How to Create a Bulletproof Budget – Part II

Welcome to a new week! As promised in Friday’s post, today we’re going to go step by step through the process of creating a bulletproof budget!

If you didn’t download the budget template on Friday, you can download it here for free, either as an Excel document (recommended) or a PDF document.

Excel Budget Template  PDF Budget Template

As you recall, there are only three simple steps to creating a bulletproof budget.  We have a lot to cover, so let’s jump right in.

Step One: Determine Your Monthly Income

This section is for you to add up 100% of your financial income for the month. We provided four different rows for you to input your income: salary, tips, bonus/dividends, and miscellaneous. Most of you will only need the row for “salary,” and I recommend deleting the other rows if not needed.

Don’t worry (yet) about what to do differently if you get paid twice a month. For now, just add up your total income for the month.We’ll address some of the frequently asked questions later this week. (On a side note, Beth & I get paid twice a month, and we use a budget very similar to the template. We set our budget on the 1st of each month and then revise it as needed on the 15th of each month when we get paid again).

Step Two: Determine your Monthly Expenses

Here’s where the fun begins. You’ll need to go through each section and fill in your anticipated monthly expense for that item. Here’s a breakdown of each section, along with some helpful tips.

First Fruits: I call this section First Fruits based on the Biblical principle of giving God our best and our first.

  • Tithe/Giving: The topic of tithing is really for another post, but I highly recommend continuing to give and cultivate generosity even when you’re paying off debt. It is a monthly reminder of who really is in control of your life.

  • Savings: If you don’t have an emergency fund of at least $1000, then try to save some each month until you do.

  • Buffer: This is a little protection added to the budget to protect you from going over and possibly incurring overdraft fees. We recommend always having a $100 buffer in your checking account.

Home: Most of this is self-explanatory, however, here are some highlights:

  • Taxes/Insurance: These are usually paid yearly, so you’ll need to find out the yearly expense and divide it by 12 to get your monthly expense. If you pay this through your mortgage (escrow), then simply delete this row.

  • Maintenance/Repairs: This is a budget buster. When people don’t budget for home repairs and their A/C breaks, guess who pays the bill? Usually Visa. We recommend setting aside $50 a month for this category.

  • Household Goods: This includes cleaning supplies, light bulbs, toilet paper, etc. We actually group this into our grocery category since Beth buys all of these items when she is grocery shopping, however, a lot of people like to keep it separate, which is why we included it here.

Transportation: You’ll notice we don’t include “car payment” in this section. That is because your car loan is debt and it should be viewed as such. We have a serious problem in America of thinking that a car payment should be a permanent line item in the budget. If you’re serious about freedom, then you have to see your car loan as bad debt and not “normal.” (Remember, normal in America equals being in debt)

  • Insurance: Similar to your home insurance, this is likely paid yearly, biannually, or quarterly. If it is not paid monthly, then you’ll need to do some math to figure out your monthly expense.

  • Gasoline: Have no clue what you spend each month on gas? Look at your bank statements for the last couple of month’s to get a pretty clear picture of what you’re spending.

  • Maintenance/Repairs: This includes tires, oil change, etc. We recommend $50 per month. This doesn’t mean you spend $50 each month…only that you’re saving $50 each month for this item. That way when you need new tires in five months you won’t have to use your emergency fund to pay for them.

To Be Continued…

That does it for the left side of the budget. We’ll cover the column on the right on Wednesday. (We try to keep these posts short enough for you to read in about 10 minutes or less…we know you’re busy…hopefully breaking everything into three parts doesn’t drive you crazy).

Please post a comment below including any questions you may have so far which we can address in the upcoming posts! We respond to 100% of our comments!

Committed to your success,

-Wesley

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