Chapters
Shownotes Transcript
- What's up guys, I'm George Camel and today we're talking about a gross six letter word that most people hate using. Nope, not moist, that's five letters. I'm talking about a B-U-D-G-E-T, a budget. And unfortunately the word budget has gotten a bad rap, kind of like Canadian bacon. Yeah, it may look like a tongue chilling next to your eggs and toast, but it's actually quite delightful if you don't compare it to its better half, American bacon.
We just do everything better here. Well, except soccer, but it's fine. We're good at other sports. Well, budgets are the same way. A lot of people think a budget is tedious, overwhelming, and will limit their freedom to spend. And this is America. No one limits our freedom. Listen, I see you driving around in your dually pickup truck with the Hemi, with that license plate that says, don't tread on me. Listen, no one's trying to tread on you, bro. We're all scared of you. Relax. Golly.
Which is why it's not shocking that six out of 10 people in America still don't do a monthly budget. But here's the truth. A budget doesn't limit your freedom. It gives you freedom. It's an intentional spending plan. That's all it is. Now, the point of budgeting is not to get a gold star for being a nerd. It's to have margin to accomplish your financial goals, like paying off debt, covering emergencies, investing for the future, and living your best life. Now, I get that making a budget might seem overwhelming at first, or maybe you tried budgeting in the past and you didn't stick with it.
but don't judge the budge just yet. I'm gonna show you the strategy that I personally use to budget my money, the same strategy that helped me go from broke to millionaire, and I'm gonna give you some tips to make the most of every single dollar. But before we start crunching the numbers, take a moment to crunch that like and subscribe button. Love a good crunch. ♪ That's why I love Nestle Crunch ♪ Now while you're crunching, share this video with someone you would love to do crunches with. All right.
There's so many budgeting methods out there, and it's probably one of the reasons you haven't stuck to one. You've got the reverse budget method, the pay yourself first method, the 50-20-30 method. Well, forget all those. Out the window. They're gone. We don't need them. The only budgeting method you need to know about is a zero-based budget.
Now, a zero-based budget simply means that your income minus your expenses should equal zero. Brilliantly named. Just absolutely brilliant. So if you make $5,000 a month, everything you give, save, invest, or spend should add up to $5,000. Every dollar that comes in has a purpose, a job, a goal. We don't want those dollars unemployed hanging out on the anti-work subreddit, okay? We got to put this money to work for us since you worked hard for that money. ♪ It was hard for the money so you can ♪
Don't act surprised that there was a Donna Summers reference. You knew there was going to be a Donna Summers reference in here. Now, to be clear, this doesn't mean that you have zero dollars in your bank account. It just means your income minus all of your expenses equals zero. Make sure to have some buffer in your checking account so that you don't overdraft. Now, you can do this the old fashioned way with a sheet of paper or an Excel spreadsheet, but I'm going to use the budgeting app
Every dollar. It's super easy and it does the math for you because let's face it, most of us tapped out of arithmetic around the time the order of operations entered the chat. And don't get me started on invisible numbers. Where did they go? Where are you? So I'm going to sign up from scratch to show you exactly what this process will look like for you. I'm going to use my favorite email address, megadonnasummerfan at gmail.com.
Don't look at my pa- Don't look at my password. It's none of your business what my password is. First and last name: George. Camel with a K. Don't wear it out. So for this example, I'm gonna pretend I'm a single person making the average household income in America of 70 grand gross pay. That's about 48 grand after taxes or about four grand a month of take-home pay.
I know, welcome to taxes. So first we're going to list our income at the top. This includes your regular paychecks and anything extra you plan on bringing in during the month through maybe side hustles or child support income. Now, if you've got some irregular income, don't zone out on me. A zero-based budget still works for you. It'll just look slightly different. You're going to have a more prioritized spending plan, and I will link an article below that walks you through how to budget with an irregular income.
And comment below if you want to see a video on that in the future. All right, so paycheck one is $2,000. Paycheck two is $2,000. I now have $4,000 left to buy.
to budget. So next up, once we have our income listed at the top, we're going to list all of our expenses. Think about everything you spend money on during the month. So first I'm going to go with giving, and I like to give 10% of my income. I'm going to do that to my local church. That's $400 right there. Boom, right off the top. Next up, we have savings. Now your savings goals depends on where you're at in the Ramsey baby steps, which is what I follow. So if you have an emergency fund of three to six months of expenses, you're in a great spot with savings.
If not, you want to make that part of your plan. And if you're in debt, $1,000 is fine to have for your emergency fund until your debt is paid off. So right now, I don't have any savings plan. So I'm going to leave that at zero. I'm also not going to invest right now because I've got one singular goal, and that's to get out of debt. So I'm pausing my investing with my work, my employer, my 401k, zero bucks right now until we get out of this debt.
Now, the big expenses we want to take care of are the four walls. This is food, utilities, housing, and transportation. Now, with housing, I recommend no more than 25% of your take-home pay going towards your rent or your mortgage. You also got to think about things like electricity, gas, water, internet,
trash, HOA, you name it. So I'm gonna say that my rent is $1,200. My water bill is 50 bucks. My gas bill, we're gonna call that exactly $37. My electricity bill, little higher at 129.
My cable bill, do people still have cable? I don't have cable. I have Netflix, so I'm skipping that. Oh, you don't want cable anymore? So I'm going to go ahead and change that to internet. $50 for internet. Great. And then trash, we'll call that $15 a month for the trash.
So I pay 350 bucks for gas. We're gonna add that in there. And then we get to food. This is an exciting one. We all love to eat and it's where we tend to overspend the most. So when it comes to groceries, we're gonna say, you know, it's just me and the dogs. So I don't need a whole lot. We're gonna say 500 bucks a month.
is gonna get me by. Let's move to restaurants. Now, if this was me, I'm in baby step two trying to pay off all this debt. I've got a priority right now to pay off that debt. And that means I'm gonna sacrifice. I'm not gonna eat out for a while while I pay off this debt. I'm gonna eat at a great restaurant called Mi Casa, where it's a culinary experience to cook my own food. Have you tried the lasagna?
It's my favorite. I can use chat GPT to make my meal recipes. It's amazing. We live in the modern world guys get with it All right, let's move down to the personal category. This is the place where I want to trim the most Okay, I want to really limit this so subscriptions. I'm just going to keep my netflix account at 12 Everything else it's got to go. Hi carly with paramount plus. We'll see you later girl. All right We got some priorities here. Uh, I do have a phone bill. Uh
of 80 bucks a month. So I'm gonna type in 80 bucks for that. Clothing, I got enough clothes. Really, I'm fine for a little while. We're gonna try to not spend money on clothes and we're gonna limit our fun money down to let's say 50 bucks a month. I think we can make that work. Now hair and cosmetics, you know I gotta have my hair products. So we're gonna call that a necessity at $20 a month for all the things we need
for that self-care. And there we go. We still have 1107 left to spend. I do have a dog, so we're going to throw in some money for pet care. I'm going to call that 50 bucks a month. Childcare, no kids. Entertainment, we already have our fun money, so we're good. Miscellaneous, I don't have any plans, but we're going to add 50 bucks in just to get those little ankle biter miscellaneous categories. Now we got the gym.
So we're gonna call that 10 bucks a month over at Planet Fitness. Now there are some other essentials you gotta think about too, like different types of insurance. You gotta have health insurance, homeowners or renters insurance, car insurance. And if anyone relies on your income, you need term life insurance. So my health insurance is 75 bucks a month. My life insurance is going to be another 25 bucks a month. My auto insurance is gonna be 80 bucks a month. And I do have renters insurance at $17 a month. And because I'm...
I don't want identity theft to happen. I'm going to add that. That's going to come out to eight bucks a month to protect me in case of identity theft. Now, you'll notice we have $792 left and you're probably thinking, huge win. Here's the problem. We're in a pile of debt. So I got to add in my debt to this equation. And so as I add it, you'll see it's going to ask me what type of debt this is. So I've got a credit card. The current balance on that card is $2,000 and the minimum payment is $75. So we have a credit card number two.
Our balance on that one is $3,000 and the minimum payment is a hundred bucks. We're going to go ahead and add that one. And we're not done yet because Americans have a lot of debt and this person is 40 grand in debt. So we're going to add the pesky student loan. The current balance on that loan, $8,000.
Minimum payment on that, $130. Done there. Okay, student loan number two. Now on that bad boy, we've got a current balance of $12,000. And the minimum payment on that one is $170. That one's done. And there's one more debt left to pay, and that is our freaking car payment. Y'all check out my new truck. So we're going to add that in there from auto. And that's going to be car loan number...
The current balance on that car loan, $15,000. Minimum payment, $375,000.
All right, so I've added in all of my monthly minimum payments to stay on track. My budget has factored all of that in. And you'll notice that every dollar is letting me know that I'm $58 over budget. That means we are outspending what we make. So I have to make some sacrifices here. So on one side, I'm going to say we can make more. I'm going to get a side hustle and that's going to give me an extra $200 every month.
Boom, side hustles in there. Now we have 142 bucks left to budget that we can throw onto that first debt. So I'm gonna add that in. So it becomes 217 on that first credit card, giving us an every dollar budget, a zero based happy budget. Every dollar has an assignment. Now, if you don't hit zero at first pass, welcome to the majority. Practically nobody gets this right the first time. But if you're in the negative, that means you're spending more than you make and you need to get out your metaphorical hedge clippers and trim that budget.
And trim those nose hairs while you're at it. The one that's nearly touching your upper lip there. - There's something going on here and all around there. - Now that's how you make a budget, but creating it is just part of the problem. We gotta stick to it. And that starts with tracking your expenses all month long. Actually adding in what you're spending to know that you're on target, that you're on track. That means any money that comes in or goes out
gets put into the right budget line item. So when you pay the rent, subtract that from housing. When you fill up the gas tank, subtract that from your transportation or fuel. When you treat your lady to Applebee's for date night, subtract it from restaurants. And as you're tracking, make adjustments as you need to. Remember, this is your budget. Make it work for you. If the electricity bill comes in higher than you thought, tweak another budget line item to make up for it. And if the water bill comes in a little lower, then celebrate and move that money over to a current money goal or add it to a budget line item that went over.
over. Now, when the month is close to over, we're doing it all over again. But after a few months of doing this, you're going to gain some momentum. You're going to create a habit and it will become something you actually look forward to, right? Like nobody likes changing their sheets, but man, it feels good to get into a crispy, clean bed. By the way, this is your reminder, change your sheets. It's time.
It's time. Now, a lot of people wonder how their spending compares with everyone else's. And they ask if I have recommended budget percentages. And beyond parameters like keeping your housing to about 25% of your take-home pay, 10% towards giving, it's really hard to give anyone a one-size-fits-all percentage guide. Because unlike Snuggies, budgets are not one-size-fit-all.
I mean, look at me, one size does not fit all. So how much you should spend in budget categories will vary depending on your income, your family size, your location, your goals, and your lifestyle. So many things. But if you want somewhere to get started, I will link an article below on how to determine your budgeting percentages.
Now here's the deal. If you want to make any progress with your money, you need to make a monthly budget. You're the boss, the chief, the chef. Which fun fact, chef is French for boss, stemming from the word chief. And turns out Donna Summer was right all along. She does work hard for the money, so you better treat her right. And by her, I mean you.
Treat yourself by not being an idiot when it comes to money because you work too hard to feel this broke. And you have way more control over your money and your goals than you ever thought. And budgeting is the key to doing all of those things. You know that feeling when you find like 20 bucks in your old winter coat? Well, a budget is like finding a whole bunch of winter coats stuffed with 20 bucks.
And for most people, it's going to take a little while to get dialed in and to stick with it. 90 days on average. So don't give up. Get back on the budget horse. If you fall off and you miss a category or whatever happens, you can stick to this stuff and it will change the way you handle your money and help you achieve your financial goals. And if you want that free budgeting app I showed you, you can check it out at everydollar.com slash george.
That'll give you a free two-week trial and 15 bucks off a one-year premium subscription, which has features like paycheck planning, goal setting, and bank connectivity. I'll drop a link to that below if you want to check that out. And don't forget to hit the like and subscribe buttons and share this with someone special in your life. Maybe it's a friend that you want to hold you accountable to this budgeting stuff. And if you're married, you've already got one of those. It's called a spouse. Be budgeting together. This is a group effort. Share this video with them and get the ball rolling.
All right, that's it for today. Thank you guys for watching. I'll see you next time.