The Right Way to do a Monthly Budget

foreign hey guys welcome to at the Rachel Cruz show all right we always talk about the importance of budgeting on the show so I figured hey let's walk through an example of a simple monthly budget so you see it and what's crazy is when I started the Rachel crew show years and years and years ago I actually filmed when my first videos was about doing a zero-based budget and it is still one of the highest videos on my channel and so I think it's really helpful just to visually see okay here is how you do a monthly budget a zero based budget if you've never done a budget before it can be a little intimidating and you're like oh my gosh I don't know what to do but hey this video it's for you we're gonna walk through exactly what to do because having a budge you guys is so crucial to you winning it really is like the State of the Union of your money like you see it right in front of you you know what's going on you know how much you're spending where you can cut I mean it is like your guided plan to win with money long term and so doing a budget is so big and what I love about it is it's basically permission to spend you can go and spend your money and not think twice about it you're not sitting there thinking this is okay is this too much oh I don't know I don't know all the guessing is out you already have a plan so this is going to be an example and I have to say this all the time like asterisk all the things right now example example example all the numbers is an example of averages and we're going to use Nashville Tennessee as that because that's where I am right now so all of you in San Francisco I'm sorry your standard of living is higher it costs more to where you are than Nashville some of you in I don't know North Dakota sorry North Dakota but like somewhere you're like that's so much money who would ever spend that I don't know sorry it's Nashville okay so don't get mad at me don't get mad at the number so that's all my precaution before we begin so here we go let's take a family of four with a household income of seventy five thousand dollars and the median household income in America today isn't like it's like 67 000 so we're a little bit above that but we're still right in that range again on average so at the beginning of the month you want to put how much money you bring home so for this example their gross monthly income is about six thousand two hundred and fifty dollars but that number doesn't matter because it's not what they're taking home so after taxes are taken out that's the number you want to look at and in this example would be 5178 that is the number you're going to work with you're going to put that at the top and then you're gonna start to list out all of your categories now I always recommend starting with giving no matter where you are give a little until you can give a lot start building that muscle because with money you're you can give it you can save it and you can spend it and you want to do all three and so making sure that giving is part of your budget is really important so I recommend 10 so in this case it would be 517 dollars now next is going to be your housing so your rent or your mortgage and ideally it's no more than 25 of your take-home pay so for this example we'll say that the monthly mortgage payment is one thousand two hundred and ninety four dollars a month then you're going to go to your utilities so the average monthly Energy bill for a single family home in Tennessee is about a hundred and eighty nine dollars including heating and cooling water appliances all that internet can be in utilities as well and on average it's around 60 a month in Tennessee cable around forty dollars uh and then we're gonna move on to food food is very important you want to eat yes and the average grocery bill for a family of four in Tennessee is about 642 dollars a month then let's just say that the family spends an additional 200 a month out of restaurants and then your next category in the budget is going to be gas and transportation so on average the average American household spends about 316 dollars a month on gas and you want to make sure you have car insurance so that's about two hundred and forty dollars so what we just covered so far there is your giving and what's called your four walls your your shelter your utilities your food and your transportation now let's say uh that this family has some debt so they have a car payment that's 503 a month which is the average monthly used car payment in America today then after that you start listing out other important categories so health insurance would be one and the average family pays one thousand seven hundred and seventy nine dollars a month for health insurance then you can look at your cell phone plan the average monthly two-person plan is about 60 a month you could have a gym membership in life right and on average it's about 58 dollars a month clothing uh we'll say about a hundred bucks a month you have some fun money about fifty dollars have some stuff for your kids you know because they have stuff going on 50 bucks there miscellaneous kind of your catch-all forty dollars all of this together again as an example total is six thousand one hundred and thirty eight dollars so our goal with a zero based budget is your income minus all of those expenses equals zero so every dollar coming in is assigned to a category now we can see that putting all of this we are over budgets by about nine hundred and sixty dollars so what do you do well first let's take a quick break so I can tell you about our sponsor so you're doing all the right things but this economy is busting at your budget did you know there's a budget friendly solution to Rising health care costs well there is and it's through Christian Healthcare Ministries America's longest serving Health cost sharing administry visit chministries.org Rachel to learn more all right back to fixing this family's budget so let's say that they cut their restaurant budget in half so that's 100 bucks there let's say that they don't buy clothes for that month that's a hundred dollars maybe they cut their cable it's forty dollars maybe for a season they cut the gym membership and work out with a neighbor or just do stuff on their own that's 58 so now we're down to a 662 dollar difference and if they didn't have that car payment you guys it was over 500 this math would make it a lot easier which shows you the weight of how much debt is costing you but that's you know until it's paid off they're still going to have that so what do you do now well if cut expense is pretty darn good which means now you gotta up the income so let's say one parent gets a part-time job that makes 25 an hour Works 30 hours at that job per month which could make them an extra 750 dollars a month and if you make some adjustments you actually end up with 88 extra dollars which you want to give a job to so let's say uh we'll make the miscellaneous category 128 dollars just to give some extra buffer and then boom there you go zero based budgets now of course there's all different ways you can change up your budget to make it work for you and your family but the key here is making it zero based knowing exactly where your dollars are going and maybe you know you cut back on groceries or gas or give up some money for a little bit or shop around for less expensive insurance or pick up that second job or a side hustle to pay off your debt faster but the key is money flows two ways it flows in which is your income so you have to look at that and it also flows out which are your expenses so no matter what again the key is for it to equal zero so every dollar is assigned to a category now you can use a spreadsheet you could use a sheet of paper paper you could download every dollar which is our budgeting app you can actually start making your first budget for free today it's amazing but all of this again just to show you the math income minus expenses equals zero now if you're starting the baby steps the very first thing you want to do is get a thousand dollars saved so that means you need to come up with a thousand dollars and that may again up in your income cutting back more expenses Selling Stuff doing what you can to get that thousand dollars quickly and then you're going to keep that same intensity until you pay off debt and then keep it going until you have three to six months of expenses saved in the bank so this is a Year's this takes years you guys this is not something you're going to happen overnight but again the budget is the plan it's the tool to help you get there it really reveals not just your spending habits but hey where your pain points are so it's so important to do one and to stick to it because this is one of the best ways that you can take control of your money and create a life you love [Music]

Channel: The Rachel Cruze Show

Views: 63,172

Keywords: the rachel cruze show, the rachel cruze show youtube, money, budget, how to save money, budgeting, personal finance, rachel cruze, save money, how to budget, debt, saving money, save, how to make money, ramsey, finance, how to get out of debt, debt free, The Right Way to do a Monthly Budget

Id: NPm9-4M6NAA

Length: 8min 59sec (539 seconds)

Published: Mon Oct 17 2022