Budget
Everyone’s least favorite word.
But here we are.
I promise to do my best to make this as fun as possible.
So, in order to build wealth, your first step is to be.you.dee.gee.e.tee. That spells budget.
Ok, sorry that was equally as annoying as it was lame.
So, in order to know where to put your money, you first need to know how much money you have.
To find that number, you take your total income and minus what you spend every month.
Nerds call it: gross income - expenses = net income
There are tons of softwares that can take your financial statements and process them into categories to find this number.
Call me old fashioned but I like to do it myself. Fuck the mint.com’s of the world.
Sometimes, I do it on excel, other times I write it on a piece of paper.
I just write categories like “Amazon purchases”, “Groceries”, “Fun Shit” and then write transactions down under that category and add them up.
As long as you do it, it doesn’t matter if it’s pretty. It just needs to get done.
Throw on your favorite background TV show or movie and do this at the beginning of every month.
It will never take longer than 30 minutes. Think of it this way: 30 minutes for peace of mind.
I’m happy to announce that after SIX years of doing this, I no longer feel any negative emotions towards my spending. Ok, except when I found out that I spent $6,000 in February of 2024. That one hurt.
Here is my template for excel that I type everything into. I included my February 2024 spending so you can feel better about yourself.
Once you have your expenses laid out in categories, you can get really real with yourself about what rules you’re WILLING to set for yourself. Your rules will differ depending on your goals. Before I was debt free, I would essentially say “not now” to anything that wasn’t my debt. I did this for 2 years. I was a total narc about spending. I’m not saying you need to do that, cause I realize my neuroticism isn’t easily duplicatable.
Now that I am debt free, and my income after taxes is $6k per month, these are my rules for each category:
LIVING: My maximum for rent + utilities + gym + coffee shops/office + massages every month is $2,000. Remember I travel full time so I’m always in airbnbs and hostels so the cost of rent/utilities fluctuates. Based on that fluctuation, I allow myself the surplus to go towards coffee shops (which I consider to be my office), workout classes, and being rubbed down by attractive people.
EATING OUT: When I was living in Mexico City, I gave myself 1 month of eating whatever I wanted which ended up being $1,500. The rest of the time, I try to keep this category to $300-$400.
GROCERIES: Food is medicine so this category is unlimited, but it’s normally around $400-$700.
EXPERIENCES: Depends on where I am in the world (or where I’m flying to), but normally $100-$1,000…lol
I put necessary shit in here too, like uber and amazon, not just a hot hair balloon ride over the 3rd largest pyramid in the world
STUPID SHIT: car insurance, dental insurance, spotify, squarespace subscription, mouth tape, etc comes out to $300
LIVING + STUPID SHIT = fixed expenses (aka expenses that remain the same every month) ~$2,300/month
EATING OUT + GROCERIES + EXPERIENCES = variable expenses (aka expenses that vary every month) ~$700-$1,500/month
So, every month, on average, I spend between $3k-$4k. My gross income is $6k, which makes my net income $2-$3k/month. Net income is the money you’re actually making every month because I’m deducting all the shit I need to live.
That means I actually make $2,000 to $3,000 per month. My goal is to make $10,000 per month, net. Well my goal is it make a billion per month, but let’s start with $10k.
So, what do I do with this 2-3k every month? Detailed explanation of it is in “My Financial Strategy Blog,” but here’s a quick breakdown:
I use the bucket system, so I only move on to the next step once I complete each number:
I make sure I have 20k in a High Yield Savings Account (I use SoFI)
I put $580 in my Roth IRA every month
I put $80 in my 401k
And anything remaining, I throw into crypto, which ends up being around $1000-$2000
Any questions? Feel free to text me and I can help explain anything to you.
ADD LIABILITY CLIP HERE.
