free spend” money can truly be spent on anything you want. It takes the guilt out of purchases. And that’s equally as liberating.

So how about you, have you been able to tackle budgeting? Have you seen any benefits of budgeting in your own life? I’d love hear about your experience in the comments below.

01/05/2015

Using a Zero Balance Budget + A Free Download

Do you make a budget for your monthly spending? Or does that thought suddenly remind you that you need to go clean the kitchen grout?

Photo by Waag Society

While it’s definitely not fun, planning where and how you’ll spend your money is probably the most fundamental element of being disciplined with your spending (and adding a little self-discipline to our lives is what we’re all about here!). So what’s the best way to make a budget? Mathematically speaking, a zero balance budget will make sure that you have a plan for every dollar you earn.

Here’s how it works:

Start with your monthly take-home pay at the top of a page.
Write down every expense you’ll have that month. First, the necessities: rent, utilities, groceries, debts, etc. Then move on to the extras: savings, new clothes, eating out, Starbucks…
Plan every dollar until you have $0 left.

For only a three step process, it’s kind of crazy that budgeting gets so much resistance, isn’t it?

Maybe it’s because people don’t like doing math on paper – it’s feels so 3rd grade, right? But I’m the same way, that’s why I made this downloadable budget spreadsheet to do the work for me.

A few things to note:

Cell names are totally customizable – I tried to be thorough but realize it’s not all-encompassing.
If you don’t have access to Microsoft Excel, I’ve uploaded the spreadsheet to Google Docs, so you can access it by signing into a Gmail account.
If you accidentally delete a function, feel free to come on back and re-download.

Here’s the important part:

Once you’ve filled out the spreadsheet, give your keyboard the ‘ol “Ctrl + P” to send that bad boy to the printer and make yourself a hard copy!

It’ll be tangible. Real. You’ll literally have to throw your budget away if you don’t want to reference it the rest of the month! The goal is to have a plan for your money, so when some sort of temptation or “great deal” crosses your path, you can honestly tell the salesman, “Sorry, my budget’s already set for the month” and walk away.

Try it for a month. See what you think.

We’ll discuss further benefits of having a budget at another time, so until then…

Do you have budgeting questions or tips you’d like to share? I’d love to hear them! Please leave a comment below.