Hey everyone, Stefan here from project
lifemastery.com and in this video
I'm going to talk to you a little bit
about how to budget money and how to
save money. Saving money is very
important. You've got to make sure that
you're putting money aside every single
month, but the problem is that most
people they don't budget their money and
manage their money in the first place.
In fact most people they're living paycheck to
paycheck where their expenses are
a certain amount of money and whatever
money that they're earning is going
directly towards paying off those
expenses. Therefore they don't
have any positive cash flow that they
can then use to save and put aside.
If you are living that way, if you're
living month to month, paycheck to paycheck
and you're not saving any money, then
you're stuck in what is called the rat
race. The rat race basically means that
you're never going to be able to get
ahead because you're just repeating the
same cycle. You're not taking money that
you can save, that you can invest, and
help use to build your financial future,
to build a business, to make passive
income etc. Really the most
important thing that you've got to
understand before you're even in a
position where you can invest money and
all that sort of stuff, is you've got
to make sure that you manage your money
and you set up a budget. A budget is
basically where you say that you're not
going to spend more than X amount of
money. You've got to decide what that is,
what is realistic for you but
a budget is a way of essentially
sacrificing in some way in your life,
which is a very important thing to
understand. For me I remember in my life
I never wanted to make a sacrifice. I
just wanted to make money and spend that
money, but then I realized by living my
life that way it was at the cost of my
future and that by living my life that
way as time were to go by that I was taking
away from my future life that I was
going to have one day. When I had kids
one day or a marriage or a family or
whatever it is that I was going to
struggle at that point in my life.
You've got to think ahead for your future.
You can't just live for and think about
today, you've got to think ahead and
prepare for the future and that means
sacrificing some instant gratification.
You've got to
delay gratification and make a
sacrifice.
Budgeting you've got to decide how
much is your budget going to be. That
you're not going to exceed what that is.
What I recommend you do before
that is make a list of all your existing
current expenses.
Go through your credit cards or debit
cards or online banking, your statements,
go through your receipts, whatever you've
got to go through and go through every
single transaction that you have and add
it all up. Because the first place to
start is you've got to know exactly where
you're at.
You've got to know exactly where your
monthly expenses are and how much it is
that you're spending on a month to month
basis. I do recommend you go back
several months because you've got to see
what the pattern is. It's even better
if you can categorize it into different
categories. A great way of doing
this, you can use software, you can use
Microsoft Excel, you can use a Google
spreadsheet, you can use Numbers if
you're on a Mac, but actually set up a
spreadsheet or track it whatever the way
that you want and add it up. Get out your
calculator and add up exactly how much
you spent on a month to month basis on
your rent or on your mortgage.
Whatever that number is write it down,
put it under a column or a category.
That's exactly what your monthly
rent or mortgage is. Another category is
going to be putting in exactly what you
spend every single month on your cell
phone bill.
Put exactly what that is. Again, go
back several months know exactly what
that is. There might be some months you might
have spent more than what your
bill traditionally is but you’ve got to
know exactly what that is. You're going to look
at your Internet bill, your gym
membership. You're going to look at how much money
you're spending on a monthly basis
buying groceries,
eating out, entertainment such as going
to movies or playing video games or
whatever that is.
Again, these are all different categories.
You've got to look through all your
transactions or statements and add
exactly what that is to know exactly
where you're at. Your car payments,
gas, your bus pass,
transportation, taking a taxi, whatever
that is break it up in the categories.
Maybe another category could be
investing in yourself like books
and courses, whatever. Know exactly
what you're investing every month there.
It could be a coach, it could be a mentor,
it could be your school tuition
payments or your student loan.
Whatever it is guys you've got to have a
spreadsheet or something that's tracking
everything. That way you can add
everything up.
You know exactly what you spent every
single month for the last several months.
When you look at that number it's going
to be an eye opener for you. You're going
to actually realize the reality of how
you're living. Then what you're also going
to do is going to add up and
track exactly how much you're making every
month as well. That's exactly what you
make from your job, maybe from your
business, maybe from other income streams
that you might have such as investments, such
as ... I don't know things that you might be
doing on the side, but you've got to make
sure you track all of that as well and
you've got to know exactly what that is.
Basically by doing this exercise
you're going to have a list and you're
going to know exactly what your expenses are
and then you're also going to know exactly what
your income is. You're always going to
make sure that your income is higher
than what your expenses are and you have
what is called a positive cash flow.
Positive cash flow. Very important,
that's what's going to allow you to save
money every month. That's what's going to
allow you to invest, to build a business,
to do whatever it is that you want to do
and have that savings for whatever it is you
want to invest in. If
you find yourself your expenses are too
high, then you've got to set up the budget.
You've got to decide again
how much do I want to save every
month? Is it one hundred bucks a month, is it a
thousand bucks a month and then look at
ways that you can cut down and lower
your expenses. That's creating a
budget. You might decide, my
budget is that I'm not going to spend
more than two hundred dollars a month
eating out.
You've got to enforce that, that's what the
budget is. I'm not going to spend more
than two hundred dollars a
month on clothing.
That's the budget. I'm not going to
spend more than X amount of
money
on transportation or on alcohol or
whatever it might be that you're
spending money on. In some cases you might
decide
got to find a cheaper cell phone
plan. I've got to sell my cell phone and get
a cheaper phone. I need to get rid of my
car and get a bus pass instead. Again,
these are sacrifices that you might have
to make so that you can save money and
set yourself up for your future.
Set that budget and then the other key
piece is guys, you've got to make sure that you
are tracking this on a weekly basis
especially the start. On a weekly
basis. Which means that every single week,
you're going to want to go through your
credit card statement, your bank
statements, everything and add everything
up and put them in the categories
that you have set up in your spreadsheet.
I recommend doing this weekly
because it'll be faster if you do it
weekly. If you leave it every month
they'll be a lot more transactions and
you're going to procrastinate you're not
going to do it. Weekly helps you
understand where you are at with your
budget and it will help you realize hey you
know what? I spent a little bit too much
just last week, I'm coming up close to my
budget so I need to cut back a little
bit. Do it every week, very important.
Then the other piece is I highly
recommend that you use a credit card or
a debit card for all your transactions
because if you're spending cash on
things, it's very hard for you to track
that whereas if you're buying everything on
your credit card, then you're going to be
able to see everything. You're going
to see where your money
is going and be able to go through
all those transactions. Using a
credit card is beneficial because
it's helping you build up your credit score
which is very important especially at a
young age to build your credit. If you
have a problem with overspending with
credit cards, then I would recommend
setting a limit on the credit card. You
can call your credit card company and
say, "I want to have a limit of a thousand
dollars, of two thousand dollars," or
whatever that limit is to ensure that
you don't overspend that, but if
you're doing that every week you're
tracking things, you're going through your
statements,
you know exactly where you're
at. You have that awareness and you're
ensuring that you have a positive cash
flow then that's going to give you the
ability to save money
and you're going to have a better
sense of control and confidence over your
life of managing your money.
It's very important that you do this as early
as possible because if you can't manage
what you currently have,
then there's no point going out there
to try to make more money because if you
can't manage two thousand dollars a
month, five thousand dollars a month, if
you make ten thousand or more, if you make a
million dollars a year, you're going to
be in trouble if you don't know
how to manage that because then you're
going to get into a serious financial
trouble. That's why it's better to
learn how to manage
what you already have.
Master managing what you already
have and then as things grow you'll have
that foundation, this money management
skills that will help you to succeed at
a later point your life as well. Thank
you for watching this video. Hopefully
you enjoyed it. Check out the videos that
I have on investing for beginners if
you're in a position where you're able
to save money and start to invest. If
you want to learn how to build your
online business and make more money
online specifically passive income, then
check out the link below to a free
course that I have that share seven online
business models that help make me an
Internet millionaire that will help you
get started building your online
business. Thank you guys for watching
this video and I'll see you in the next
one.