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Personal Budgeting

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Personal Budgeting

Monthly Plan

Here's one way you can budget and manage your money.

Keep in mind this is just one way to budget. You’ll want to adapt it and adjust the

Questions for you⁠

to fit your personal/family needs and goals. What worked for me might be different than what works for you.

How does this work in practice?

Every month, you first set aside enough money to cover your expected

@Necessary expenses⁠

Emergency Fund

Until you have an adequate Emergency Fund, you’re setting aside less for

@Optional/fun expenses⁠

and

@Long-term savings/investments⁠

Once you have a suitable Emergency Fund, you’re in a safer spot financially, so you can afford to spend more on

@Optional/fun expenses⁠

and save more in

@Long-term savings/investments⁠

. Yay!

If you want, you can put your Emergency Fund into a savings account to keep it separate from the rest of your

@Necessary expenses⁠

account.

It’s up to you what these percentages are. You can adjust them on the

Questions for you⁠

tab.

Make sure to treat credit cards as if they were debit cards linked to one of these buckets. If it helps, you could have one card for

@Necessary expenses⁠

and another for

@Optional/fun expenses⁠

What are the steps to do this every month?

Have your

$5,400

⁠

income deposited into your

@Income⁠

account.

The entire balance of this account gets transferred to the other accounts each month.

At the beginning of each month, transfer

$1,200.00

⁠

from your

@Income⁠

account to your

@Necessary expenses⁠

account (based on your estimates for your monthly

@Necessary expenses⁠

Split the remaining

$4,200

⁠

in discretionary income like so:

if you have high-interest debt (like credit cards):

transfer

20%

⁠

to your

@Optional/fun expenses⁠

account

use the rest to pay down the debt as fast as possible

if you have less than

$7,200 (6 months)

⁠

in your

@Necessary expenses⁠

account:

transfer

$2,100.00 (50%)

⁠

to the

@Necessary expenses⁠

account (in addition to the $ from step 2)

this helps you build the Emergency Fund you said you wanted on the

Questions for you⁠

tab

it also helps cover occasional unexpected

@Necessary expenses⁠

and loss of

@Income⁠

transfer

$840.00 (20%)

⁠

to your

@Optional/fun expenses⁠

account

you’ll have more for fun and luxuries once you’ve built your emergency fund

transfer

$1,260.00 (30%)

⁠

to your

@Long-term savings/investments⁠

account

if you have more than

$7,200 (6 months)

⁠

in your

@Necessary expenses⁠

account:

transfer

$2,100.00 (50%)

⁠

to your

@Optional/fun expenses⁠

account

transfer the rest to your

@Long-term savings/investments⁠

account

Go about your month (and try to stay below your budgets so there’s money left over!)

any leftover money in your

@Optional/fun expenses⁠

account can either (your choice):

stays there for future fun/optional expenses, or

gets moved to

@Long-term savings/investments⁠

so your savings can grow faster!

Once in a while, think about these things:

Once you have saved enough money in your

@Long-term savings/investments⁠

account, consider investing it. This will help you build long-term wealth! I put a few of my favorite options on the

Investing⁠

page.

By spending less on necessary expenses (for example, a cheaper place to live), you get more you can spend on

@Optional/fun expenses⁠

and your

@Long-term savings/investments⁠

grows faster. When something unexpected happens, like a flat tire or an unexpected medical bill, you might want to save for a bit to rebuild your emergency fund.

If you have a lot of extra money in your

@Optional/fun expenses⁠

account, congratulations on your financial responsibility! Perhaps consider moving more of this money to your

@Long-term savings/investments⁠

If you’re having trouble meeting your goals, check your expenses (particularly recurring expenses). Are you spending your money on what is most important to you?

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