Budgeting is the #1 way to becoming wealthy. We need to understand how much money is coming in and how much money is going out. We also need to discover if our money is being spent in the most efficient manner possible. As soon as we get paid we split our money into 3 distinct budgets. They are House, Investment, and Personal Budgets.
House Budget: The house budget consists of all utility bills, cable, internet, streaming services, kids sports, etc. It also consists of the food and household goods budget. We also like to have a little budget for monthly house extraneous spending (i.e. fast food, movies). Gas is also a part of this budget. As is, home projects and clothes.
Investment Budget: We have an investment budget for our baseline investment spending. Remember the 4 parts of our investment portfolio; High Yield Savings, Bonds, Stocks, and Real Estate. The reason why we have a budget for investments because as we get paid, the stock market always has something new and exciting to invest in. There is always something more “sexy” to invest in than a savings account or bonds. We need to ensure that we are covering our bases for all 4 types of investments. If we earn extra income, such as rental income, then we can invest more into a particular segment.
Personal Budget: It is very important to have a personal budget. This is for things like coffee, energy drinks, cigarettes, alcohol, and fast food. These things are not good for us but they are a part of life. We like to do our Personal budget weekly. I personally give myself $60 a week for these types of things. I transfer the $60 to the Cash App. Any money that I do not use is invested into the stock market via the Cash App. It is a perfect way to keep spending under control and reward us for good behavior.
Understanding these budgets the first step to getting your money where it needs to go in order to build wealth.
Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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