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Financial Budget

4 Best Tips to improving your Budget

By Drew Cheneler on August 5, 2019

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Following a budget allows you to save and invest more money.

A common misconception is that the more money you make, the less you need to budget and save because you make a lot of money. Those who are financially stable all created a budget. America’s millionaires are disciplined, that is what separates them from the rest of us. Majority of them have created yearly budgets, which they then break down into monthly and even weekly budgets. If you have not yet, please read our article on how to create a budget.

By following and adopting these 4 simple steps, you can take action to become a great budgeter. Creating a budget allows you to save money, which you can then invest into low cost index funds. These 4 budgeting tips will serve as a great foundation for you, as you begin creating the perfect financial budget.

1. CANCEL THOSE SUBSCRIPTIONS

Yes, we all have our various subscription’s. We all have Neflix, Hulu, Apple Music, or Spotify subscriptions, etc. There are so many subscription services that are constantly draining your monthly income.

Although each service may have a small fee of $4.99 or $9.99, everything adds up when you analyze your budget.

One simple solution would be to first cancel any subscription that you are not actively using, or simply just share the service with friends and family.

There is no need for you to be the sole funder of a subscription service if multiple people are using that same account.

As a Broke-Millionaire I still split my Netflix and Spotify accounts with both my brother and sister. This drastically decreases my annual expense for these services, and allows me to invest my money through our easy to follow dollar cost averaging strategy.

And it is not just me who splits these subscriptions. In fact, a member on this community told me that him and his college roommates split all of their subscriptions. Together, they have a Netflix, Hulu, Spotify, and a premium Sound Cloud account.

If you ask me, I think it is a bit of an overkill, but they all use them enough where it is worth the expense. Again, they are splitting up this cost, which frees up capital to invest into their Roth IRA or Brokerage account.

Netflix and subscription services are one of the biggest expenses on your budget. A thorough financial budget requires you to minimize expenses, invest, and save as much money as possible.
Do not spend money on Netflix or other subscription services. Your monthly budget will increase if you minimize these expenses, and instead, invest or save more each month.

2. A NEW MONTH MEANS ANOTHER PAYCHECK

You need to treat each month as a brand-new month. Never rely on income from the previous month to support your expenses. Obviously, this does not entail any large purchases that you need to save for, just your normal monthly expenses (rent, food, gas, ect).

This will help you start becoming a great budgeter if you can “live within your means” and not make any irrational purchases that may drain your accounts.

Each month should facilitate a brand new budget. Whatever your income for that specific month is or is estimated to be, balance your budget to where it can perfectly align with your monthly income.

If you are struggling with creating a personal financial budget, follow our easy to use guide which follows the 50/30/20 principle.

This may be slightly difficult for you business owners, bloggers, or any job that does not have a steady income. However, it is important to estimate revenues from previous months or years to allow yourself to create a budget that suits your business.

If you have any spare cash from the previous month you need to invest it. If you haven’t already, I strongly urge you to read our Dollar Cost Averaging Strategy. It is the easiest investing strategy to use!

3. HAVE A GOAL AND BE MOTIVATED

Listen, even if you want to save $1 extra a month, write it down or tell someone that will assist you!

Have a set amount of dollars that you plan on saving each month and actually stick to your goal.

Don’t follow these tactics for a week or two and wonder why you are not seeing any results. Budgeting is a slow and steady process that requires time, discipline, and strategy.

This may be a bit overkill, but I write down weekly financial goals. For the most part, they are small, but again it all adds up. I always try to save an extra $20 a week and invest it.

This has been my weekly goal of mine for about three years, and I am finally starting to see how powerful it has become thanks to compounding.

4. AVOID SPENDING MONEY

If you are wondering why it is so hard to save money, it is probably because you are spending too much time at these money traps.

I consider a money trap to be a place such as the mall, outlets, Amazon, really any place where you are constantly tempted to spend money.  

With out a doubt, if you spend less time at these places, then you will ultimately spend less money.

Don’t go on big shopping spree or buy unnecessary items, this will crumble your monthly financial budget.

The real trick is to stop going out every weekend and conserve your capital. Don’t get into the mindset that to have a fun life, you need to go out and spend money.

Controlling and dominating your financial budget requires you to make sacrifices.

We have said it before, but our goal is to help you achieve financial independence.

Every top CEO or Business owner will echo these same principles of conserving your hard earned capital by sacrificing expensive habits.

This may seem like unpopular opinion, but if you are seriously trying to control your budget and save money, then discipline is an essential principle that will ultimately help you succeed down the road.

Spending money at the mall does not help your budget. Limit how much you spend so you can invest that saved money.
Try to limit how much you spend at the mall. The mall is one of the single greatest money traps that destroys your weekly, monthly, and yearly financial budget.

How to Live Frugally, Create a Personal Financial Budget, and Increase Your Net-Worth

By TheBrokeMillionaire on June 10, 2019

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Save Money Each Month

Saving money is a rigorous task that requires discipline and a solid game plan. Fortunately, here at broke millionaire we are more than ready to point you into the right direction. Do you have a friend who makes less than you, but is somehow saving more money each month? They already wrapped their head around their financial situation and improved their budget. I sure did! And that was the reality check I needed. Although, it crushed my confidence and bruised my ego, it was a defining moment for me as a Broke-Millionaire. Undeniably, this moment taught me how to truly live frugally, save money, and make even more money.

That is why today we are going to cover:

  • How to create a Personal Financial Budget.
  • Embracing a Frugal Life Style, which will force you to save money each month.
  • The Best Investing Strategy to increase your net-worth.

Recently, our loyal readers have asked me how much they should save or invest per paycheck. To be completely honest, there is no finite answer or a simple arithmetic like y=mx + b to calculate how much you should save or invest.

It is all dependent on your current spending habits, which we will discover today. Do not worry, this is going to be an action packed article where you can immediately act on our advice and implement our strategies to rebound your current financial situation.

Creating A Personal Financial Budget

Sadly, there are so many websites and personal finance blogs that over complicate this topic. It infuriates me, because creating a personal financial budget is not scary, nor intimidating, but rather, exciting! Like I said earlier, it was my turning point as a Broke-Millionaire. Without a doubt, creating a personal financial budget is the first step you need to make in order to master your personal finances. It is one of the easiest tasks to complete thanks to Microsoft excel. To help you out, we are going to tell you everything you need to include in a personal budget.

As a broke-millionaire I follow the quick and easy 50/30/20 personal financial budget rule. Since starting this, my savings account has grown tenfold, But more importantly, my confidence in financial management has increased, which is a joke, because literally anyone can apply this rule to their everyday lives.

50/30/20 Personal Financial Budget Rule

So how does the 50/30/20 rule really work? Believe me, if you think this is going to be hard, then you may need to go through grade school again. When I discovered the 50/30/20 rule, I felt like Edison discovering electricity.

Before we begin, grab a pen and paper. I need you to write down everything we discuss today. This will allow you to include and focus on all of the nitty gritty details that need to be included in your personal financial budget.

To make your calculations easier, make sure you know your monthly income. Since the average salary for the United States is $47,060 per year or roughly $3,921 per month, we are going to use this as our base number to make our calculations.

Step One: Put 20% away in your Savings Account

That’s right, put 20% of your paycheck directly into your savings account. Let’s calculate this:

.2 x $3,921 = $784.20 per month goes into your savings account

The average American should be saving about $785 per month. If you are shaking your head at this number in disbelief like I just did, do not worry. We are going to teach you exactly how to save your money.

Do not be greedy and dip into your savings account. Do not at all costs. As a Broke-Millionaire you are only allowed to transfer money from your savings account into your Roth IRA. That is the only exception!

Step Two: Only apply 30% towards Discretionary Spending

30% of your paycheck will go directly towards discretionary items.

0.3 x $3,921 = $1,176.30 per month used for discretionary spending

What is discretionary spending? Discretionary spending is classified as an expense you can get by without. For example, a discretionary expense includes your hobbies, dining our, a concert ticket, vacation, picking up the bar tab, ect. This is hands down my least favorite allocation. Why? This specific allocation encourages spending, which is why I have added a Broke-Millionaire strategy.

Each month, I take 30% of my discretionary spending limit, and invest it into low cost index funds (ETF’s). This allows my investing account to compound and grow each month.

0.3 x $1,176.30 = $352.89 each month is deposited into my brokerage investment account

If you are like me, and you want a holistic view of your yearly personal financial budget, then this equates to an extra $4,234.68 a year that goes into my brokerage account.

This is the easiest percentage to bring down if you live frugally. All it takes is the will to eliminate or scale back on your current habits. I eat out at most 3 times a month. Instead, I pack my own lunch and bring it to work. This alone saves me close to $50-$60 a week! Which is great, we are all about saving our hard earned cash. When I go to the bar, I only pay for myself or split the drinks with my friends.

However, the most important thing you can do is not buy any accessory items. Yes, this means limiting your time spent at the mall or on Amazon.com. Before you go shopping, plan ahead. I only shop when I know the item I am looking for is on sale, or if it is Amazon Prime day/Black Friday.

Step Three: 50% of your paycheck is used to cover your needs

50% of your paycheck will go directly towards the ‘needs’ of your life. This allocation will allow you to pay off your credit card, student loans, groceries, rent, or basically anything else you need to sustain your life. No, this does not give you the right to buy the nicest steaks or cheeses at Wegmans.

Since you are finally thinking about maintaining a frugal lifestyle, this allocation is the easiest to beat. Start saving your coupons. Yes, even if it is from CVS where they are notorious for giving you a two foot long receipt. These receipts come in handy as you begin to scale back on your spending habits. Giant, Shoppers, and Costco all offer great coupons, use them!

Because I am an absolute fanatic over my personal finances, I turned grocery shopping into a game. Every week, I try and see if I can spend less than the last time I did. I then compare my two receipts, and subtract the difference. What do I do with this saved money? Great, you guessed it right! I stash it away in my brokerage account and continue to invest it.

The point is, begin to think frugally. Ultimately, this mindset change will force you to save, and believe me, you will notice the differences within your first week.

Creating A Personal Budget

As you can see, the 50/30/20 rule is easy to follow and allows you to begin saving and monitoring your spending. The key to all of this is living a frugal lifestyle, which is the hardest part of this rule. Believe me, I know how hard it can be. Especially, if you are a brand-new college graduate and starting to make some money. You will have the urge to spend your money on a watch or an iPad, but DO NOT. Invest in your future. Put this money away in your Roth IRA or Brokerage account.

Embrace a Frugal Lifestyle

What drives me insane is how there is a negative stigma towards college graduates who just go back home and live with their parents. You kidding me? If you are smart and your parents are not charging you rent, then why would you move out quickly? You won a mini jackpot! Free rent just means you can increase your net worth month after month. Heck, I urge all college graduate to live at home if your job permits. Save as much money as you can for at least 6 months, and then think about moving out.

Only move out though if you have roommates or a significant other to split rent with. If you are living at home and working, guess what else you potentially get to save money on? Yeah that’s right, groceries. But since you are making money assist your parents or whoever you are living with and help pay for groceries. That is the least you can do if you are living rent free. Or mow the lawn, I am sure they will appreciate that. Point is, use this fortunate situation to help you advance your financial situation. Tell those who are making fun of you to watch your savings account grow with you.

Do Not Eat Out

We have already briefly covered this topic, but I want to reiterate how expensive it is to eat out on a regular basis. Do not get me wrong, enjoy a meal out every once in a while, just scale it back. Make sure you know the costs associated. If you can make your own meal, then please do it. Save yourself the $5-$7 because it starts to add up rather fast.

After eating out for five meals, you are anywhere from $25-$50 in the hole, which could have been used to dollar cost average or been contributed to your retirement. I know a lot of jobs have cafeterias within their work space but avoid it. I got a challenge for you. Let me know how much you save if you pack lunch for 5 days. If it is more then $25 then email me, and I will tell you my #1 stock pick for the month of June so you can go on ahead and purchase it with your saved money.

Invest the Money You Save Each Month

Each month, I challenge you to invest your money each month. Now is the time. Thanks to the internet, it has never been easier to create a brokerage account, and immediately implementing our dollar cost averaging strategy. If you remain frugal and actually invest your money, then you will retire a millionaire. Not to mention, our strategy is so easy to start. Here is the best part, this strategy is the same as Warren Buffets. So what are you waiting for? Show some ownership and start to invest like a billionaire.

Accept a Frugal Lifestyle, Create a Personal Financial Budget, and Invest Your Money

Again, there are so many things you can do to save money. What we do here at Broke-Millionaire is help you find those useless expenses. Living frugally is hard. We know that, but the challenge is worth it. Why be short-term rich when you can call yourself wealthy in 10-15 years if you implement the practices we are putting forth. By the way, I hate the term rich. You have achieved great success if you can call yourself wealthy.

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