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  • How to budget (free tracker included)

    We’ve all heard that budgeting is important

    In the research study “Wealth accumulation and the propensity to plan”, the researchers stated that the “detailed monitoring activity helps households save more and to accumulate more wealth.” 

    They further concluded with ”our findings suggest that planners save more” 

    Clearly, having a plan (i.e. a budget) will help you save money and build wealth.

    Here is a step by step on how to get started:

    1. Bank/credit card statements

    Start by tracking down your most recent credit card and bank statements. This is a good starting point because it will help you determine your typical spending categories and the income you have coming in each month. (I have an easy tool for this—keep reading!)

    2. Write down your income 

    The first step with budgeting is writing down your income. If you have an unstable income, take the minimum or average amount you’ve earned over the last few months. Bank statements will show you exactly how much you’ve earned.

    3. Determining the categories

    Look at your statements and think about where all of your money is going. From your transactions, create different categories.

    I recommend being as specific as you can, as it will be easier to check your actual spending against the budget later on.

    4. Create a budget

    Here is a simple view of how it might look like:

    I like to split expenses into fixed (the ones that don’t change) and variable expenses.


    1. It makes it easier to recreate the budget next week
    1. As a rule of thumb, keeping your fixed costs under 50% is a good financial practice.

    Additionally, creating a weekly budget is a good practice. It helps make the amounts more “real” and easier to track.

    In the example above, we can see that we are spending $230 per week on groceries, $75 on dining, etc.

    5. Weekly review

    A budget isn’t supposed to be a “set it and forget it” type of thing. It requires constant monitoring and tracking. Yes, it is time-consuming at first, but it’s necessary to build wealth. After doing this a few times, you will also improve and spend less time on it.

    During your weekly review, analyze your variances – compare your planned spending to actual spending. Are you on track? What expenses do you need to reduce? Adjust your budget accordingly.

    What about budgeting apps?

    Budgeting apps can save you time, but I personally don’t use them. Here are a few reasons:

    • More control with an Excel spreadsheet

    • Lower cost

    • Privacy of your own data

    • Entering data by yourself into an Excel spreadsheet can help you become more familiar with all your transactions.

    P.S. I created my own Excel file that you can use to easily track your transactions and compare them against your budget:

    1. Copy and paste transactions from your credit card/bank
    2. Automatically track expenses based on various categories (needs/wants/saving)

    Just reply “BUDGET” to this email and I will send it out for free!

    See you next Saturday.

    MC, CPA

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