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Money Principles
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Track Budget

Lesson 2

Total duration:   2h

Budgets

CORRESPONDING LEssons: 4 & 5 Creating & Sticking to A Budget 

PDF | Book 

Introduction

"93% of millionaires... stick to the budgets they create."

Chris Hogan

If millionaires stick to a budget how much better is it that you do the same. If you would rather not use a paper or planner here are 3 great budgeting tools.

  • Mint App | Free - Link
  • Every Dollar App | Free & Paid - Link 
  • Excel Sheet | Free (Join her email list) by Lauren Greutman & Paid

I personally use Mint but I have to say the other two options are better for budgeting. For me it is hard to beat the free features Mint brings to the table. 

You vs You

The most important steps are understand how you currently spend, start allocating 100% of your income to your goals by category (Envelope System so to speak) and roll with the punches. If you trend down on spending over time and never give up you are better than the average American.

“Many couples believe that the solution to their financial problems is increasing their income. However, a divided approach to managing money can be far more damaging to a relationship than low income or lack of financial resources."

Manage Less To Win More

My wife and I prefer to only tightly manage the categories we always over spend in. They just happen to be most of the same categories as from this study of how must Americans choose to reduce spending.

  • 68 percent cooked more often instead of eating out
  • 66 percent spent less money on clothes or beauty products
  • 55 percent cut down on meal expenses
  • 46 percent skipped social or extracurricular activities
  • 39 percent opted to not plan a vacation
  • 13 percent took a supplemental or part-time job
  • 7 percent moved to a cheaper home
    -Source

Mind you this is not a list of absolutes. This just means for example you take a large vacation every other year rather than yearly.

My wife and I also had to create a rule of a max spending amount. If we spent over $100 we had to discuss and agree on it prior to the purchase. 

Compare

There is danger in comparing yourself to others if that becomes our sole focus. I've prepared several budget breakouts as a reference not a prescription for you and your household.

The guide, unlike Ramsey, recommends spending 25% or less on housing monthly. Also that you allocate at least 1% of your homes worth for home maintenance yearly. 

Based on the Ramsey books I have ready these are the ranges I uncovered by category.

Here is a government study that helps you compare to the average American.

I took a 3 month snap shot from Mint app and compiled it so you can see there is no ideal breakout.

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