How Do I Make A Budget And Stick To It?
Summary
TLDRIn this segment, Sam discusses the importance of budgeting, especially for new parents. He advises creating a budget as a 'guardrail' to prevent overspending, not a 'straitjacket'. He suggests setting limits on categories like groceries and entertainment, with a clear 'why' behind these limits, such as providing a better life for a newborn. Sam recommends using the EveryDollar app to track expenses and emphasizes that a budget gives permission to spend within set limits, fostering a sense of control and purpose in financial planning.
Takeaways
- 👨👩👧 Congratulations on the new baby! It's a great motivator to start focusing on financial planning.
- 💼 A budget is not a straitjacket but a guardrail to keep financial decisions on track.
- 🧮 Start by estimating your spending on categories like groceries and entertainment, then adjust based on actual expenses.
- 🛒 Be aware that you likely spend more on groceries than you think, so consider increasing your initial budget for that category.
- 🎬 Set specific spending limits for each category, like $50 for entertainment, to help control overall spending.
- 💡 The reason for budgeting should be a 'why' that is meaningful, such as providing for your child's future.
- 🚫 A budget helps you say 'no' to unnecessary expenses and 'yes' to those that align with your financial goals.
- 📱 Use budgeting tools like the Every Dollar app to track and manage your spending throughout the month.
- 🤝 Ensure both you and your spouse are on the same page regarding the budget to maintain consistency and commitment.
- 🌟 Having a clear and noble financial goal, like ensuring a good life for your child, can make sticking to a budget easier and more rewarding.
Q & A
What is the main concern of Sam in the script?
-Sam is concerned about his financial standing, especially after having a baby, and is looking for advice on how to create and stick to a budget.
What is the first step Sam should take in creating a budget?
-The first step is to sit down with his wife and decide on the amount they want to spend in various categories such as groceries and entertainment.
Why does the speaker suggest increasing the grocery budget initially?
-The speaker suggests increasing the grocery budget initially because most people underestimate their actual spending, and it's important to accurately reflect real expenses.
What is the purpose of setting a specific entertainment budget?
-Setting a specific entertainment budget helps Sam and his wife prioritize their spending and align it with their bigger financial goals, such as getting out of debt and providing for their child.
What is the significance of having a 'good why' when creating a budget?
-Having a 'good why' provides a compelling reason for sticking to the budget, making it easier to resist overspending and stay focused on the long-term goals.
How does the speaker describe the role of a budget in financial management?
-The speaker describes a budget as a 'guardrail' that prevents one from going off track financially, rather than a straitjacket that restricts all spending.
What tool does the speaker recommend for tracking the budget?
-The speaker recommends using the 'Every Dollar' app, which is free and can be set up in about 10 minutes to help track and manage the budget.
Why is it important for Sam and his wife to be on the same page regarding the budget?
-Being on the same page ensures that both partners are working together towards the same financial goals, which is crucial for the success of the budget and maintaining harmony in their relationship.
How does the speaker suggest Sam should feel about the money they do spend within the budget?
-The speaker suggests that Sam should feel permission to spend within the budgeted limits, without guilt or weirdness, because it aligns with their agreed-upon financial plan.
What is the ultimate goal of budgeting according to the speaker?
-The ultimate goal of budgeting, as per the speaker, is to achieve a bigger, more noble goal than simply buying more things, such as creating a great life for the family and the new baby.
Outlines
👨👩👧👦 Starting a Family Budget
Sam shares his concern about his financial situation after the birth of his first child. He seeks advice on creating and sticking to a budget. The response emphasizes that a budget is not restrictive but rather a 'guardrail' to prevent overspending. It suggests setting limits on categories like groceries and entertainment, and adjusting the budget based on actual spending. The budget is framed as a tool to achieve bigger goals, such as getting out of debt and providing for the child, rather than as a punishment. The importance of tracking expenses and having a shared understanding with the spouse is highlighted, along with the use of budgeting apps for convenience.
Mindmap
Keywords
💡Budget
💡Financial Standing
💡Guardrail
💡Groceries
💡Entertainment
💡Debt
💡Every Dollar App
💡Goal
💡Permission to Spend
💡Infinite Money
💡Family Tree
Highlights
Sam starts the conversation discussing the importance of budgeting after having a baby.
A budget is described as a guardrail, not a straitjacket, to prevent financial missteps.
The first step in budgeting is to agree on spending limits for categories like groceries and entertainment.
It's suggested to initially overestimate grocery spending to accurately track actual costs.
The reason for limiting spending should be clear and agreed upon by both partners.
The goal of budgeting is to achieve a better life for the family and the new baby.
Budgeting helps to prioritize spending and avoid unnecessary purchases.
EveryDollar app is recommended for tracking and managing the budget.
Budgeting is about admitting that everyone has limits on their spending.
A budget provides permission to spend within agreed-upon limits without guilt.
The importance of being on the same page with your spouse regarding financial goals is emphasized.
Having a clear 'why' for budgeting, such as providing for a child, can motivate adherence to the plan.
The conversation concludes with encouragement for the listener's commitment to budgeting.
Transcripts
Sam starts off this hour in Indiana hi
Sam how are you
better than I deserve what's up so my
wife and I we just had a baby here a few
months ago our first one and after
sitting down and looking at on moment
and that those near so some I've gotten
fairly nervous about you know where my
financial standing is and I guess my
question is how do I make a budget and
then be able to make myself and my wife
you know make ourself stick to it okay
it's a good question the great news
about having a baby in congratulations
is it makes you get serious about stuff
like that and starting to get you get
your act together on some things that's
very cool I'm glad I'm glad y'all are
doing that okay so number one when you
do a budget it is um it is not a
straitjacket it is you telling you what
to do okay okay so it's a guardrail it's
don't run off the road and so you you
the two of you sit down and say for
groceries this month we want to spend X
by the way as a side note whatever you
think you're spending on groceries are
spending more so the first month go
ahead and beef that one up okay but okay
we're gonna spend X on entertainment
okay I'll just make up another 50 bucks
okay we're just gonna put $50 in the
entertainment category and then what you
do you know the two of you are in
agreement that the reason we're limiting
our entertainment spending to $50 is so
that and so that's a big deal we can get
control of our money get out of debt
create a great life for the new baby
and so the great life for the new baby
is and change your family tree is the
goal not punishment for entertainment
sure thing and so it makes it really
easy it's like when you look at it and
you know we're at $40 and to go this
movie costs another the
dollars and we don't have that we got
$10 left in the budget we can't go the
movie because we decided that it was
more important to straighten our family
out for the good of our child than it is
for us to entertain our butts off mm-hmm
and so you are limiting you and then so
you and then of course you write it out
and you keep up with it and you track it
throughout the month and ever the every
dollar budget will do that for you okay
get to get that every dollar app it's
free and you can build it in about 10
minutes
it's all it takes okay and you'll be
able to you know that both of you will
have it on your phone and you can look
at it and keep up with it and you know
just go we don't have that so the answer
is you know you have to everyone has a
limit on everything a budget is just
admitting it mmm because no one has
infinite money right and so you know you
just say okay at this point we're not
gonna spend any more because we believe
in a bigger goal a more noble goal than
simply buying more crap at the grocery
store all right or I need this shirt
that's on sale or whatever it is right
and so right but then the interesting
thing is the things you do spend on
you've given yourself permission to do
that so you don't feel weird or guilty
about it right so like my daughter
Rachel Cruz who teaches Ramsey
personality teaches on budgeting all the
time says a budget is permission to
spend okay because you said we're gonna
spend this much on clothes and so as
long as you don't go over that amount
then you know you feel like you're a
hero and you bought clothes instead of
like okay what do you spend there to
store men you know it's like ands but
we're on the same page we're working
together so you need a good why you got
it good why it was born the other day
you have a wonderful wife right and you
need to be on the same page with your
spouse and a game plan and then have
your have your guard rails laid out and
then stick to them so very good start
very good start honor to have you in our
audience
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