"Why is budgeting success important", you ask? I'm no statistician, but I can tell you that, every single one of our financial coaching students (hundreds at this point) who have successfully paid off their debt say that it's "IMPOSSIBLE" to do it without a budget.
That's right, all of them bar none, say that it’s NOT POSSIBLE to win with money without living on a budget. No matter how smart we think we might be or how much we “got this”, more often than not, an actual, detailed, written budget will prove us horribly wrong.
SO, that said, setting up the budget and purposefully rewriting it every month, staying on top of expenses, those are incredibly important.
BUT, the one thing that most people miss in this process is the “all important” pre-budgeting step of listing out all of your bills, expenses and debts, organizing them by date and THEN plugging them into the budget.
This one, seemingly “unimportant” step serves the purpose of breaking what can be an incredibly overwhelming process (i.e. learning how to budget) into smaller, bite-sized, more manageable pieces.
So let’s jump into the pivotally important “pre-budgeting stage.
By the way, if you want a downloadable PDF of this blog post, you can get that by clicking here: The Forgotten Budgeting Step (aka "Budget Insurance") Downloadable PDF
OR by clicking the image below:
The Forgotten Budgeting Step
Also, as an ongoing means of supporting your personal finance goals, I want to encourage you to:
1) subscribe to our YouTube channel for ongoing strategies and encouragement and
2) go ahead and join Zero Debt Tribe, our private Facebook community aiming at helping you to connect with others, to get your questions answered and to stay the course.
As always, please don’t hesitate to reach out to me at: [email protected] when you have questions, need help or just need someone to talk to during this difficult time. We love you, want the best for you and are here for you during this time.
(i.e. making a list of all bills, expenses and debts)
Don’t worry it’s normal. Rome wasn’t built in a day and MOST of our students don’t remember ALL of their bills, expenses and debts the first time through.
If you’re prone to overwhelm, I highly recommend breaking this exercise into 25 minute time blocks. Here’s a free 25 Minute Time Block Strategy resource that will tell you how to do that.
Start by “brainstorming” all of the bills you can remember. The following steps are meant to get the wheels turning and to help you find all the “nooks and crannies”
You may want to print off a couple of copies of the "Everything I Owe" PDF Worksheet as you will likely rewrite by “due date” after your 1st draft “brainstorm”.
Also, as a way to “jog” your memory, go ahead and download our Budget PDF Form. The categories may help you to remember things you might otherwise forget.
Make sure to include “due dates” with every expense you write down. We’ll organize them by date later in the process. This part is all about “getting it all down on paper”.
Gather up all of the following you can:
Bank statements and log into all of your online banking accounts.
Credit card statements and log into your online accounts.
Mortgage/2nd mortgage/HELOC/HOA statements.
Car payment stubs
Student loan statements
Personal loan statements
Rental invoices
Utility bills (electricity, water, sewer, gas, pest control, internet
Insurance invoices (home, car, health, life, disability, identity theft)
Car maintenance, oil change receipts.
Grocery receipts
Restaurant receipts
Gas receipts
Travel related expenses
Cell phone
Medical related expenses (doctor visits, chiropractor, medications, supplements)
Irregular expenses like: gifts, back to school, seasonals
Miscellaneous…
Do you "get down" with Pinterest? Would you share this on one of your boards for me?
Again, set that timer for 25 minutes if you start to feel overwhelmed and take a break for 5-10 minutes and then get back at it.
Don’t worry, it’s not going to be perfect the first time. Remember, this is just the first draft and it will get more and more accurate the more times you rewrite it (just like budgeting).
Here's a "livestream" session I did that walks you through this process in the context of the 2020 financial crisis.
Don't be afraid of rewriting. Rewriting is a hallmark of all steps of the "learning to budget" process. Shun, the "set it and forget it" mindset. It will not serve you.
Instead, resolve that you're going to do "whatever it takes" to become successful at this and I promise you, you will!
You can learn more about how to actually budget at this blogpost and/or by watching the video below.
And again, if you want a downloadable PDF of this blog post, you can get that by clicking here: The Forgotten Budgeting Step (aka "Budget Insurance") Downloadable PDF
OR by clicking the image below:
The Forgotten Budgeting Step
0. Stop All Retirement Investing (Until Step 4)2. Starter Emergency Fund of $10003. Eliminate Debts Smallest To Largest (a.k.a The Debt Snowball)4. Full Emergency Fund of 3-6+ Months’ Expenses5. Invest A Minimum of 15% Income Into Retirement Accounts (and increase savings rate to 50%+ if possible)6. College Funding (if applicable)7. Pay Off The Home Mortgage8. Build Wealth, Serve, Be Ridiculously Generous And Go FI (Financial Independence)!
What To Do When You Can't Pay Your Bills - Dave Ramsey's "4 Walls"
18 Expenses You Should Obliterate From Your Budget
How To Start Budgeting When You're Terrible At It
8 Steps To Erase Debt - And Get Your Life Back
9 Things We Do To Save Money Like "The Millionaire Next Door"
7 Budgeting Mistakes We All Make (And How To Correct Them)
The 4 Most Popular Reasons People Seek Financial Coaching
When Is It Okay To Say "I Can't Afford It"
How To Get Your $1000 Emergency Fund - Fast!
12 Things We Don't Spend Money On
How To Be Financially Prepared For The Coming Recession
11 Irregular Expenses You Probably Forgot To Budget
4 Not-So-Obvious To Rewrite Your Budget Every Month
12 Things You Should Buy At The Dollar Store And 5 You Shouldn't
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