I’m going to talk to you a little bit about how to budget money and how to save money.
You’ve got to make sure that you’re putting money aside every single month, but the problem is that most people they don’t budget their money and manage their money in the first place.
If you are living that way, if you’reliving month to month, paycheck to paycheck and you’re not saving any money, then you’re stuck in what is called the rat race.
The rat race basically means that you’re never going to be able to get ahead because you’re just repeating the same cycle.
Really the most important thing that you’ve got to understand before you’re even in a position where you can invest money and all that sort of stuff, is you’ve got to make sure that you manage your money and you set up a budget.
You’ve got to decide what that is,what is realistic for you but a budget is a way of essentially sacrificing in some way in your life,which is a very important thing to understand.
When I had kids one day or a marriage or a family or whatever it is that I was going to struggle at that point in my life.
You can’t just live for and think about today, you’ve got to think ahead and prepare for the future and that means sacrificing some instant gratification.
You’ve got to delay gratification and make a sacrifice.
Budgeting you’ve got to decide how much is your budget going to be.
Because the first place to start is you’ve got to know exactly where you’re at.
You’ve got to know exactly where your monthly expenses are and how much it is that you’re spending on a month to month basis.
I do recommend you go back several months because you’ve got to see what the pattern is.
Get out your calculator and add up exactly how much you spent on a month to month basis on your rent or on your mortgage.
Again, go back several months know exactly what that is.
There might be some months you might have spent more than what your bill traditionally is but you’ve got to know exactly what that is.
You’re going to look at your Internet bill, your gym membership.
You’re going to look at how much money you’re spending on a monthly basis buying groceries,eating out, entertainment such as going to movies or playing video games or whatever that is.
You’ve got to look through all your transactions or statements and add exactly what that is to know exactly where you’re at.
Whatever it is guys you’ve got to have a spreadsheet or something that’s tracking everything.
You know exactly what you spent every single month for the last several months.
Then what you’re also going to do is going to add up and track exactly how much you’re making every month as well.
That’s exactly what you make from your job, maybe from your business, maybe from other income streams that you might have such as investments, such as … I don’t know things that you might be doing on the side, but you’ve got to makes ure you track all of that as well and you’ve got to know exactly what that is.
Basically by doing this exercise you’re going to have a list and you’re going to know exactly what your expenses are and then you’re also going to know exactly what your income is.
You’re always going to make sure that your income is higher than what your expenses are and you have what is called a positive cash flow.
Very important,that’s what’s going to allow you to save money every month.
That’s what’s going to allow you to invest, to build a business,to do whatever it is that you want to do and have that savings for whatever it is you want to invest in.
If you find yourself your expenses are too high, then you’ve got to set up the budget.
You’ve got to decide again how much do I want to save every month? Is it one hundred bucks a month, is it a thousand bucks a month and then look at ways that you can cut down and lower your expenses.
You might decide, my budget is that I’m not going to spend more than two hundred dollars a month eating out.
You’ve got to enforce that, that’s what the budget is.
I’m not going to spend more than two hundred dollars a month on clothing.
I’m not going to spend more than X amount of money on transportation or on alcohol or whatever it might be that you’re spending money on.
Which means that every single week,you’re going to want to go through your credit card statement, your bank statements, everything and add everything up and put them in the categories that you have set up in your spreadsheet.
If you leave it every month they’ll be a lot more transactions and you’re going to procrastinate you’re not going to do it.
Then the other piece is I highly recommend that you use a credit card or a debit card for all your transactions because if you’re spending cash on things, it’s very hard for you to track that whereas if you’re buying everything on your credit card, then you’re going to be able to see everything.
You’re going to see where your money is going and be able to go through all those transactions.
You can call your credit card company and say, “I want to have a limit of a thousand dollars, of two thousand dollars,” or whatever that limit is to ensure that you don’t overspend that, but if you’re doing that every week you’re tracking things, you’re going through your statements,you know exactly where you’re at.
You have that awareness and you’re ensuring that you have a positive cash flow then that’s going to give you the ability to save money and you’re going to have a better sense of control and confidence over your life of managing your money.
It’s very important that you do this as early as possible because if you can’t manage what you currently have,then there’s no point going out thereto try to make more money because if you can’t manage two thousand dollars a month, five thousand dollars a month, if you make ten thousand or more, if you make a million dollars a year, you’re going to be in trouble if you don’t know how to manage that because then you’re going to get into a serious financial trouble.