Is Budgeting Really That Hard?
Summary
TLDRThe speaker emphasizes the importance of budgeting as a tool for financial discipline and clarity. They liken a budget to GPS, guiding individuals towards financial goals and away from overspending. The script promotes the 'Every Dollar' app, highlighting its ease of use and the necessity of a zero-based budgeting approach where every dollar is assigned a purpose. The speaker also stresses the importance of involving one's spouse in the budgeting process and adjusting the budget as needed for a realistic and effective financial plan.
Takeaways
- 📅 Start of the year sees many people committing to financial resolutions, like starting a budget or reading financial books.
- 🗺️ A budget is compared to a GPS, guiding you step-by-step and alerting you when you're off track financially.
- 💰 The purpose of a budget is to direct your money rather than wondering where it went, promoting intentional spending.
- 📝 A zero-based budget assigns every dollar a purpose before the month begins, ensuring no money is left unaccounted for.
- 👫 It's crucial for couples to agree and commit to the budget together, as it requires teamwork and shared responsibility.
- 🔢 Expect to spend more on food than you initially budget for; it's common to underestimate this category.
- 🍽️ Separating restaurant and grocery spending can help control spending and avoid overspending on dining out.
- 📉 The first month of budgeting will likely involve adjustments and learning, so be prepared for frequent 'emergency budget committee' meetings.
- 📈 As you get better at budgeting, the need for adjustments will decrease, and you'll become more proficient at managing your finances.
- 🚫 Avoid using credit cards for budgeting; this practice can lead to increased debt and is not advisable.
- 🛠️ There are tools available, like the Every Dollar app, to help simplify the budgeting process and make it more accessible.
Q & A
What is the significance of starting financial management practices in January according to the transcript?
-The transcript suggests that January is significant because it is a common time for people to make New Year's resolutions and start new habits, such as budgeting and managing debt, to change their financial life.
What does the speaker compare the budgeting process to in the transcript?
-The speaker compares the budgeting process to using a GPS or map for navigation. Just like a GPS provides step-by-step directions and alerts you when you are off track, a budget helps you plan your financial path and alerts you when you deviate from it.
What is the main purpose of a budget according to the speaker?
-The main purpose of a budget, as described by the speaker, is to tell your money what to do instead of wondering where it went. It's a plan for spending your money on purpose and being in control of your finances.
What is a 'zero-based budget' as mentioned in the transcript?
-A 'zero-based budget' is a budgeting method where every dollar has an assignment, meaning every income dollar is accounted for with a specific expense or savings goal before the month begins.
Why is it important to involve your spouse in the budgeting process according to the transcript?
-Involving your spouse in the budgeting process is important because it ensures both parties are on the same page and agree on the financial plan. It also helps in making collective decisions and sticking to the budget, which is crucial for financial success.
What should you do if you find that your initial budget is not accurate according to the speaker?
-If the initial budget is not accurate, the speaker suggests having 'emergency budget committee meetings' with your spouse to adjust the budget. This may involve increasing some categories and decreasing others to maintain a balance.
What is the 'Every Dollar' app mentioned in the transcript?
-The 'Every Dollar' app is a budgeting tool developed to help users manage their finances easily. It allows users to build and adjust their budgets and is designed to be user-friendly.
How can someone get the 'Guide to Budgeting' mentioned in the transcript?
-To get the 'Guide to Budgeting,' one can sign up at everydollar.com or text 'GTB' to '233789'. The guide provides additional help for setting up a budget or improving an existing one.
What is the speaker's advice on the frequency of budget adjustments?
-The speaker advises that during the first month of budgeting, you might need to have several 'emergency budget committee meetings' to adjust the budget as you learn. By the third month, the number of adjustments should decrease as you get better at budgeting.
Why should you not run your budget on a credit card according to the transcript?
-Running your budget on a credit card is not advised because it leads to deficit spending, which is essentially debt. The speaker emphasizes the importance of living within your means and not spending more than you have.
What is the common mistake people make when budgeting for food according to the speaker?
-The common mistake people make when budgeting for food is underestimating their expenses. The speaker suggests that people often spend more on food than they think they do, so it's important to allocate more than you initially plan.
Outlines
📈 Embracing Financial Discipline in the New Year
The speaker emphasizes the surge in individuals taking financial responsibility in January, often driven by New Year's resolutions. They liken budgeting to using GPS for navigation, providing step-by-step guidance and course correction when one goes off track. The budget is described as an intentional allocation of funds, where every dollar has a purpose before the month begins. This zero-based budgeting approach requires agreement with a spouse and includes all expected expenses. The speaker humorously suggests that the budget can act as an 'impulse control' mechanism, ensuring that overspending is met with a prompt to correct the course, much like a GPS warning. They also mention the availability of tools like the 'Every Dollar' app to assist in budgeting.
👫 Collaborative Budgeting and Its Importance
This paragraph discusses the necessity of couples working together on budgeting to achieve financial goals. The speaker warns against the misconception that budgeting is an individual task, stating that it's nearly impossible to achieve debt-free status without both partners' involvement. They acknowledge the initial difficulty of budgeting and the need for adjustments through 'emergency budget committee meetings.' The speaker also addresses the common mistake of underestimating food expenses and advises to allocate more than initially thought. The paragraph concludes with the speaker's endorsement of the 'Every Dollar' app and a guide to budgeting, offering a free resource to help individuals set up and refine their budgeting process.
Mindmap
Keywords
💡Debt-free
💡Budget
💡Financial Peace University
💡Total Money Makeover
💡Zero-based budget
💡Baby steps
💡Spending plan
💡GPS
💡Emergency budget committee
💡Every Dollar
💡Guide to Budgeting
Highlights
People start budgeting and financial initiatives in January, often due to New Year's resolutions.
The importance of having a step-by-step process for financial goals, similar to using GPS for directions.
A budget is a tool to tell your money what to do, rather than wondering where it went.
The concept of a zero-based budget where every dollar has an assignment and a purpose.
The necessity of creating a budget with your spouse for mutual agreement and accountability.
Adjusting the budget as a couple to ensure it fits the month's needs and to avoid overspending.
The first month of budgeting is often challenging and requires adjustments.
The importance of not spending more than the budget allows, akin to avoiding deficit spending.
The development of the Every Dollar app as a tool to simplify the budgeting process.
The availability of a free guide to budgeting for those who need extra help setting up their budget.
The suggestion to separate restaurant and grocery spending to better control food expenses.
The emphasis on the need for both partners to be involved and committed to the budgeting process.
The idea that budget adjustments are a normal part of the budgeting process and should be expected.
The comparison of budgeting to a GPS, guiding you back on track if you go off course.
The notion that budgeting is not about restricting spending, but planning and being intentional with money.
The advice that the budget should not be run on a credit card to avoid creating more debt.
The encouragement to course correct and adjust the budget as needed to stay on track financially.
Transcripts
so the number of people that walk into
here and do their debt-free screen that
started doing their budget in January is
amazing
they started Financial Peace University
in January it's amazing they started
reading the Total Money Makeover listen
to audio book in January it's amazing
because a lot of people want to do stuff
to change their life in January the OL
New Year's resolution that works no
question about it
and you know the the way you actually
accomplish something if you want to go
somewhere in the old days we would get
out a map now some of you don't even
know what a map is but you would get out
your phone right and you would enter in
the address and click Google Maps or
whatever and it's going to give you
directions right there on your phone and
you go straight you know off the GPS
right in there right you have a
step-by-step process to get where you're
going and if you get off track it talks
to you and says you're off track right
well that's what your budget does and I
figured out a long time ago of course
years ago we did the budget with the
paper and in the back of all the books
or blank forms that you can make copies
of if you want to do a paper budget in
the back of the Total Money Makeover or
most of my other books it's in there as
well and so the budget is a pretty
simple idea here's a couple things your
budget is you telling your money what to
do instead of wondering where it went
well I don't want to do a budget it's
restricting not unless you make it
restricting it's your budget all a
budget is is you're doing it on paper on
purpose before the month begins every
dollar has an assignment every dollar
has a mission every dollar has a name
before the month begins in a unique
budget each and every month because
every months a little different some
things are the same but something some
things are different every month and you
agree on it with your spouse so if you
put take out the dollars that you have
coming in this month your take-home pay
and you put it at the top of the page
and you and your spouse sit and look at
that and you say all right let's
spend that on paper before the month
begins we buy food we buy lights and
water we pay the rent or the mortgage we
pay the car payment if there is one we
pay the insurance we put clothes on the
kids we whatever it is we have to do
with it we have to buy this month and
most people don't buy clothes every
month by the way but you know you go
right down the list and every dollar has
an assignment and then you squeeze
dollars out of that budget you start
working those baby steps that save the
thousand dollars baby step one two is
you start working your way out of debt
and so on down the line right so every
dollar has an assignment that's called a
zero based budget you make a list of
your income you hold it up before the
month begins you make a list of your
expenses and you spin those expenses on
paper and then once that's on paper you
stick to it now the reason the budget is
not restricting the reason it should be
just called a spending plan is because
it's a plan for how you're going to
spend your money and you're in charge
I'm not in charge
no one's gonna the budget police aren't
going to come in and look over your
shoulder
you're in charge but what it forces you
to do is be a grown-up instead of an
impulse brat if folks if it forces you
to tell your money what to do instead of
wondering where it went it forces you to
live on purpose it tells you when you're
out of bounds you just made a wrong turn
turn around take a left here take a left
here go back up to the highway you got
off the highway you're gonna miss your
you turned off too soon you're not gonna
make it
just like your GPS would do it's the
exact same thing only it's not an audio
me yelling how to do that I don't make
them put that in every dollar album I
yell at you if you overspend a category
that'd be funny or I could just say in a
stern voice turn around don't do that
you know that would be no that's just
that's just spooky weird but anyway so
the budget is the key though you hear
people say this all the time with that
free scream what's the key communication
what's the key
being on a budget what's the key the
extra work what those are the types of
things you hear on every debt free
scream just about every one of them now
a couple things
you need to know about your budget I
don't know what you're gonna budget for
food for the first month that you do
your budgeting but you're wrong people
always spend more on food than they
think they do so whatever you think
you're going to put in there for the
food category put some more in there
because you're wrong you're gonna spend
more than you think you're spending
you've been spending way more than that
number you have in your head that you
think you're spending and it's okay to
separate restaurants and grocery store
which is not a bad idea because
restaurants ought to be like zero while
you're getting out of that and the
grocery store if you don't if you do go
to a restaurant you'll spend your
grocery store money in a heartbeat and
then you got no no food at all and the
family is kind of skinny and hungry and
all that kind of stuff we don't do that
the second thing about a budget is you
must sit down together and do the budget
you have you're married you have to do
this together well I can't get nice
bouncer you have a marriage problem you
don't have a budget problem and I'll
tell you I have found no data points in
30 years of doing this I've seen almost
no examples of people who bust through
getting out of debt I've never never
have I had a debt free scream on the air
and I said okay what's the secret and
they say well you know he doesn't that
mean I deal what's going on I did it all
by myself he just came down and stood
here you know it never happens because
it's almost impossible to drag
deadweight through a get out of debt
plan and drag them into a budget you're
just not dealing with adults you have to
be a grown man in a big grown woman you
have to make adult-like decisions here
you have to step into this and do it so
once you set your budget now you guys
stick with it here's hard part the first
month you do your budget you suck at
doing the budget first month I did a
budget I sucked at doing a budget was
way off and so you're gonna have to sit
down and have emergency budget committee
meetings with your spouse and adjust the
budget because you under budgeted some
categories which means since you've
spent every dollar that if you're gonna
raise one category by 150 dollars you've
got to lower other categories by under
$50 you're not in Congress you can't
spend
more than you thought you were you can't
spend more than you had coming in you
you know it's income - outgo equals zero
not income - outgo equals a deficit we
don't do deficit spending in our
households that's called debt and you're
gonna do what run your budget on a
credit card now this is just plain
stupid we're not going to talk about
that so every dollar has an assignment
and your first month you're going to
seventeen emergency budget committee
meetings the second month you'll get a
little better at it you'll only have
about five or six emergency budget
committee meetings the third month by
the third month of doing this it'll
start to work and you'll only have one
or two emergency budget committee
meetings in a month most months you'll
have a one you have to sit down and do
some adjusting mid month in other words
or somewhere along they'll be something
that pops up that was quote unquote
unexpected it's not really an emergency
fund issue
we just need to budget adjust we need to
budget adjust we need to budget adjust a
budget adjustment meeting let's see
once you agree on this with your spouse
both of you are agreeing to stick to it
and you pinky swear and spit shake we're
not doing anything else this is it the
good news is a couple years back we
spent several million dollars in about a
year and a half
developing and have continued to develop
the world's best budgeting tool that is
free for you to use it's called every
dollar the every dollar app for your
phone is so simple and we've made it
even easier by creating a guide to
budgeting that will help those of you
that need a little extra help it goes
through everything you need to do to set
up your first budget or to make next
month's budget even better and the guide
to budgeting is free you can sign up at
every dollar calm or you can text GTB
guide to budgeting GTB 233 789 you want
the free guide the budgeting covers the
stuff I was just talking about GTB text
G tb-3 230 GTB that's all in it no it is
free but don't you say free GTB text
that 233 789 33 789 or you can just go
over to every dollar the
app is free anyway so you can sign up
for the every dollar app and it helps
you do all this you can build out your
budget in about 10 minutes it's very
easy to do but the trick then is the
both of you have to be involved and you
have to stick to it and you have to do
your mid month adjustments which the
first two months are gonna be a lot of
them it's okay you're learning something
new your course correct your course
correct your course correct you got this
you can do this it works so good so text
GTB guide to budgeting GTB 233 789
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