- Budgeting is not about restrictions.
It's about creating more freedom in your life.
It's about creating a little extra room in your finances
so you can make smart decisions with your money.
By doing this, you feel more in control, less stressed,
more confident, and find more money
that you never thought that you had
to spend on things that you actually want.
That is what you get when you successfully create
and work through a budget.
Budgeting for the first time can be so stressful.
Where do you start?
What do you do?
And when do you even do it?
Okay.
Take a deep breath.
No, seriously, take a deep breath with me.
(inhales and exhales deeply)
One more time, and do it like you mean it please.
(inhales and exhales deeply)
Now I'll have to admit that I'm probably the poster child
for how successful you can be if you have a budget.
I used one to help me pay off $82,000 in debt.
I used one to help save up six months worth of expenses
in less than a year.
I still use one even though I'm out of debt
just to save 50 to 60% of my income every single month.
Something that I hear all the time is:
But hey, Jarrad, my mom told me
that I need to make more money before I start budgeting.
Look, I love your mom.
She is an absolute sweetheart,
but she's also a dirty liar.
In this video, I'm going to show you
exactly what you need to do
to start budgeting as a beginner
to eventually become a money wizard
like that Harry Potty wizard guy.
Jarrad, what?
It's Harry Potter, duh.
Hey, I'm Jarrad from Debt Free Blueprint,
where I show intelligent people like you
how to get out of debt and create freedom
through your finances using the Debt Free Blueprint.
Smash that thumbs up button
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asking me any additional questions that you have
surrounding budgeting your money.
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Now I am not saying
that you should completely stop trying to pursue
more money at the same time
that you're learning how to budget.
I actually think you should do both.
But the problem is that, in our brains,
it's always one or the other.
And most of the time, we focus on the more money part.
Since we know this to be true,
I want you to prioritize how to budget before anything
because, honestly, how do you know
how much money that you actually need to make
if you don't even know how much you spend
and where it's going every single month?
If you don't know how to budget and manage your money,
then you're gonnna be just as broke
once you start making more money.
How often do you drive somewhere out of state
without a map or without some sort of navigation?
You probably don't because, if you did,
then you'd head in the general direction
of your destination, but you'd constantly get lost
and have to stop to ask for directions.
The most important reason to have a budget
is that it tells your money where to go every single month.
It's like the money road map
that helps you get from point A to point B
in the most efficient and effective way possible.
The best time to start making a budget was yesterday,
so yeah, you already missed out on that time.
So the second best time is today.
Don't wait for the perfect time to start this process.
Instead of finding a reason not to work on this,
I want you to make time
and to find a reason to begin today.
If you're in the middle of the month, then that's okay.
Start setting up your budget for next month.
In the meantime, try to cut your expenses
in the current month as well.
Next, you're gonna need to decide
which budgeting method is good for you.
The way to determine this
will be based on how you get paid.
Don't worry about figuring out your expenses yet.
The point of this step
is to become familiar with the two different methods.
If you get paid on a consistent basis
and your paycheck amount is exactly the same every month,
then you want to use a zero-based budget.
A zero-based budget directs you to budget
every single dollar of your income
before the month even starts.
That way, all of your money is accounted for
and has a place to go.
Zero money should be left over in your plan.
If your paycheck amounts have some sort of variability,
then your best option will be an irregular income budget.
An irregular income budget has you list out
all of your expenses for the month based on your priority.
So your basic needs like housing, food,
transportation would be at the top of the priority.
As you make money throughout the month,
you'll spend that money,
starting with the highest priority items,
housing, food, transportation,
to the lowest priority,
eating out, video games, clothes,
a new television, a new puppy.
Since you don't know exactly how much money you'll make,
you want to use your average take home pay
over the past couple of months as a starting point.
Now let's figure out why you want to start budgeting.
Setting up a goal will help you determine
how to set up your budget
and where you plan to spend your money.
If you're trying to pay off debt,
then you'll need to have a little bit of money left over
to go towards the extra debt payments
to get them paid off sooner.
If you're trying to save up for something specific
or invest more for retirement,
then you'll need to have some money left over
in your budget to put towards those particular things.
If you're just trying to get a handle
on your money situation,
then we'll need to just make sure
that all of your normal expenses are covered.
Another reason that this is an important step
is because it'll ensure that there's a reward
or outcome tied to the monthly management of your budget.
If you want to start telling your money where to go,
then you need to know how much you have to work with.
Take some time to list out every source of income
that you expect to have every month.
If you get a bonus check every quarter,
then you'll account for that in the month
that it's actually received.
For now, just stick with how much you'll receive
on a consistent basis, your base pay.
If you have some sort of side hustle,
then you'll also want to include that income
in this area as well.
If you're going to be completing an irregular income budget,
then you'll want to use your average take home pay
over the past couple of months as your starting point.
Now it's time to list out some of your basic expenses.
I created something that I call the hierarchy of expenses
that might help you work through this process.
I'll throw a link in the description
for you to get access to it.
You first want to start accounting for the expenses
that cover your basic needs.
Think of things that you need to survive,
keep you safe, and earn more money,
things that, if you don't do them,
then your life will not be able to function properly.
After you have those listed out,
you're gonna want to add the minimum payments
on all of your debts.
I know this stings just a little bit,
but it has to be made a priority.
You need to at least keep your head above water
with all of your basic debt.
So expenses that will go in this area
are things like housing, utilities,
food, transportation, car insurance, gas,
and, like I said, minimum payments on your debts.
As you list each one,
start adding numbers to the expenses.
If you really don't know how much,
then pull up an online bank statement
to try to get a good idea of how much you spend
on each of these expenses.
If you still don't know, then give it your best guess.
Any reasonable number is better than zero,
no number at all.
Next, you'll need to list out all of your optional expenses.
This is where you'll use your goals
to help direct where you budget the rest of your money.
Now it can get really squirrelly once you get to this part,
so be very careful with what you decide to budget
in this expense area.
If you decide that paying off debt is a high priority,
then budget some extra money towards that.
If you're trying to save up for the down payment
on a house, then put that in here.
If you need to start building your emergency fund,
then budget for that right in this area.
I made a few emergency fund videos
that I'll link in the description for you to check out
after this video if you need help in that area.
For most of us, there are things that we can live without
but benefit us quite a bit, kind of like the internet.
But keep in mind that, if you think that having the internet
is more important than, we'll say, budgeting for clothes,
then you'll wanna make sure
that it's a higher priority in your budget.
Don't be afraid to add things to your budget that you value.
Just because I don't budget for cable television
doesn't mean that you shouldn't if you get value from it.
As long as you're creating your budget
with your goal in mind, then don't apologize for it.
As you're adding more items to your budget,
deduct those expenses from your income.
Keep an eye on how much you have left
after adding each expense
so it helps you decide if budgeting for that item
is important or not.
Making sure that all of your expenses are accounted for
every time you make a purchase
is going to help keep you on track and informed
when it comes to how much you have left to spend
in each budgeting category.
Keeping up on your budget is going to be just as important
as creating your budget if you truly want to be successful.
Making sure that all of your expenses are accounted for
every time you make a purchase
is going to help keep you on track and informed
when it comes to how much you have left to spend
in each budgeting category as the month goes on.
I've personally found success
by picking one day per week to review my budget
and make any adjustments that are needed.
My day is Sundays,
which is right at the end of the current week
and right before the next week starts.
If you're in a relationship,
then having your significant other on hand
to review everything is going to help you be successful.
You both need to be on the same page
with how much you have to spend
for the remainder of the month.
I'm not married and I don't have a girlfriend right now,
so my budget reviews kind of look like this.
Jarrad, party of one.
Don't be scared to adjust your budget
in the middle of the month.
If you're doing this for the first time,
then you will get a lot of things wrong
and that is absolutely okay
because none of us are good at anything
when we do it for the first time.
Based on myself and the people that I've worked with,
I found that it usually takes
between two to four months of budgeting
until you feel pretty comfortable and confident.
Just make sure that you don't allow those early mistakes
to stop you from continuing to create
and work through your budget.
For example, if you notice that you spent too much on food
leading up to this point,
then you'll need to readjust
how much you spend for the rest of the month.
You can do that by taking some of the budgeted money
from other categories and moving it
towards your food budget because you have to eat, folks.
Should you budget with a spreadsheet
or use budgeting software?
You really can't go wrong with either one.
You can successfully budget as a beginner with both tools.
I always recommend that you budget with a spreadsheet
if you're starting this for the first time.
After about the second month,
you can move on to budgeting software if you want.
I started out with a spreadsheet,
then moved on to budgeting software,
which is what I use today.
I'll throw links to a bunch of budgeting resources
down below in the description for you.
Leave a comment down below with any questions you have
when it comes to budgeting
that I haven't covered in this video
or that you want me to go into a little bit
more detail about.
If you need some extra help in the area
of getting your money in order,
then sign up to get on the money management course
waiting list, where I teach you about budgeting
and all things money.
Link is in the description.
Make sure to smash that thumbs up button
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I'll see you in the next one, friends.
Adios.