Create-A-Budget – WorldOfLuke

Create-A-Budget...

A budget is a plan used to track where each dollar you earn goes.

Budgets commonly include tracking rent payments, groceries, gas, insurance, and other personal expenses.

If you are serious about saving money and building your wealth a budget is a MUST!

Knowing where you spend each and every dollar you EARN gives YOU the power needed to eliminate unnecessary purchases.

To start budgeting you must first know exactly how much money you have coming in.

Once you know how much you make, you need to determine how much you spend.

Income – Expense = Free Cash

There are tons of apps that can help you start tracking and saving your money.

Use these to help automatically keep up with spending and investments.

Determine how much money you make on a monthly basis after taxes (ex. $5,000/month)
Calculate your fixed expenses (payments made every month). Common fixed expenses include housing, car payments, loans, phone, internet, insurance, etc. (ex. $3,000/month)
Now take your monthly fixed expenses and subtract it from your monthly income ( $5,000 – $3,000= $2,000) This number is your discretionary income, or the amount left over after paying the bills.
Now that we know how much free money you have each month lets figure out where it should go!
The rule of thumb is to save at least 10% of your monthly paycheck, but let’s shoot for 20%! In this case that would be $1,000 a month ($5,000 x .20 = $1,000) This should be split between an investment account of some sort and an emergency savings account.
Congratulations! You’ve started putting money away for the future now know you have $1,000 left to spend on whatever you want! If you are serious about building wealth this money is perfect for some of the higher risk investments like starting your own business 🙂

Now that you know where your money is going, lets figure out how to make it grow!

Its time to learn about the world of investing!