6 Easy Steps to Build Your Budget

How I Budgeted My Way From $2.46 Lunches to Financial Freedom

Let’s talk about budgets, shall we?

Budgets are your best friend on the path of Personal Finance. Without a budget, the money journey can feel dark and discouraging. But when you follow a budget, you’ll walk a track where the sun shines, and every breath feels like a gulp of fresh air!

Unsurprisingly, 93% of millionaires say they stick to a budget. So why don’t you?

My First Budget

Before I teach you how to create a budget, I’ll tell you a story about me at 24 years old—this was a time when financial wisdom hadn’t quite settled in yet, and I was embracing the beginning of my budgeting journey. It’s a story of dollar menus, old clothes, and invaluable lessons. Let’s take it from the top:

Ground Zero

There I was, crawling my way out of a failed business, a romantic breakup, depression, and a penchant for, let’s say, herbal hobbies at the age of 24 years old. I never thought I’d experience those things, especially not at the same time. Thankfully, I managed to crawl out and back into an industry I always excelled in—software! I had no money or car (I’d sold my car six months earlier to pay bills). I was down, and for the second time, I was starting from ground zero.

I wasn’t bothered by starting at the bottom again. I knew I’d eventually find another love, start another business, and never light the California herb again. But financially, I was concerned. I didn’t want to go broke and knew I needed a budget to keep me disciplined and guide my financial future. So I opened my notebook, drew a line down the middle of a page, and wrote my monthly income on one side and all my expenses on the other. That became my first budget as an adult.

The $2.46 Lunch

I set aside $20 for lunch every week. It was a seemingly impossible budget, but every day, like clockwork, I’d walk over to In-N-Out Burger, wallet in hand, and spend exactly $2.46. My lunch didn’t come with fries or a drink. Heck, my burger didn’t even have cheese. It was simple but, most of all, affordable. And if I stayed disciplined all week, I’d buy a $5.00 Subway sandwich 🥖 on Fridays to treat myself.

I’m not encouraging you to do what I did—seriously, it’s unhealthy—but you surely don’t have to overspend on lunch. Set a realistic budget for yourself and stick to it.

Old Clothes and No Vacations

I wasn't living a life of luxury, that's for sure. I wore clothes that were years old, lived with my parents, and missed several family vacations. I know this doesn’t sound glamorous, but here's the thing: I was quietly building something invaluable for my future while doing all that. I built a financial foundation while learning to budget, save, invest, and say no to things that took large amounts of cash out of my wallet. Soon, I realized that even though I earned less than some of my counterparts, I had accumulated more wealth than they did.

Remember, wealth isn’t always about how much you earn. A major component of wealth is how much money you keep and what you do with that saved income.

The Lesson in Starting Small

At that time, I saved less than $300 a month. Even though the amount was small, the habit of budgeting is what mattered most. I developed financial discipline through consistent budgeting and knew those small, consistent savings would eventually become more significant. Today, my wife and I have drastically increased our income, savings, and investment accounts, but we still budget to keep us on track.

Here’s the thing: budgeting isn’t the fun police; it’s the fun facilitator. It empowers us to make savvy money moves, chase our dreams, and live life on our terms—all within our financial means.

So, let’s create your budget, shall we?

Creating A Budget In 6 Simple Steps

The budgeting process is simple! If you want to see a positive impact on your finances, follow the steps below, in order, and stick with the process:

1. Get a Budget Tracker. Start by downloading the Earn Out Loud budget tracker:
   

2. Monthly Net Income. Write down your monthly net income. That’s how much you have left after deductions like taxes, employer benefits like health insurance, and retirement. If you have multiple jobs or side hustles, include your income from those sources, too.

   
   If you’re a contractor or self-employed, your budget tracker may change monthly due to irregular income. So, keep detailed notes of invoices and expenses to manage frequent changes.
   

3. Monthly Expenses. List your monthly expenses, and be detailed here, too. Include the amounts you must spend on housing, utilities, car payments, groceries, etc. Adding personal items and other guilty pleasures like Starbucks runs is also easy if you’re using the Earn Out Loud budget tracker.
   

4. Track Your Spending. Track your monthly spending to be sure you’re sticking to your budget. There are many ways to do this—I record my purchases at the end of each day. If that’s too detailed for you, track your spending at the end of each month. How you do it isn’t important as long as you track your spending accurately.
   

5. Adjust Your Behavior. After tracking at least one month of expenses, you’ll have all the information you need to craft a healthy plan for your budget. If you aren’t confident with your budget, change it. If you aren’t satisfied with your spending and savings, focus on cutting back in areas where you regularly overspend.

   Remember, you’re in control, and aim to keep your monthly spending below your net income.
   

6. Set Long-Term Financial Goals. Define your financial objectives. Are you saving to build an emergency fund, pay off debt, or go on a vacation? Knowing your goals will guide your budget, and your budget will guide your behavior.

A Word of Encouragement

Remember, wealth isn’t only about what you earn; it’s about what you keep and do with those savings. Likewise, budgeting isn’t just about numbers; it’s about taking charge of your life!

If you’re just starting your budgeting journey, keep these words close: “Every dollar counts.” Whether it’s $2.46 on lunch or $200 in savings, those small, consistent choices are the bricks you need when building your financial future. So, even if your budget is small now, don’t hesitate to start because the sooner you start, the sooner you’ll find financial freedom!

-Earn Out Loud

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