Is Budgeting Really That Hard?

Summary

The 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

00:00

📈 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.

05:03

👫 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.

Keywords

💡Debt-free

The term 'debt-free' refers to a financial state where an individual or entity has no outstanding debts or liabilities. In the context of the video, it is a goal that many people aim to achieve, especially at the start of the year, as part of their New Year's resolutions. The script mentions that people start doing their 'debt-free screen' in January, indicating the beginning of their financial planning journey.

💡Budget

A 'budget' is a financial plan that outlines expected income and expenses for a defined period, usually a month. The video emphasizes the importance of budgeting as a tool for financial management, with the speaker explaining that a budget tells your money what to do instead of wondering where it went. The script provides examples of how to assign every dollar a purpose before the month begins.

💡Financial Peace University

'Financial Peace University' is a program designed to educate individuals on personal finance management. The script mentions it as one of the resources people start in January, indicating it as a part of the journey towards financial literacy and independence.

💡Total Money Makeover

'Total Money Makeover' is likely a book or program that offers financial advice and strategies for improving one's financial situation. The script refers to people starting to read this book or listen to its audiobook in January, suggesting it as a source of guidance for financial transformation.

💡Zero-based budget

A 'zero-based budget' is a budgeting method where every dollar of income is accounted for, with no money left unassigned. The video script describes this concept as a way to ensure that every dollar has a mission and a name, emphasizing the importance of detailed financial planning.

💡Baby steps

'Baby steps' in the script refers to incremental financial goals or steps that individuals take to improve their financial health, starting with saving a thousand dollars as the first step. This term illustrates the gradual approach to financial stability and debt reduction.

💡Spending plan

A 'spending plan' is another term used in the script to describe a budget, emphasizing that it is a plan for how you will spend your money rather than a restrictive measure. The speaker argues that a budget should be seen as a spending plan that empowers individuals to take control of their finances.

💡GPS

In the script, 'GPS' is used metaphorically to illustrate how a budget guides financial decisions, similar to how a Global Positioning System guides physical travel. The GPS provides step-by-step directions and alerts when you are off track, which parallels the role of a budget in financial planning.

💡Emergency budget committee

'Emergency budget committee' is a term coined in the script to describe the process of reevaluating and adjusting the budget with a spouse when initial estimates were incorrect or unexpected expenses arise. It highlights the need for flexibility and communication in budget management.

💡Every Dollar

'Every Dollar' is mentioned in the script as a budgeting tool developed to assist with financial planning. It is described as a simple app that can be used to build and adjust budgets, emphasizing the ease of use and accessibility of modern financial tools.

💡Guide to Budgeting

'Guide to Budgeting' is a free resource offered in the script to help individuals set up their first budget or improve their existing one. It is part of the support provided to make the budgeting process more approachable and effective.

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