Chapter 3: Budget Breakdown
Real-life budgeting should be a little nuanced. We’ve not only got to consider our income and our set bills (fixed expenses) but our spending along with those expenses that don’t come up monthly.
Take a moment to watch the video and read more to construct your budget.
The DNA of a Budget
There are three types of expenses to consider when building your budget. They are: fixed, variable, and non-monthly expenses.
So, the equation from Chapter 1: How To Start a Budget really breaks down into:
Income – Fixed Expenses – Variable Expenses – Non-Monthly Expenses = Money for Goals
Plan, Plan, Plan
Non-monthly expenses and emergency funds are part of budgeting wisely. Each takes effort, intentionality, and planning.
For non-monthly expenses: Estimate how much you need and divide it by the number of months you have to save.
Emergency funds help you not reach for a credit card or line of credit when expected events hit. They help you keep enough cash on hand to cover deductibles or minor incidents. For emergency funds: Try to save six to nine months of funds to cover any essential expenses.
Your Chapter 3 Checklist:
- Watch the Budget Breakdown video
- Download the Budgeting 101 Worksheet
- Crunch the numbers on your budget
Budgeting Help for Spenders
Once you know what those habits are, you’re empowered to change them.