Wanna get rich? It might not be quick, but keeping a budget is exactly the way to start the process of building wealth. Intentional spending and saving is crucial as you press on towards optimal financial freedom.  

This is the basic foundation to build your budget around…

  1. Have a minimum of 1 months living expenses in an emergency fund. Later you will want to build that to 3-6 months.

  2. Start contributing regularly to a retirement savings account any amount that your employer will match. This is free money from them. 

  3. Pay off all debts (in ascending order of their amount). Try to consolidate debt into the lowest interest loan possible. Pay off the highest interest loans first. 

  4. Put as much as possible in a savings account by reducing spending (the less you live on, the better). 

  5. Prioritize, savings, food and shelter needs and investments first. Then decide how you will spend your surplus. You may find that there isn’t as much left as you thought after you hit your savings and investing goals. That’s ok, because the savings and investments is what will lead you to financial independence in the future. Tightening the spending belt now could provide you the financial freedom in the future, which is where you also have more personal freedom to do what you what in life. 

If you don’t already have a budget, regardless of what stage you are at in life, let this be an encouragement to start one today! That can be done through Mint.com or You Need A Budget (YNAB). Here is a simple way to think about your money in the meantime: 

Know what your MONTHLY NET INCOME is.  

This is what you take home after taxes. Many people make the mistake of basing their budget off their gross income – and it’s costly (literally).  

Know what your FIXED MONTHLY EXPENSES are.  

These are the payments you make monthly that stay the same, sometimes with an annual increase. These fixed expenses generally include (where applicable): 

  • Housing (Mortgage/Rent Payment) 

  • Insurance (health, life, car, etc) 

  • Phone, Internet, and Cable (might be the same bill, might be separate) 

  • Childcare/school tuition 

  • Car Payment 

  • HOA/Condo fees  

  • Student loans 

  • Other loans 

  • Ongoing charity donations 

  • Music & sports lessons 

  • All membership subscriptions (this is a broad category and is far-reaching: gym, streaming services, delivery apps, digital news, audiobooks, Patreon, fitness apps, etc) 

TIP: You might not even realize you have a subscription somewhere. One app that offers a free trial and can sniff out the places you are paying for something you forgot about is TRUEBILL. This app offers a $7/month subscription (yes, you pay a subscription to find other [unneeded] subscriptions!) to help you track your spending in a user-friendly way, particularly for things in the next category: 

Pay attention to your UNFIXED monthly expenses.  

This is what you know you pay for on a monthly basis, but the amount might change each month depending on your usage. In most cases, this means you can really control what you spend, but the key is knowing when exactly you are! 

  • Utilities (Water/Electric/Gas/Trash) 

  • Groceries/Food 

  • Gas & Transportation 

Pay SUPER close attention to your
non-fixed, non-monthly expenses.  

Some of these things you have less control over: 

  • Car & home repairs 

  • Medical bills 

  • Medications 

And some you have more control over: 

  • Hobby/entertainment expenses 

  • Gifts 

  • Coffee 

  • Trips/Vacation 


For more on determining how to track your non-fixed expenses, check out the Introduction to How Non-Fixed Expenses Work | HowStuffWorks 

This is where you track what you spend!! And don’t confuse SAVINGS with PLANNED SPENDING. It is not the same thing to save up for a trip you have planned as it is to SAVE your money for the future and for investing.  

After tracking all of your spending with an app or program, notice your patterns. How much money are you saving at the end of the month? If it’s not much, or you’re going in the red, act immediately! 

saving pennies

Use this as a guide to get on track, and begin your journey to build your wealth!