so in today's video we are going to look at the topic of um budgeting how to budget do not confuse
uh yourself when you hear the word budgeting just understand that budgeting is just that concept of
how you can manage your income and your expenses is as simple as it gets it is
boring but at the same time if you can understand this simple concept
income and expenses and how you can manage it then you are ready to jump into starting a budget
the next question you're going gonna ask yourself is what is your budgeting goal
for most people it could be when i started budgeting it was more like me trying to
build a business and get out of debt so you should know what your budgeting goal is because
once you understand what you're trying to budget then it makes it easier to get into budgeting
right so let's clear that concept as well choose your budgeting goal before you start budgeting
choose a budgeting plan that is easier or very easy for you to follow there are so many
uh budgeting plans out there i've had about 30 50 20 i've had about 40 40 20
i do love the budgeting uh 40 40 uh 20 plan but for me i followed the uh budgeting plan
of 30 30 40 which is similar to the concept of 40 40 20 and i'm gonna break it down for you guys in
a way it is easy to understand so let's hop on to my computer so i can show you guys how to budget
so as you can see on my screen right now i do have the highlighted definitions of
fixed expenses variable expenses irregular expenses and then
savings i actually wanted to put this information in a spreadsheet but i realized that
this link is actually free so i will leave this link in the description area below so if you're
someone interested you can use this link to do your mini calculation or actually use it
to create your own spreadsheet if you do know how to do that but if you don't you can just use um
this free tool to like mess around and kind of as in get this uh thing figured out so
let's look at the definition so it's telling us that fixed expenses are those expenses that come
up every month and they're kind of roughly the same so we're looking at rent mortgage payments
um child care you know utility bills and things like that and then variable expenses we're looking
at things like food travel home repair and then irregular expenses we're looking at things like
car repairs and new appliances right so this is more like a breakdown so now that we have
all these definitions as you can see here i do have employment income i have a number here which
says a thousand six thirty right so it could be whatever you make on a monthly basis so let's say
that this number we are working with uh let's say you're someone who makes 3500 a month and
you have bonuses and tips and things like that if you have any other way of making extra income then
you can add it here if you don't really have the number listed or the name listed right
so then on your fixed expenses i have um rent and mortgage payment i just gave an example of uh 650
you can mess around with what works for you and that's pretty much uh a mini definition of
fixed expenses um the other one is uh variable expenses and then irregular expenses so once you
finish that if you if you use a spreadsheet you can still do this all you have to do is you do
calculate and then it brings down your number and it tells you that your total income is 3500
and then it's telling you that your total fixed expenses is 650 and then your variable expenses
let's say your grocery for example everything is going to be way more we're just working with
simple numbers just to pass our message across let's say your um grocery is 500 a month or less
or more then you calculate that as well and then once you finish that it's now showing you that um
your total monthly income is three thousand five hundred and then your total monthly expenses is
one thousand sorry showing you that your total monthly income it shows you your total monthly
income your total monthly expenses and then the difference between your total monthly income
and total monthly expenses this is what budgeting is all about it's all about
putting income in your column and your expenses in another column and knowing the difference
so if you kind of use this tool or a spreadsheet or um offline as in budget planner or whatever you
have and you figure out this first phase then you are actually almost through with budgeting because
all you now have to do is if you have extra money in then you can now channel it towards your goal
let's say if you're planning on vacation then you channel that money towards your vacation if you're
planning on paying off your debt then you use that money towards your uh towards paying off your debt
that is all about budgeting but let's say for example now that you are in deficit
which could be um normal for a few people let's say you've done all your calculation right now
and you are in deficit that is exactly now when you have to use your budget planner
which is this one that i have here that is now when you use your budget planner this is kind of
a budget that i filled out with income showing you how much you're making every two weeks which gives
you 3533 a month and then it shows you a total of expenses now this expense column is different from
the monthly budget um that we use this one it's all about breaking it into different
categories the fixed expenses variable expenses and irregular expenses right but with the actual
planner it puts it together the two differences this one breaks it down in a way you understand
which one is different from each other but here in your budget plan in your budget planner sorry you
are able to put the whole information into one so let's say you have done all of this part and
you check your results and it's telling you that you have money left you just have a few dollars to
spend or you don't have any money left now this is where you can take a look it says where your
money goes here you can tell that your money part of your money is going to transportation
part of your money is going to housing part of your money is going food out of your money is
going insurance part of your money is going to debt repayment right so with a chart like this
it gives you a clue of how to start working on cutting down on your expenses so anybody that
tells you about budgeting and they hit you with 30 50 20 budgeting plan when you haven't figured
this out yet when you haven't done a list of your income at list of how much you are spending and
figure out where your money is going because once you are able to know where your money is going
that is when you can start making changes now you can decide okay i am paying so much with housing
maybe i need to get a roommate to cut down on expenses maybe i am doing as i'm spending so
much on food i need to do what quit eating out and cook my meal at home once you are able to
get this part right then you go to the final step which is what choosing a budgeting plan
this is when the actual budgeting plan comes in but if you've already done this part and you know
what you're looking at then if you are good with the 30 50 20 budgeting plan go ahead with that
it's gonna help you but for me personally if you are someone i i don't have anything against the
30 50 20 budgeting plan it's okay but it feels more like a budgeting plan structured around
entertainment and having fun and if you're someone who has actually struggled and you're trying to
make ends meet because i've been in that position where i've misused money and i've had to struggle
then you should be looking at a budget plan like 40 40 20 or 30 30 40 40 40 20 is more like
how much you pay in income tax how much are you giving the government whatever you pay
in in um towards as in you pay the government in income tax you are going to try to save that same
amount if you pay 5 000 every month in income tax save 5 000 if you're paying one thousand two
try to save one thousand two i use the 40 40 uh budgeting plan to structure the 30 30 40 budgeting
plan that i use because based on my own income statement i realized that i was paying i think
around 30 or 40 percent in income tax so i was able to save the same amount and a budgeting plan
followed following the 40 40 20 or 30 30 40 budgeting plan helps you save
money for investment so if you haven't watched that video i will also leave
the link in the description area below which is the full detailed breakdown of the budgeting plan
on how to create a budgeting plan towards savings and also a simple breakdown of what the 30 30
budgeting plan is all about so if anybody talks to you about budgeting don't get it confused it's
straight to the point all you have to do is follow the step know why you're making a budget make your
plans in terms of what you want to achieve and then figure out this part out this is the most
important part in your budget which is once you've inputted your income and once you've imputed your
expenses then you are looking at your result to know where your money is going if you don't know
where your money is going you can never be able to uh effectively follow any budgeting plan because
if you can't even tell where your money is going and where it's uh how it's coming in and
how it's going out and if there are changes that can be made you cannot follow any budgeting plan