The 5-rule budget that WORKS.

You might have grown up in a place where people talked about money. Or, you might have grown up in a place where you had no idea it was possible to save more than you earned each month.

For me, I had no idea.

Reflecting on the past, I am grateful for being exposed to all the terrible ways of living with money because, at the very least, I learned what not to do.

This is a basic way to create a budget. It will help you take control of your finances. You can learn from my mistakes and not have to spend years figuring out what actually works. You won't need to be frugal and want to save every last dime. You also will be able to spend money on things you enjoy doing.

So beginning, like everything in life you need to have some sort of ideal life that you want to live. And finances play a big role in this.

What do you want to drive, what do you want to wear, do you want to rent or own, where do you want to live, what kind of wedding do you want to have? You get this gist. Have a plan and create a solid WHY behind these things you want in your life.

Rule Number 1: Avoid DEBT.

I can not stress this enough if you have debt, get out of debt and do not look back. If you are in debt and have no savings, get to at least $1k in emergency savings. It's for car trouble, vet visits, or whatever else is around $1k.

Then, after paying your bills throw everything else at this chunk of debt.

If it's something like credit card debt. Get another credit card if your credit allows. Then, transfer the balance to an interest-free credit card. Make sure you can pay it off without adding to your debt.

I only have debt on my mortgage, that is it. I think it's fine to have a car loan. I would still avoid them if you could save money instead. But, it's okay to have a car loan if your payments are not more than 8% of your monthly pay and you can pay it off within 48 months.

If you do not have debt GREAT, never look back and avoid consumer debt at all costs. The only debt you should ever have is a mortgage, and MAYBE a car loan if it fits with what I said above.

Rule Number 2: Fixed Income MUST not be more than 60% of TAKE HOME pay.

This is so imperative that you do not go over this number.

This is where 99% of people are in crippling debt. They live paycheck to paycheck and blame everything but themselves for why they are broke.

Fixed costs cover housing, utilities, internet, subscriptions, gas, and car and phone insurance. All this should not exceed 60% of your after-tax income.

To show how to do this, we will use this visual. The average U.S. salary in Q4 of 2023 was $59,384. This data is from the U.S. Bureau of Labor Statistics.

And I live in Florida so no state tax, but I will account for taxes in general. You can google a tax calculator for your specific salary and where you live. Stupid simple.

After taxes is $49,516 annually divided by 12 for a monthly take-home pay of $4,126

I personally use: Florida Paycheck Calculator - SmartAsset

So, at the very top end, this should be no more than $2,475 a month for your fixed costs.

If you stay under this good, and before you go crazy saying that is not enough to live off of I know. I've been there, done that, and have many t-shirts and awards.

I have other guides in my newsletter where I teach you how to add extra income of up to $10k a month only working a couple extra hours a day.

Rule number 3: Save 5-10%

This is important! You need to save at least 3-6 months of living expenses. So, the amount we just went over, $14,850, is for a solid emergency fund.

I have a 1-year emergency fund that just helps me sleep extra great at night. So, my ultimate advice is to get to this, but what matters at the end of the day is what is YOUR dream for your LIFE. That's all that matters.

Once you have a fully funded emergency fund place it in a High-Yied-Savings-Account. (HYSA)

I personally use the AMEX which has a 4.35% minimum no direct deposit is required. It's awesome I love American Express, so many perks.

Again, you can do a quick Google search and set up this account within minutes on your phone. You will be able to earn as of April 2024 4-5% APR through many online banks.

Once you have done this, you can start splitting up your money. You can divide it for vacations, weddings, education accounts, or whatever you want. Once again it is your dream LIFE on how YOU spend money make it count!

Rule number 4: Invest 10%

If you want to create true wealth do this.

Find an index fund like the S&P 500 that returns on average around 8% this is what this index fund has done.

It is the FOR SURE way to become a millionaire over your lifetime.

You must do this as soon as possible, time works for you or against you in the realm of investing.

Make sure it is working for you. You do not want to retire broke. Leave an inheritance to your children's children.

You can also invest 10% of your portfolio in something that you like, such as specific stocks or crypto. But, I highly recommend not investing your whole portfolio in crypto or single stocks. It is, in my opinion, pure gambling.

Rule number 5: Spend 20-25% on WHATEVER

This is my favorite rule other than investing.

Spend on whatever you want that way you can live your life spending your hard-earned cash doing the things you are into.

I like eating out like most people so most of my spend goes to this fund and experiences in the area I live.

Follow these 5 rules. I promise you will live the life you want by building and enjoying the money you earn. Spend it on what you enjoy.

Coaching:

If you need one-on-one help, you can always book a call with me, and I can help coach you through it in your specific area.

Click this link to book a free 1-on-1 call: https://t.co/6DdNePHD8Z

My other newsletters.

How to make $10,000 a month flipping couches. (beehiiv.com)