3 Minute Read
Hollywood business managers get paid to keep their wealthy clients from buying things they can’t afford—like tropical islands and Hard Rock Cafes. Rough life, right? But while a celeb’s budget might be big (like really big), there’s still a limit to what they can spend.
Just ask Kanye West, who announced earlier this year that he was $53 million in debt. The Twittersphere went ballistic. People couldn’t believe a multimillionaire could be roughly twice his income in debt.
But Kanye’s not any different from the rest of us. According to PEW research, roughly 80% of Americans are in debt of some kind.
And if you aren’t making a budget, you’re probably blowing a portion of your money too. The truth is we all need accountability when it comes to our income. No one is above a budget.
The truth is we all need accountability when it comes to our income. No one is above a budget.
So if you’re new to budgeting, or just need to get back into the swing of things, here are four keys to making your money behave:
1. Write down your monthly income.
Whether you earn $2,000 a month or $2 million a month, begin with your income in mind. Be sure to add money you’ve earned from freelance gigs and side jobs as well. It all counts!
2. List all your expenses.
Include everything. Think mortgage payments, tithe checks, electric and water bills, vet care, restaurants, gasoline, online streaming, gifts, debt payments, vacations, and household supplies. Basically, if it gets your money, it gets a place in your budget.
Also, write down how much you’re putting away in savings each month. This might include your emergency fund, car savings fund, retirement account, Christmas gift fund, or kids’ college accounts.
3. Do the math.
If you’re using a pen and paper, grab your calculator. If you’re using our free online budget tool, EveryDollar, sit back and let us do the calculations for you. Either way, it’s math time!
The end result of your budget should always equal zero—as in, you’ve given every dollar a job to do. If you have money left over, put it toward one of your money goals, like paying down debt or investing in your retirement. If your budget is in the red, take a second look at your expenses. Where can you cut back? Start with non-essentials like eating out, coffee cash, or trips to the movies. Once you hit zero again, you’re golden!
Related: 5 Small Budget Cuts That Equal Big Savings
4. Track your expenses.
Budgets are only as good as their managers—that’s you. When you buy $200 worth of groceries, for example, you must tell your budget. Then you’ll know how many more organic bananas and chocolate-peanut butter powerbars you can afford for the rest of the month.
And if keeping receipts and manually inputting expenses doesn’t sound fun to you, try EveryDollar Plus. It does all the work for you by connecting to your bank. All you have to do is drag and drop, and you’re done! Couldn’t be easier.
Make It Happen With a Budget
When it comes to budgeting, no one is exempt. Not rich people, not poor people, and definitely not middle-income people. Everyone needs a plan—even the ultra-wealthy.
If you want to be successful, you must make a plan. The same is true for your money.
Local experts you can trust.Find an ELP