There are only two ways to become rich: lower expenses or increase income. If you can reduce your costs as you add more cash flow to your bottom line, you have a good chance of becoming wealthy.
But how do we lower our expenses when inflation wreaks havoc on our budgets? The answer is to develop a hardcore budget that doesn’t allow for “slippage.”
Welcome back to The How to Control Your Spending series (101, 102), where we take our budgeting to the next level.
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What is a hardcore budget? A hardcore budget is a budget within a budget; let me explain. Most people live on no budget at all.
When they receive their paycheck, they aim to make it last for two weeks or a month. When we start budgeting, we usually begin with a broad area, such as “food.”
A hardcore budget breaks down these generic subjects and converts them into sub-budgets. For example, we might divide the “food” into Week #1, Week #2, Week #3, and Week #4.
We could divide it into Groceries, Restaurants, Workplace, School, and Family To-Go. The good part is that we entirely control our hardcore budgets.
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What is the purpose of devising a hardcore budget? We use hardcore budgets to give us more freedom over the things we love.
I know that “budget” and “freedom” usually don’t combine effectively. However, we can focus on what we love by getting to the nitty gritty of our spending.
The idea is to allocate the resources we need to the areas we want. We can curb unnecessary spending by tweaking our budgets to suit our passions.
Let’s say our family loves to order $40 worth of pizza every Friday night, and we have $1,000 in our food budget.
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We can factor in our $160 in pizza with a hardcore budget by adjusting our grocery and restaurant budgets. We can achieve our goals but still have fun and spontaneity.
Getting started with a hardcore budget. Building a hardcore budget from scratch is tricky because you’ll need some data and field testing.
Start with your large areas, such as food, gas, clothes, going out, and entertainment. Let’s start with our gas bills.
Let’s say we love to drive to various national and state parks on the weekends. We give ourselves $100 per week for commuting to work.
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Then, we can add another $200 per month for driving to parks around the country. Since we have a budget, we can plan our trips accordingly.
We can take a few smaller, shorter trips or one longer trip throughout the month. If we choose the latter, we can plan our weekends around being home.
The freedom to live your life. Most people don’t have a plan—for anything. That’s sad because having a plan ensures you can accomplish your events while having an emergency fund in place.
Creating a hardcore budget protects your family from unnecessary grief and gives them more options to achieve success.
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Let’s say we create a hardcore budget for Christmas. We give ourselves $1,500 for everything related to Christmas.
We can split this into $500 for decorations, $500 for household gifts, and $500 for gifts outside the household.
Now, we can list all the decorations we want, gifts for our siblings, and everyone we need to send gifts outside the family.
We can focus our $500 outside the family on those in need—for others, we can send a family photo and greeting card.
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The magic of having budgeted fun is allowing our creativity to shine. Let’s take a look at our entertainment budget.
How can we entertain ourselves? People love to go to concerts, comedy shows, and wine tastings to entertain themselves. How many of these people have a hardcore budget for entertainment?
Let’s give ourselves $800 a month to entertain the family. We can divide it into weekly fun ($200) or $500 for significant events and $300 for extra fun.
This way, we have a budget if we want to go to Disneyland or Knotts Berry Farm. Life is about give and take, not getting everything we want.
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Going over budget. What happens if we go over budget? We should have extra money from our other budgets to cover the expense.
We need to analyze what caused us to go over budget. Did inflation cause prices to rise more than we expected?
Did we overspend at the amusement park because we wanted to give our kids more than we allocated? Did we get emotional and spend it on a whim?
We don’t create a budget to make ourselves feel bad; we want to gain control of our spending. Life is about having grace for ourselves and others.
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We can learn from all experiences. In the Marines, we would conduct an after-action report after each exercise to highlight lessons we learned.
Look at each month as a learning experience towards making a better household. Eventually, you will have your budgets on lock and find extra money in each account.
You go as far as you want. Leave this budget generic if you love being spontaneous with food, cooking, or eating.
However, if you know gas is a problem, focus on this topic. You are in complete control. If you have an Amazon habit, you may want to break it down into various budgets.
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“What you measure, you manage.” These are words to live by. You will gain control of this area when you assign a hardcore budget to something.
Conclusion. The media loves to use the word “independence.” They want you to wake up and spend $1,000 on a whim or because of an emotion—they win in this scenario.
However, waking up and knowing your limits gives you more freedom than you can imagine. Let’s say you have $200 per week for entertainment.
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Last week, you visited your folks and only spent $20. So this weekend, you have $180 plus $200 to spend on yourself. Doesn’t that give you a much better version of freedom than using your credit card on a whim?
I used to spend on whatever I wanted. Then, I converted to a hardcore budget. Most of the time, I don’t buy anything because watching my money stack up throughout the month is fun.
I put whatever I have left over into my high-yield savings account. It may be boring, but I love having this level of control of my life. It makes me free! Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. 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. All Right Reserved Military Family Investing
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