Budgeting Made Simple
A laid-out budgeting plan for any income level
Regardless if you are an all-time CEO making seven figures or a broke college student working random hours to get some minimum-wage cash, it is crucial to have a budgeting plan!"Budget your money and save," has probably been engraved in you by teachers and parents, but do you actually know what that means?
In this article, I will supply you with the mindset, knowledge, and an excel sheet that will set you up for the best possible budgeting plan, regardless of what income level you are!
First, let us begin with getting in the mindset.
It is very important to have a good mindset about your finances. Saving is an amount of money that you are allocating to yourself or paying yourself... AKA this is money that you are deciding IS NOT for other people!
Spending is a way of giving your hard earned cash to other people in exchange for things! Your money is given to you based on your time, and your time is absolutely priceless!
Before moving on I recommend downloading this excel sheet and following along with the article to make sure you're getting the most out of your budgeting!
To begin, this excel sheet here will calculate for you your total income and outgoing expenses (not including daily purchases), and the amount you have leftover. There is also a column to include a savings plan. This will help you determine your leftover money available for entertainment activities! This excel sheet is also based on A SINGLE MONTH. You should update a budgeting sheet, this one if you like it, monthly to guarantee all of your calculations are accurate, and you're always aware of how much you can spend a month!
Starting with income:
To start, go ahead by entering all of your incoming sources of money in the green column. This could include many things including a salary/hourly based job, child support, allowance, etc... I filled in the first cell as work for an example!
After filling in all of your income so far for the month you will see your total income calculated in cell f11!
This column is not for entertainment activities like going to a restaurant, or going to the movies! You'll figure out how to budget these in later. In this salmon column, you're going to want to include your monthly expenses! You also want to include reoccurring purchases. Recurring purchases are things that come out of your account automatically every month; you may find that this column really adds up, because of how easy it is to sign up for all different kinds of memberships! This column should include things like a gym membership, Netflix accounts, HULU, or anything that comes out automatically! You should also include things like your total rent or house payment including its utilities, gas amount, groceries, and if you make any kind of monthly payment on a loan!
After filling in the outgoing column, your total calculated amount should be in cell f13, and your amount total left should be in the column below that! This is what I call your raw amount.
Your raw amount of money is the total you have incoming, minus the amount that you inevitably have to spend that month. Your raw amount is the available amount for you to split for yourself and other people! When I say other people, I am not meaning just giving it to random people, but giving it in a sense that you're paying them for something they have. I think it is important to think of purchases like this, because you are exchanging your valued time to every purchase you make. Before you can pay others, you should start by paying yourself!
Paying yourself is designating a certain amount of money for you to keep! Looking at your Leftover cell, examine this number and determine a financially reasonable number that you are willing to pay yourself monthly. I do not give suggested amounts or percentages because one-size-fits-all is as BS as saying there is a one-size-fits-all meal plan for all people! Your budgeted amount is based on your budgeting plan! Some people can take a more aggressive approach and save 50 percent, while some people may save much less! And that 50 percent will vary based on your overall leftover raw amount!
After figuring out your tailored amount you're capable of paying yourself each month, look now at the blue column under the savings section. This is for you to list all of your savings accounts, I have listed a Marcus Goldman Sachs account as an example.
Marcus Goldman Sachs is an online savings account that offers a 2.15 APY, FDIC insured, and is compounded daily! I strongly recommend using online savings accounts for the money that you pay yourself because of the high-interest rates! A regular savings account has an interest rate of around .01%, while banks with no overhead are able to pay you more! You will not make a lot of money using these accounts, but it helps secure your money from losing its value, and makes a couple of extra dollars for you a year! You can use this APY calculator to see how much you could make extra with a high-interest savings account.
This blue column should include any money market account you deposit into, index funds, retirement funds, or savings accounts!
You now should have all of your income, outgoing expenses, and savings listed, and the amount calculated in cell F22 is your amount left that you have available to spend on whatever it is you please!
Budgeting will help you to become more financially successful, and can help you prepare for major life events! Money is created and valued from your time, and your time is priceless! Good luck with your finances and happy budgeting!