You should always be watching your income, expenses, and cash flow. Build your personal budget to let you know how much cash flow you will need to finance your life without having to work. The goal is to grow your wealth so your assets can be turned into larger and larger streams of unearned income.
What are Your Monthly Income and Expenses?
The first step to creating a budget is to understand your current income and expenses. Take a moment to complete the following worksheet. This will be used to determine your current financial situation. Remember, you don’t want to use your income to finance your personal lifestyle. That is an old way of thinking. It’s not all about what you have anymore. Use your income to finance your life without having to work! Check out what Suze Orman talked about on the View:
Simple Budget Model for Your Life
To avoid overcomplicating things, here is a simple budget model to follow. If your current debt obligations prevent you from applying this budget to your life, then make the changes in your lifestyle to make this budget a reality. It’s your life!
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30% toward saving and/or investing
- 40% toward living expenses and taxes
- 30% toward rent or house payment (principle, interest, taxes, insurance, and HOA)
Start Saving Today!
If you can’t afford to save 30% of your income due to your current debts, then start small. It is better to start today versus waiting until tomorrow. Set a goal to save 30% of your income and work purposefully toward that goal. With the proper mindset and discipline this goal will become a reality. However, you must set a deadline or it will not happen!
The table below assumes you invest $100 every month:
| 0% Interest | 2% Interest | 4% Interest | 6% Interest | 8% Interest | 10% Interest | 12% Interest | 14% Interest | 16% Interest | 18% Interest | 20% Interest | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| $1,200 | $1,213 | $1,226 | $1,240 | $1,253 | $1,267 | $1,281 | $1,295 | $1,309 | $,1324 | $1,338 | |
| $2,400 | $2,451 | $2,503 | $2,556 | $2,611 | $2,667 | $2,724 | $2,783 | $2,488 | $2,906 | $2,970 | |
| $3,600 | $3,713 | $3,831 | $3,953 | $4,081 | $4,213 | $4,351 | $4,494 | $4,643 | $4,799 | $4,960 | |
| $4,000 | $5,001 | $5,213 | $5,437 | $5,673 | $5,921 | $6,183 | $6,460 | $6,752 | $7,061 | $7,387 | |
| $6,000 | $6,315 | $6,652 | $7,012 | $7,397 | $7,808 | $8,249 | $8,720 | $9,225 | $9,766 | $10,345 | |
| $7,200 | $7,656 | $8,149 | $8,684 | $9,264 | $9,893 | $10,576 | $11,317 | $12,123 | $13,000 | $13,953 | |
| $8,400 | $9,023 | $9,708 | $10,459 | $11,286 | $12,196 | $13,198 | $14,303 | $15,521 | $16,867 | $18,353 | |
| $9,600 | $10,419 | $11,329 | $12,344 | $13,476 | $14,740 | $16,153 | $17,733 | $19,504 | $21,490 | $23,718 | |
| $10,000 | $11,842 | $13,017 | $14,345 | $15,848 | $17,550 | $19,482 | $21,677 | $24,174 | $27,017 | $30,259 | |
| $12,000 | $13,294 | $14,774 | $16,470 | $18,417 | $20,655 | $23,234 | $26,209 | $29,647 | $33,626 | $38,236 | |
| $18,000 | $21,006 | $24,691 | $29,227 | $34,835 | $41,792 | $50,458 | $61,285 | $74,858 | $91,921 | $113,429 | |
| $24,000 | $29,529 | $36,800 | $46,435 | $59,259 | $76,570 | $99,915 | $131,635 | $174,946 | $234,349 | $316,148 | |
| $30,000 | $38,947 | $51,504 | $69,646 | $95,734 | $133,789 | $189,764 | $272,728 | $396,522 | $582,331 | $862,671 | |
| $36,000 | $49,355 | $69,636 | $100,954 | $150,030 | $227,933 | $352,991 | $555,706 | $887,048 | $1,432,529 | $2,336,080 |
