Planning a budget? Financial Freedom?

Question

I am looking for help !!! Setting up a budget to obtain finanical freedom. Anyone have any suggestions? Dont want to pay a lot of money for it, but need help. Serious answers only please.

Answer 1

Good for you! I consider a budget a planning tool to reach my financial goals--not a strict guideline to spending. I recommend using Excel for this exercise. You can adjust the numbers and add/delete catagories easily:

1. List your net income (paycheck amount). You should have already contributed at least 6% to your 401k plan.
2. Underneath that number, subtract 10% of your gross income and list it as "savings."
3. Under that, subtract each of your other FIXED expenses (rent/utilities/cell/gym/debt payments/etc).
4. Now calculate how much you have leftover. This is the amount you have left each month to spend on discretionary expenses--this includes gas, food, going out, shopping, etc.

Now you can fiddle with the numbers to see how you can save more and where you can/should spend less. If you don't have enough for discretionary spending, then you need to lower some of your fixed costs (other than savings!).

That 10% of savings should be saved/invested automatically according to your goals each month. Open a high yield savings/money market account for short term goals (within 1-2 years) like a new car, a vacation, etc. Open a broad low cost index fund for long term goals (downpayment on a house, etc). Split your 10% contribution accordingly between these two accounts. And raise that 10% number as often as possible. My personal goal is to get to 15% retirement savings and 10% other savings.

Mechanics--have your paycheck go automatically into your primary checking account. Have all savings invested automatically from this account (I have this done mid month since my mortgage is due at the first of the month--so each paycheck is used up equally). Have as many fixed costs as possible paid automatically from this account. ONLY use the checkcard/checks from this account for fixed costs. Set up an automatic transfer in the amount of your "leftover for discretionary spending" line--this should go to a separate checking account that you use until it's gone every month.

This dual checking account method helps me not overdraw since large amounts of money are constantly going in and out of my primary checking. You can blow the money in your "spending" account guilt free because you know that your fixed costs are being taken care of separately and you've already saved a chunk of your paycheck!

Answer 2

Not enough room here. Saying and Doing are two different things. But, here how it works.
It require basic math. We will look at your car insurance and the numbers are example;
Many insurances allow a person to pay Monthly, Semi-Annual and Annual. Monthly incurs a service charge of about $5 and semi and annual do not.
Say your insurance is $600 per year. We divide by 12 and see that $50 a month. Now when your insurance bill you and you just pay for a month at a time you pay $55 a month. Math tells us you are throwing away $60 a year on insurance.
So, you have to get ahead and pay your insurance up front for at least 6 months and save the extra money for something else. NOW, just because you pay 6 months in advance not mean you wait until they bill you again to come up with your money. You BUDGET and each month put $50 in the bank to draw interest and when the next insurance bill comes in 6 months you have your $300 0r $600 how ever you want to pay. The $60 you save you put into your Saving Account Budget.
One more eaxmple and then you should see.
Car Repairs and Property Taxes. We look at the past year and see your Taxes were $300 and car Repairs well $300. That a $600 total divided by 12 and we see it average $50 a month. This what must go to the Car/Tax Budget every month!!! $50. Now say the end of the year comes and you did not do car repairs and there is $300 in the Buget. Do you spend it like the Government does??? NO!!!! You continue to buget your money every month and allow for the excess to build up. Then in time when you need a new car you may have an extra $2000 for a down payment, Sales Tax or whatever but, that money is for your car Budget, NOT Beer. :-p
So, the bottom line is you may be putting $200 a month into a budget for future lump sum payments and save money doing this and stop having to buy on Credit going further in debt.
Also, 10% a month just goes to savings!

Answer 3

Budgets work great! They help you decide where to spend your money each month and if it is too strict, then change it. You are the boss of the money but you have to know where you are spending it first! And you need to have discipline. It has been proven that you spend less when you use cash. There is a "hurt" that happens when you fork over cold hard cash. Swiping the card doesn't register with your brain that you are spending your hard earned money!

First, check out Dave Ramsey. He is the king of financial freedom. www.daveramsey.com he has a great book The Total Money Makeover and he often has sales on his website and can get it for around $10 when he has a sale. But even at full price it is a deal (around $16). His budget forms are on his website. You can also attend a 13 week program (that is really great and goes step by step) called Financial Peace University (FPU) which is about $110-139 for the entire program, life time membership (you can go back to the class as many times as you wish) and you get his audio version of the class, book, etc. We have attended FPU and it was well worth the money.

Good luck!

Answer 4

I had checked out Oprah's debt diet and I didn't do it exactly as written, but I got some ideas that really helped. I even made my own pie chart that helped me figure out how much goes where. I think that the most important thing to do is to get some of these tips, but configure them to fit your life

http://www.oprah.com/money/debtdiet/steps/debtdiet_steps_main.jhtml

I also got some books in the library. Such books as, Idiots guide to managing your money had some good tips also. The best thing about getting books at the library was that they were free!! Just remember that you are not going to find a quick fix, I started in Jan and I am still getting use to my budget....

Answer 5

You need to provide more information.
From you picture, you look very young..
Are you married or single, children?
What is finanical freedom to you?
Is it retirement or living off your investment/interest?
What life style do you want?
How much is enought for you per year?
Ask you question again with more details.

Answer 6

start with what you want and create your ideal lifestyle.
Then create a dream chart with with cuttings of what you want.
Remember, budgets suck...they limit you...
Instead focus on how much money you can make...