Why you need to start budgeting

When it comes to becoming better at something, many people look for the quickest, easiest way to get there. They want to make one investment today and be wealthy tomorrow. They want to become a social media influencer and go viral in their first post. Or maybe they want to start a business and become hugely successful their first day open for business. The truth is, it takes years to become good at something. Building wealth is no different. Before you can start investing and building, you need to know where your money is going.....You need to start budgeting.

There are a lot of statistics out there that show just how bad the majority of people are with money. Bankrate published an article last year stating that only 1 in 4 Americans have enough money saved to cover a $1,000 unplanned expense. Another article at GoBankingRates says that out of the 47.8 million Americans age 65 and older, the average income is only $38,515, and their average net worth is $170,516. This same article states that 33% of Americans have no retirement savings at all, and for the 77% that do, they don't have nearly enough to actually retire off of. The Motley Fool says that the average American under 35 has $13,000 saved for retirement. The numbers are staggering, and it is a problem we can all fix.

Budgeting is simple. I am not saying it's easy, but it is simple. You track all the money coming in (income) and all the money going out (expenses). Once you get a good idea of your spending habits, you can decide how you can maximize your savings rate. For many, a 15% savings rate is the goal, but I just don't think that is enough to make a big enough impact, unless you are making millions of dollars a year. My goal is to save and invest 60% of all the money I make. Then, once that money is invested and working for me, I don't touch it. I let the power of compound interest take hold and multiply my money.

In life, we start seeing results and improvement when we are consistent. Budgeting isn't sexy. It isn't exciting like buying cryptocurrency. Or investing in the next hot stock. But, budgeting will open your eyes to where all your money is going. It will help you make small adjustments to your spending habits that will make a huge difference for you years down the road, after years of consistently investing and focusing on where your money is going monthly.

I created a budget last year that I wanted to share with you here. I have made some adjustments to it since then. It is designed to be used monthly. Then, after every month, you take the totals from every category and add it in to the yearly tracker towards the bottom of the spreadsheet. At the end of the year, you can see what months had the biggest changes in income and expenses. You can start to see trends on where your money is going, and, more importantly, watch your assets grow.

Below is a link to my 2023 budgeting spreadsheet. Check it out and let me know if it helps!

https://docs.google.com/spreadsheets/d/1ZX1_mgc-LatrfjB-xhMVyPmUsySFL4epPjw51F-Cf4g/edit?usp=sharing