Budget for Financial Freedom

Some people don’t like to think or talk about their own budget. They may feel like it is work to do or they feel they won’t have anymore fun in life if they start following a budget.

Having a personal budget is like work. The place you work needs to spend less on expenses than they bring in for income. That is no different than your own personal budget. It is simple Math.

This is part of our Mills Way to Financial Freedom Action steps and rule that we covered with our boys. They don’t do a great job at it so we help them at least with the savings part of their budget and staying debt free.

Creating a budget is more than just making sure to place a spot of each expense. It is also important to create a payment accelerator amount in the budget. The payment accelerator amount is what we use to get our debt paid off faster and then to save towards or Financial Freedom goal.

Sometimes when I have worked with people, they had to make hard choices what they felt was hard to them. To other people their choices may seem like they should have been easy. For instance, if one family gives their kid’s $100 per week allowance and someone like us that doesn’t pay our kids an allowance, we would see that as an easy choice to cut back on in the budget. But they may not think so.

One family may spend $150 per week on Cable TV and another family like us has Antenna TV. So, for us that would be an easy expense to cut back on in our eyes but maybe not theirs.

Couples I have worked with in the past had a harder time agreeing on what to adjust than single person of course. Sometimes people made even larger reductions by downsizing their house or selling off an expensive truck they own.

I have budget sheets available for people I work with that we can break each expense out monthly and yearly. We show what the percentage of the expense is to total expenses. Then we can see that they roughly need to in investments to reach their retirement goal.

Of course, before they can save for retirement, they need to get their budget in-line and then get all their debt paid off.

Below are some suggested rough percentages that people could use as a rough guideline when doing a budget. The one I like to plug in first is 10% for your Debt Accelerator amount to get debt free and save towards Financial Freedom.

Our Budget has Needs and Wants in it. Remember we need Shelter, Food, Water and the rest of our expenses are negotiable. Yes, we need clothes but in reason. Our Clothes budget for the four of us is $1,380 a year. I have seen some people spend over $6,000 on just clothes a year. Some people think if Blue Jeans or Shoes aren’t over $100 than they aren’t any good. If people make the income to support $6,000 in clothes then good for them. But a majority of people have debt, no savings and spend more than they make so they need to look at every expense.

Suggested Percentages

Here are some suggested percentage of your family take home pay after taxes and insurance.

Total Housing Expense – 20% to 35%. Doesn’t matter if you rent or own.

Total Utilities – 5% to 10%.  That includes your Cell Phone and Cable TV.

Total Food – 5% to 15%. Some people look at $150 per person a month. This includes eating in and eating out.

Out of Pocket Medical and Dental Expenses – 5% to 10%. Ours runs us currently about 2%.

Total Car Expense – 10% to 15%. This is all car expenses, gas, oil, repairs, tabs and more.

Total Entertainment – 5% to 10%. We spend extra on this expense with our vacations and my golfing addiction. LOL

Clothing Expense – 2% to 7%.

Charity Expense – 0% to 15%. A lot of opinions on this. If it is important to you than budget for it and take away from another expense. We are just talking simple Math.

Total of all Insurance Expenses – 10% to 25%. There are ways to save on Insurance that we can cover in other Podcasts. Our Insurance costs is really low for us.

Debt Payments – 0% to 10% is a rough number depending on how much debt you have or if you are debt free. Also depends on how fast you want to get debt free depending on your Financial Freedom goals.

Savings – 0% to 25%. This depends on the person, situation, goals and if they are debt free.

Remember my disclaimer on millsway.com. I am not giving any legal or financial advice. This podcast and blog are just for entertainment.

It isn’t Rocket Science but it can seem like it to some people when we are talking Budgets. Some people don’t think it is possible. I am telling you from my own personal experience of working with clients to tracking my own expenses since 1982 that it is possible. I have examples I show people and, on my blog, I even let my paid followers know are exact numbers for the month. I cover our P&L and our Net worth.

You may say that you aren’t a numbers person but this is simple Math and very important. We may not want to talk about the subject of Money but it is actually what we live on. Money is any currency that we use to pay the expenses from a $100 bill to Digital Currency.

If you are married and having problems working out a budget together it may be good to get a third party involved. Maybe your Accountant, Insurance Agent, Parent, Friend or a Financial Coach like myself.

What is your situation? Do you have a Budget? Do you track your expenses each month or not? A budget is worthless exercise somewhat if you don’t track your expenses and do a recap to see if you won for the month or not. Same with a yearly recap. Some people use Envelope Budgets, Zero Budgets or even Reverse Budgets. What is most important is the one that works best for your situation.

Here are two positive quotes I like; “There is no way to happiness; happiness is the Path.” By Buddha

“Change Your Thoughts – Change Your Life” by Wayne W. Dyer

Let me know your thoughts about this blog and let me know of others you would like me to do in the future. I feel we can all learn from each other. That is why I am in the helping people retire early, enjoy life more and be more successful. Also, please see my Disclaimer page.

Don’t give up on your dreams; don’t let others talk you out of your dreams. Make your dreams happen. Make it happen today.

Visit my Podcast at www.Live4.Club on Anchor.fm, Spotify, Pocket Casts, Breaker Audio, Google Podcasts, Radio Public, i-tunes, Apple Podcast and more. If you would like to be a guest on my Podcast drop me an email at bruce@millsway.com or text me at 480-389-6224.

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Sources and Resources from Podcast (Available in Show Notes)

  1. Cbsnews.com https://www.cbsnews.com/news/percentage-of-young-americans-living-with-their-parents-is-40-percent-a-75-year-high/

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