So, how do you build a budget? The simplest way is by the give, save, spend method. In the post, Budget: What is it, I asked you to write give, save, spend next to each item on your checking account statement. The reason why I asked you to do that is because you need to see where your money goes every month. So what is the give, save, and spend budget? Don’t get scared at this point, because a budget is going to give you freedom that you never knew you had.
The give, save, and spend budget is really simple, you divide your budget into three categories: give, save, and spend. This method is the easiest to learn and implement. When you get your paycheck, 10% goes to giving, 5% goes to general savings, and 85% goes to spending. I know some money experts say to do a budget every month, and that’s fine. I personally make my budget every time I get paid.
The first category is give. If you are a Christian, giving is especially important. Giving a portion of your money back to Jesus is very important. But what if you are not a Christian reading this? You should find a charity you like and give to that charity on a monthly basis. Try to start with giving away 10% of your gross income. You may be asking yourself, but Todd I cant afford to give that much. That’s fine, just start with what you have. If that’s just 5%, then start giving 5% of your income away and then build up to 10%. You’ll be glad you did.
The next category is save. Every time you get paid you should set some money aside into general savings. The reason for this is because you never know what will happen in life. You need to get into the habit of saving every time you get paid. You should be aiming for 5% in this category. Again, you may be saying I can’t afford to save that much. Just start where you are at, if that is just 1%, that’s fine. You need to start building the habit of saving.
The last category is spend, this is the category you split into all your spending buckets. What are spending buckets in the budget. Your spending buckets in the spend category are basically what you spend money on every week. You could have buckets for clothes, hygiene, fast food, rent, groceries, car payment, fuel, credit cards, and so on. The idea is to have all you needs covered in your budget.
That’s basically what a budget is, you give 10%, you save 5%, and %85 is yours to spend how you please. But, let me tell you, the first couple of months are going to be hard. Don’t quit. You can do it. You have to relearn how to manage your money or you will be broke the rest of your life. No more flying by the seat of your pants with your money, like I used too. Check out Balanced Finance by Andy Stanley to learn more about the Give, Save, Live method to budgeting. Come back next week to see how we put all this together and build your budget.
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