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Free tools on the road to financial independence: Part 1 – a budget

Guest post from Brother FI – Brotherly Advice on Love and Money

 

 

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Hopefully you’ve figured out your ‘why’ for FI, for being on the path to financial independence and financial freedom. If you don’t know what I’m talking about then head over to episode 13 and give a quick listen.

Today we’re going to begin a two part series on two free financial tools that my wife and I have been using these last 15, 16 months to help us get out of debt and gain financial control and I’m confident these two tools can help you too. Best of all they’re free.

On this episode we’ll get into the exciting and amazing world of budgeting.

The second episode is about tracking your net worth which we’ll go over next week.

You know I’ve tried to budget so many times before in my life. I’ve used different apps, different methods, but nothing really worked for me. Until I got married and found out we were expecting I didn’t have any urge or thought to live on a budget.

We basically managed our money in our heads and that did not prove to be effective. If you don’t keep up with a manual budget you either don’t realize you need one or you just come up with excuses not to.

 

Excuses For Not Budgeting

 

Here are some excuses that I could come up for not budgeting.

  1. ‘Budgeting is hard.’ You will do what matters to you. There are free apps and spreadsheets that budgeting is actually very easy. Hardest part is just the beginning.
  2. ‘Budgeting restricts me.’ This is far from the truth.
  3. ‘I’m too busy.’ Again you will do what matters to you.
  4. ‘Budgeting is complicated.’ Free apps and spreadsheets out there that help you budget.
  5. ‘I’m too lazy.’ Probably don’t want to admit this. But let me say it’s a lot easier to budget in your early years of working than later. You budget now and you won’t have to worry about it later in life. You don’t budget now and you will be paying for it later.

Why We Budget

 

Here are some reasons why we budget.

 

  1. Know how much we have going into the month and allocate expenses appropriately.
    1. Won’t overspend.
    2. Have some money left to take to the next month.
  2. Optimize spending (groceries, power bill, water)
  3. Give ourselves freedom to spend a little each month on wants
  4. Ensure we give/donate to causes we care about and those in need.

How Do We Budget?

 

  • Use a Google sheets budget.
  • Article that explains and walks you through using this Google sheets.
  • It’s Free.
  • List estimated income including what you’re bringing in from last month. List estimated expenses and make sure you’re amount left ‘Remaining to Budget’ has something in there.
  • Zero based budget? Just add a section for Money to carry over or something like that.
  • We don’t connect our bank account to any budgeting app. We can’t really do that anyways since we use a spreadsheet. I would be careful with using the apps and programs out there that allow you to connect your accounts and update your budgeting for you. That takes out the psychological aspect of you feeling every expense, right. You can review the budget at the end of the month, but if I’m logging in my expenses every few days or so then I’m very much in tune with the budget and taking another level of responsibility over my money.
  • If connecting your bank/credit card account to a budget is the only way you’re going to handle your spending in some structured method then by all means you can do that.
  • As I mentioned we strictly budget with a spreadsheet that we manually update. Doesn’t take but a few minutes every few days.

What I’m getting at is you need to be aware of how much money is coming and going out. If more is going out than coming in then you got a problem. A budget is great, because it will expose anything that’s keeping you from achieving FI, financial independence.

As you get started know that the flow and comfortability of using a budget will take 3 to 4 months. You’re basically learning how much you spend on different categories of your life. Then by that 3rd or 4th month you make adjustments and keep that going with the goal of getting closer and closer to financial freedom each month.

I mentioned earlier apps and spreadsheets. So I actually have a page dedicated to several budgeting apps and tools available for you use. I’ve actually tried all of these and my favorite is the free spreadsheet from Google docs. I’ll link that out in the show-notes along with a video tutorial i created for you all to have that walks you step by step on how-to budget with a google sheets. brotherfi.com/googlebudgetsheet.

 

 

Click here for FREE budgeting apps and spreadsheet.

Click here for Google sheets budget article/tutorial.

Ready to become financially independent?

 

  1. Sign up for your FREE Personal Capital account and start tracking your net worth. It’s what I use and happily recommend to you.
  2. Download this FREE spreadsheet that I use to budget our money and expenses each month.
  3. Listen and subscribe to the BrotherFI podcast on your favorite podcast player.
  4. Don’t forget to subscribe to the BrotherFI newsletter and receive your FREE financial independence checklist.

 

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