The Hall of Awesomeness

In a previous article I discussed the fundamentals of hardcore budgeting. Like I always say it’s not good enough to show me the what, I need the how. So this post is dedicated to showing you how to save money with a budget. How you save money is by watching it as it comes in and making sure you don’t spend it as it goes out. Now, I love money because it helps me to live a secure life and to enjoy some of the things this world has to offer. It does not mean that I have to live the life of a millionaire but it does mean that I can be happy with what I have because I know how to look after it. What I am going to talk about here is not hard. You can do it. So how does it work?

What comes in…

You are paid money for working or if you are smart enough you have a system for making money. These are the only two ways I know to make money. You either work for it or it works for you. Peter Spann calls this leverage in his excellent book on finance which you can read more about here. However you do it, you have a certain amount of it coming in which we will speculate as $500 a week for now.

Gets processed…

That $500 gets processed by you to spend on your needs, wants or desires. Money is a system… an economic one at that. Ok, so this is very obvious stuff isn’t it? However, most people don’t get it. Money comes in and goes out and inbetween that is the bills. This process involves the money being extracted from your account and given to the man.

Must go out

The input (your money) gets processed (given to the man) leaving you with an output (not for most of us). That’s the rub of it right there. Now to make this easier to understand I have some pictures. The following example is a weekly budget.

In this example which you can download here you can see the inputs, the processing and the output of your budget. So as you can see it’s a matter of dividing the numbers into the right categories. Now, if you can do that and you are left with $0 that means you have a tight (not fun) but good budget. You are saving a little bit each week.

What about my personal goals?

You can work this out simply by working out how much you save each by dividing your savings by the cost of the item you wish to purchase. The resulting number will tell you how many weeks you have to save for to get said item. See below:

This, of course, assumes that everything stays put until disasters come. However, if you stick to it you will have money for car disasters, and you will have savings to draw from. To put hardcore budgeting to work you need a follow this kind of thinking right through. You can save money by consistently putting it away (when you can) and making incremental progress. The key is to find things to do with not much money and I will be posting on that this week… so stay TUNED!

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