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The Unsexy Tool You Need For Financial Success
The easiest way to get a raise, without a negotiation.
I know my current audience…
For most of you, this will be irrelevant (I’ll talk to you next week).
But, for a handful of you and my future audience, this might be the push you’re looking for!
Inflation.
What a nightmare. Your paycheque shrank 8% last year and you’re looking for a solution to fight it.
Here’s your solution: A Budget.
Woooooo, oh yeah, what a revolutionary idea. I’m so excited to start budgeting!!! Holy sh*t Blake why didn’t I think of that.
I know. But, let’s break it down, teach you the strength of budgeting and give you a raise.
The Mindset Shift
If you’ve been responsible for part of a company budget know its importance.
Why don’t you treat your personal finances the same way? They’re way more important.
I want to reframe one concept for you: Most people see a budget as a limitation on spending, it is the exact opposite, it is permission to spend.
You have the same amount of money every month, why not spend it on what excites you?
Time To Audit
Humans are as good at estimating things, as my dog is at NOT eating the cheese I drop on the floor.
So don’t estimate.
Use any tool to collect your data from the last 6 months to create averages in each category. I use mint.com.
The further you can break down your categories the better. How much up-front time investment are you willing to put in to save yourself hours of financial stress for years?
Go To Zero
Now. Let’s set up your budget so that income - expenses = $0.
At a high level it might look something like this (your’s should be more granular):
Single Monthly After-tax Income: $5000
Rent/Mortgage: $1800
Investments: $1050
Car Payment: $550
Groceries: $300
Utilities + Phone: $250
Insurance: $210
Everything Else: $840
Remainder: $0
There is a conversation here about debt payoff and investment theses but that is a conversation for a different day.
What we really want to focus on here is the $840.
You now have permission to spend $840 every month 100% guilt free.
Every last drop of your financial stress occurs because you don’t know your “Everything Else” number. Or you choose to ignore reality and spend more than that number.
The latter is a larger psychological problem. It won’t be solved by budgeting.
If you never got a raise and started this budgeting principle at age 30 you could autopilot your way to $4,000,000 at retirement.
Expenses change.
Your job is to sit down at the start of each month and determine your “Everything Else” number.
Then spend it with no guilt!
There are many other tools and tactics to be used in your financial journey as you invest, buy a home and start a family.
But, it is important to start with this. Budgeting is the financial bedrock you’ll use to build success.
If your budget breaks, so does the rest of your financial picture.
Thank you for reading this far, I’m humbled! Could I ask you for a small favour? Sharing this newsletter with 1 person is completely free and helps me out a lot!
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