The Rachel Cruze Show - Create Your First Budget In 5 Simple Steps

Episode Date: December 4, 2024

💵 Start your free budget today. Download the EveryDollar app!   Creating your first budget is easier than you might think. In today’s episode, you’ll learn how to budget like a pro in five simple steps.   Next Step:   🎥 Watch my video How to Stop Going Over Budget on Groceries.   Connect With Our Sponsors:  🏥 Learn more about Christian Healthcare Ministries.  🔒 Get 20% off when you join DeleteMe.   Listen to More From Ramsey Network:  🍸 Smart Money Happy Hour  🎙️ The Ramsey Show    💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  💰 George Kamel  💼 The Ken Coleman Show  📈 EntreLeadership    Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

Well, hey, you guys, if you're a regular around here, then you know that I talk a lot about budgeting when it comes to building wealth, because it's one of those essential steps that you really have to take to start that wealth building journey. But if you're newer to my channel, then you may need a little bit of a hand holding while you build your first budget. Because listen, budgeting, it can be really simple, but it's also nice to have that step-by-step support when you are developing a new habit for the first time. So that's what we're going to do today. I'm going to show. how to create your first budget in five simple steps. And if you have been budgeting, still stick around because I think it's so important to rehear some of this because you could have lost one or two steps in the process. And also make sure that you subscribe so you don't miss any content coming in the future. All right. First, I want to be very transparent with you. There was a brief time that I did not like budgeting.

Yeah, budgeting was probably the hardest part of this whole financial journey if you will for me to get on board with and actually see and enjoy it because I'm such a spender. I'm such a free spirit. And it always felt like this like lots of details. It felt like, oh my gosh, you can't have any fun. You can't go shopping. You have to say no to everything. The word budget almost became a cuss word.

And what I realized, though, when I was actually on a trip with Winston and he was like, don't worry about the budget. I can take care of everything on this trip. You just enjoy. That you would have thought would have given me such freedom. But at that point, we had been budgeting pretty consistently for a few years. And the one time that I was told, don't worry about it, you can just fly and be free. I actually found that it wasn't free.

It was actually more stressful not to have a budget. So now I am a firm believer. I love a budget because a budget really is permission to spend. And when it comes to every dollar, which is our budgeting app, it makes it even easier. So with every dollar, it is so nice and convenient because your budget is right there on an app, on your phone. And when you make transactions, you put them in or they're plugged into your bank account and they drop in there so you can actually see in real time what you have left, the amount of money you have left to spend in each category. And it helps you plan and it really does give you

this roadmap to your money on a daily basis, which is so key. All right. So when you get started budgeting for the first time, one of your first steps that you're going to take is to list your income. That is step one. So I want you to think through any streams of income that are coming into your household. And if you are married, you and your spouse together are going to be doing this. So if you're both working, both incomes combined together, go at the top of the budget. If you have a part-time side hustle, you know, you're going to put that in. If you have a part-time just job or maybe you work overtime, put that in. If you have alimony coming in or child support, put that in. Like any amount of money, again, that you have coming in, list that as income. And you're going to

add everything up and know here is the number you are working towards. Then step two is you're going to list all of your expenses. You're going to start with your four walls, which is going to be food, transportation, shelter, and utilities. And so you're going to be able to mark down these are the most important things that you have to do first. And then under that are going to be really essential things like insurance or childcare. You're going to be listing out other things that you spend money on throughout the month. And so you can look and that could be subscriptions, that could be clothes, whatever.

it is, you're going to put as a category. Now, a couple of categories that you don't want to forget, first and foremost, is giving. Giving needs to be in your budget because this is part of your money that really has to deal with your heart and your character. And so building that habit early, regardless of where you are financially, is so crucial. And also, do not forget the miscellaneous category because there are going to be things that happen throughout the month that you forgot to budget for, and that's okay. But it's just going to drop in that miscellaneous category. It's one of my favorite categories, stuff comes up and I'm like, oh, just drop it there, drop it there. All right, number three is you're going to subtract your expenses from your income.

So again, your income is going to be at the top, minus all of those categories that we just talked about added together should equal zero. That means every dollar coming in is assigned to a category. So if you have money left over, which is a great problem to have, then take that even if it's, you know, $38, $200, whatever it is at the top, if you have not a lot, $1,000. for that amount of money, then drop it in a category. You can even make your miscellaneous category bigger. It doesn't matter, but give it a name.

Now, if you're in the red and you're spending more in the expenses than you have coming in, then you have to go and adjust and you have to say, okay, maybe we try to shave off $100 of groceries this month, and maybe we cancel these two subscriptions that we're not using, right? You go through all the categories and try to lower them so that you get that zero-based budget. Now, when it comes to all of this together, it is going to take maybe one, two, even three months to really get it right. There's going to be tweaking you're going to do throughout the month, and that's okay. But after 90 days, this is going to get easier.

And what you're going to see as well is that each month is going to be different. So you're going to have a different budget every single month because one month, there may be a holiday that you put in a line item for that, you know. And maybe summer and the kids have camp and you have to put a line item for that. every month is going to look different. All right, before I share, it comes to your budgets, is to track your transactions all month long. I mentioned this,

that every dollar is such a great app because you either can put your transactions in manually or if you have every dollar premium, it's going to connect to your bank, so they will drop in automatically, and then you go and track them. And again, it is so easy. It's literally a drag and drop with your finger

if you're doing it on your phone or even on a laptop. And what's great about this is in real, time you're able to keep up with these categories of what's going on. And Wednesday night, we use this. Like, we will look if it's the 29th of the month. We're like, okay, we have a little bit more out to eat. So maybe we can go and, you know, grab some food for dinner one night instead of cooking at home or, golly, the grocery budget, it is, we're getting close. Okay, so what can we do some cheap meals? Let's do spaghetti one meal. And, you know, you really can plan around your life and what money you have left in the budget. And this helps you stay on track as well. Because a budget

it may sound good in theory, but when you actually practically do it, you have to stick to the budget. So in order to do that, you have to know what is in each category. And so that's one reason tracking these transactions and keeping up with it is so helpful.

And it may seem like a lot of work at first, but honestly, when you get in the rhythm of it, you can do it in just like under 15 seconds. Like it really can be very, very fast to track those transactions, but it keeps you in control, which is what I love. All right.

And number five is to make a budget for next month. So we just kind of mentioned this earlier, but I do want to stress how different every single month is. And especially if you are on commission like I am, every month from your income standpoint is going to be different. And so you're going to have to adjust according to that. And so it's really key to do your budget before the month begins. So before the first of the next month, make sure you already have things planned out. And if you're using every dollar, it's great because it will duplicate your budget from last month. So you at least have a starting point.

you're not having to start from scratch, but then go in and change, right? So this month, for instance, I'll just be honest, I'm not making as much as I did last month. So I'm lowering my income. You know, Winston has his, so we put his in. So our giving, because we give 10% of our income,

will change according to what we make every month. Our savings is going to look different, depending on what we're doing in life. And then from there, we're able to say, okay, what is left that we can put in these categories? And so, again, looking at it every single month is key. And while again,

it may seem overwhelming. It's really not. Once you get in the rhythm of this, doing the new budget, I mean, it may take you 10 minutes. Like, it really doesn't have to be this elongated thing, but it may be at first. If this is your first budget, you're going to have more time spent on this as you get used to it. But these are things that really give you the control that you can have because there's a lot of things in our life right now. You guys, we can't control. We can't control interest rates. We can't control the inflation. We can't control grocery prices. But we can control what we do with our income. And that's why I love a budget is because it puts you in the driver's seat of your own life.

So again, if you have not downloaded every dollar, click the link below because this is going to be the tool that's going to help you get in control of your money. Again, sign up for this, you guys, put it on your phone, create an account because this is one of the keys of unlocking your wealth building journey. And after you create your budget, make sure to watch my episode on how to stop going over budget on groceries, because groceries are essential and they are expensive. All right. remember to take control of your money and create a life you love.