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Break down a budget

There are three types of expenses to consider when building your budget. They are: fixed, variable, and non-monthly expenses.

03-04-2019

Video Transcript

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:


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