Mastering how to budget and save your money takes time but budgeting isn’t hard. These tips show you how to budget your money for the ENTIRE YEAR at once so that you can start reaching your financial goals and taking control of your money once and for all. Budgeting doesn’t have to be hard or time consuming.
In part one of this budget your money series, we’re going over to steps to budget your money the right way. And we’re showing you our family budget with actual numbers as an example.
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We are Tasha & Joseph a millennial couple balancing kids, jobs, money, and life.
One Big Happy Life is our website which focuses on creating a life you love by finding the right balance between your personal and financial goals.
Life isn’t just about one thing but money touches on just about everything. Personal finance doesn’t have to be complicated or overwhelming.
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in today's video we are going to be sharing with you our favorite budgeting method how to budget for an entire year at once hey guys it's justice and Tasha with one big happy life we make videos about how to find balance build wealth and live happy so if you want more videos on how to create a life that you really love this is a place to be so one of the ways that you create a life you love is by having enough money to afford the life that you want and that starts with having a budget that actually works and here we are going to talk about how to budget for an entire year step by step everybody can do it grab a pencil you might want to take notes now the first thing that we want to do is direct you to our website one big happy live.com slash budget because we have a free budget template that you can download to help you get started with this then we're gonna talk about why budgeting for a year at a time is so important and the reason is that when you budget just for a week or per paycheck or a month you're looking that's short-term budgeting it doesn't allow you to plan for your long-term financial goals and really visualize those goals in the same way that having a year-long budget and eventually like we have a five-year budget and we'll drop a link to that in the description box so you can check it out we have so many subscribers that have emailed us messaged us on Instagram saying that budgeting for a year at a time has changed their life and it can change yours too so let's get into how to make this actually happen step number one is to calculate your income from all sources so that side hustles that's your main job everything and at this point you're also going to decide whether or not you're going to budget with your net income so like after taxes retirement health insurance or gross income which is just your gross pay before anything has taken out or taxes and anything now we always use net income because for us our withholding doesn't change throughout the year and so there's no real reason to track what is coming out it's the same all the time now that you know what your income is let's talk about how to make that work for a 12 month budget because you may not get paid once a month you might get paid once a week every other week twice a month or once a year I don't know so this is how they're these are the options that you have for making your income fit into a twelve month budget so number one you can calculate what your annual net income is like the total amount and just divide that by 12 and put that into each month's income category the downside to that is that you may end up with a shortage because you haven't earned that money yet so another option is to if you get paid twice a month then you use two paychecks if you get paid weekly then you use four paychecks and so what that does is you're budgeting for less money with less money than you actually earn within that month period and so you plug in those extra paychecks where they would fall in the calendar so if you look at our budget you can see Joseph and I have our paychecks here on three because we are full-time attorneys so that's where that is this column right here but then we get paid every other week and so we have our extra paychecks the two extra paychecks built in right here so we know in May we're basically gonna get three paychecks and in October we're gonna get three paychecks because that's the way the calendar shakes out we also include a line item for our one big happy life business and it is after expenses and taxes and we don't always know exactly how much we're gonna make for month to month so we budget with the minimum that we expect to have because it is much better to under budget than over budget your income all right so next up on our budget you'll see the next category is savings but we're gonna skip past that that when you're budgeting when you're creating your budget for the first time you're not gonna stick your savings in right away you're gonna focus on your expenses so that's where we are step 2 calculate your expenses so you're going to pull together all of your bills that you get every single month things that come once a year everything together that's utilities mortgage credit cards whatever it is get it all together write it down yeah and you might want to like Joseph said actually just write it down on a piece of paper because this is one of those things where you might keep remembering different things and so it's better to have that list so that when you start plugging the items in and category categorizing them in your Excel spreadsheet that you're not having to constantly go back and cut and copy and paste you already had the list yeah and you will constantly remember things as you go along and that's completely okay just plug them in because people forget lots of things like doctors co-pays and things like that that rarely happened but they do exist what's happen so one of the things that we recommend when you are jotting down your expenses focus on your mandatory must pay these whether it's every month or you know twice a year or whatever those expenses and put down the minimum payments because we want to see what your total budget surplus is that is step three and we're gonna get to that but then once you have your budget surplus then you can decide where you want to put that extra money but just start with reasonable minimum expenses on things like your groceries your daycare your credit card expenses all of that stuff and you can see the categories that we have under household and lifestyle except for fun monies and vacations those are optional those are things that we add afterwards step number three is to calculate your monthly budget surplus take all of your income subtract all of those expenses and see what you get hopefully it is a positive number if it's a negative number then that is a sign that you might have some serious financial trouble if it keeps going that way because that means you're going to be racking up debt to pay your regular expenses so double check those expenses see if there's something you can cut make sure you got all of your income and you didn't forget something and then move on from there if it's a positive number then you do have some money that you can work with to accomplish other things and you can move on to the next steps so step four or is to list all of your financial goals list everything that you want to accomplish financially both short-term and long-term because some of those long-term goals like saving for retirement you actually need to start now even though you're not going to accomplish it for 10 15 20 30 years so just brainstorm everything that you want to do retiring early maybe pay for college for your kids if you're replacing cars buying a boat any of those kinds of goals you want to go ahead and and have them on there yeah so just write them down write and put a dollar amount next to them let's so that you know how much it will take for you to reach those goals then when we move on to the next step step five you're gonna prioritize those goals and figure out how much of your budget surplus you want to put towards each goal every month and this is where the fun really starts to happen because then you can see how much you can actually accomplish in a year so our budget right now we've already added our financial goals into our budget but what I'm gonna do is I'm just gonna delete them so here is here are our singing goals normally this is what it would look like and then we're also working on paying off some debt that's what that would look like and we would not do vacations so I'm gonna remove that and we also probably wouldn't have gifts gifts is not the thing that we would put in first so I'm gonna pull that out all right just do which I owe to home decor we would not have that we would definitely have maintenance on our on our cars but so these that brings up a good point and as part of the expenses it's okay if you go ahead and throw in like your regular maintenance for your car like that like and also your your house like if there's some regular stuff air filters you know that those kinds of things you want to have those as part of your minimum expenses because if you budget to accomplish some other things you don't want to be short and can't change your oil so so what I'm gonna do is just gonna put in the like what the minimum payments on these things would be normally because that's what we would normally fill our budget with this is 370 right 370 good car yeah Joseph yeah okay and so even with these minimum payments know that your debts will go down over time so if that's all you can budget for that's okay so this is what our budget would look like with just the minimum payments on everything and not really trying to hit our major financial goals beyond retirement and HSAs because remember those come out pre-tax so they come out they're not on our budget there are three main considerations when you are prioritizing your financial goals time financial health and happiness so when it comes to time you can think about well which one absolutely must be done first so for us we know that we have a vacation coming up in March so we're gonna want to prioritize socking away the cash that we need for our trip before March another issue could be well which one is the most urgent so if we know that we have that trip coming up but I also have a really bad toothache that's killing me well that's far more urgent than saving to go on a vacation so we will put aside money to for me to go to the doctor and perhaps get a tooth extracted or a root canal over saving for that trip next is the financial health of you so you don't want to start prioritizing trips and things if you don't have an emergency fund per se or you want to use at least split heavily towards getting that emergency fund if you're not saving for retirement those are much more important to your financial health and so that's gonna get strong consideration at least in the beginning until you have some savings built up and then the third consideration would be happiness so again just we keep using like okay well maybe you live in an apartment but you also drive like an older car it's still functional you can probably it'll still keep going for another five years but so you kind of want a new car but you also want to be a homeowner so which one is going to make you happy because neither one of those are like it's absolutely essential financial goals their life goals that you happen to want to have and so you might choose to prioritize buying a house because you already own a car that will last you a while or you might say well I'd prefer to have a newer safer vehicle over owning my own home so that is how you prioritize based on happiness step number six is adjusting your budget as you go along even the best made budget is going to need adjustments as you go along it takes time to learn things like what your true spending habits are like if this is your first budget you're getting to know yourself as much as you're getting to know how to budget and then second things like saving for retirement big financial goals also take a lot of time and so you might be adjusting the numbers save me a little bit more save me a little bit less as your path continues and so one of the mistakes that a lot of people make when it comes to budgeting is they think that when you set your budget once especially a year-long budget they're like well I could never budget for a year because my financial situation is always changing guess what an Excel spreadsheet you just type different numbers in there and it changes to your budget whether it's written or digital changes with you it is your spending plan it's meant to meet your needs whatever they are at any given point in time so your annual budget can change so for example our annual budget is changing already because Alexis got her driver's license and when we added her to our insurance our car insurance doubled so it was it you know it went from 100 to 200 a month but that's still you know 50 percent hundred percent increase how does it increase yes when we added her as a learner's permit Shh yeah so what we're going to do our initial goal was to try to explain these concepts to you and show you how to implement it in an annual budget at the same time but that would make this video hello long so this is going to part one in part two we're going to go over the steps again and then we're going to actually implement it in a budget so you can see it happen right in front of your face so stay tuned for that video should come out on Monday so be sure to subscribe and hit that notification bell for more one big happy life and we'll see you next week bye bye you