Learn to manage your budget in 1 hour or less
I’m glad you joined us on the journey to create your budget using the 1-hour budget method
If you are new to budgeting, or you already created a budget in the past…
In this guide we will teach a simple budgeting system that is super easy to set up (no more than 1-2 hours) and super easy to maintain (less than 1-hour a month)
This system will help you define your financial goals, help you save more money, and pay debt faster.
If the word “Budget” makes you feel overwhelmed, you want to improve your financial situation, and are looking for a system to get your money in order – you’re in the right place!
We created this budgeting method to help you achieve any of your financial goals faster.
Using it will allow you to spend less than 1 hour a month to manage all your finances.
You will find it’s pretty easy to make better money decisions overall.
The most important thing is that you find an easy way for you to stick to this process.
If this means printing and writing everything by hand is better for you – great!
And if you are not afraid of using a digital spreadsheet or an app – even better.
You can use this guide to create your budget with what way you find easy for you.
The most important thing is that you find the method that works for you – and stick to it!
So are you ready to start this journey?
If you didn’t do it yet – print Your budget binder workbook.
It’s around 10 pages, and once you print it make sure to place it in a binder or folder to keep everything organized.
Make sure to have your writing accessories ready
I prefer using an erasable pen or pencil and make neat changes as you go along. A budget is a living document and rarely (if ever) stays exactly as you’ve set it in the beginning of the month.
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What do I do if I want to use a digital spreadsheet or app?
We recommend you go through the whole process as written here, and right it down once.
Then you can read the “Create a Digital Budget” Section in the end of the guide.
Enjoy listening to the all new 1-hour budget audiobook.
Filled with even more practical ways to save $10k or more this year – you won’t find in your guide.
If you still didn’t get the 1 – hour Audiobook, You can find the latest edition in our store >>
If you already purchased it – you can get access to it here >>
(Using The Goals Printable)
This in my opinion is the most important step.
Without defining where we want to go – we will never be able to get there.
This is the place where you’ll brainstorm with your family about what you want your life and goals to actually look like.
Do you want to be debt free?
Do you want to have epic vacations every year and see the world?
Do you want to buy a house?
Do you want to be able to homeschool?
Do you want to live in a lake house in a remote location?
Do you want to start a charitable foundation to give back to the community?
Do you want to quit your job and be able to stay home?
Do you want to have a baby? (Or another?)
You can have anything you want in the world, but you have to understand that money is a tool.
It’s not evil, it’s not all mighty.
It’s just a tool. The same as a hammer.
The person holding the tool makes a choice to build or destroy.
You can make these SMART goals (Specific, Measurable, Achievable, Relevant and Time-bound).
If that idea stresses you out, just write down your goals in whatever way feels most natural to you.
2. Choose 6 goals (less is fine too) that you want to work towards.
Common examples from our readers…
You get the idea I think?
(Using The Small Goals Printable)
Be sure to include some small goals.
Small Goals are things that don’t really take very long to earn.
While your big goals will take months, or possibly even years to achieve, small goals are things you could do right now (or within a month or two) if you really wanted to.
Having a place to write down all of the things you want helps you prioritize what you actually want, so you can go after it.
It’s also one of the best exercises you can do if you struggle with impulse purchases.
By writing it down, you know you’re setting it aside so that you’ll remember to buy it later.
With an impulsive personality, that feels the same as actually buying it.
Also, when you’re ready to make your purchases for the month, you’re able to look at all of the things you wrote down, and decide which ones you really want.
What you’ll find is that things that seemed so important at the time, stay unpurchased on your small goals list for YEARS.
While other things get prioritized and purchased easily.
Here’s a few more examples from our readers…
But choosing to purchase one of these things is taking your money away from the others, not to mention from your larger goals. So having them all written down lets you choose what you want most (in a peaceful moment like a budget meeting and not when you’re standing in the middle of the Gap with that dress that you KNOW is going to change your entire life).
The other benefit of small goals tracking is to give yourself some quick wins. Achieving those major goals takes a long time and it’s easy to get discouraged along the way.
It’s impossible (and not very fun!) to spend nothing while you try for years to achieve this major goal.
Writing down these small goals and achieving them while you also save money and stick to your budget is incredibly motivating.
You go from feeling like you are a budget drop out to a legit expert in just a few months (and ironically, you become one).
(Using The Net-worth Worksheet)
Now, let’s calculate exactly what is the current value of the assets you own, and what you owe.
This section is divided to 2 sections:
Any Item that you own, and can be easily sold – might be considered an asset. You can go on Ebay to see how much it sells for to get an estimate.
Make sure you list the real price this sells for, and not the emotional number you set to it.
Combine all of the above values to know the value of your assets
(including child support and alimony)
Combine all of the above values to know the value of your Debt and liabilities.
The last step is to deduct your amount you owe from the amount you own.
This will give your actual net worth.
I suggest you keep track of this number on a quarterly basis, as it’s a bit too much work for a monthly tracking.
Tracking your net worth is probably the best way to see that you are on the right track.
Our ultimate goal with budgeting and managing our money – is to increase our net worth, as we progress on our financial goals.
If the number you calculated doesn’t make you feel good – I can totally understand it. But at least you can look at the reality as it is, not just rely on feeling.
Know that today you made an important step towards your financial freedom. Use these emotions to encourage you and drive you to progress and not get overwhelmed.
(Using The Expense Tracking Worksheet)
Next, we want to map all your expenses so we can track where your money is going.
This is where we discover everything we spend money on. To make it easy and help you identify areas where you can save or cut expenses, we divide our spending to 5 simple categories.
5 Basic Spending Categories
We’ve been helping chronically disorganized families transform their budgets for about 5 years now. And in every success story the focus is on simplicity.
When we gave people only 5 budgeting categories, instead of making it more difficult to budget, it made it so much easier.
Having a few categories makes it easier to categorize your spending, and it lets you focus on the only two categories in your budget that you ever really need to work on.
Here, I’ll explain:
Net Worth: These are things that you SHOULD be spending money on. Lot’s of it!
That includes paying your mortgage, credit cards (including extra payments), saving and investing.
Any money you put into this category has a positive effect on your net worth.
Set Expenses: These are the things that you’re not actively deciding to purchase in the moment.
These are usually your monthly bills from the front page. While you can reduce your spending in this area, these aren’t usually emotional purchases and it’s pretty easy to reduce them if you want to.
Examples of set expenses are things like rent, taxes, insurance, internet, electric bill, etc. We also put fuel and medical expenses here because few people overspend on fuel or medical expenses.
Unless you’re purposely trying to cut out bills, the spending in this category rarely changes.
Food: This is the biggest area of overspending, and includes anything you consume by mouth.
Groceries for the house, eating out, school lunches, and even coffee and bar tabs. If you want to save a ton of money, this is usually the area to focus on first.
Stockroom: This is all of the stuff you need to run your home, from toilet paper to deodorant to air filters.
Lifestyle: This is usually the next easiest category to reduce after food. This is all of the spending that doesn’t fit into the other categories.
They aren’t things you HAVE to buy (although sometimes it feels like you do). These are things that improve your life quality like personal spending, outings, vacations, hair cuts, date nights, home renovations, shoes, clothing, fun and random things that come up.
When you need to save money, the easiest way to do it is to focus on the food and lifestyle category first.
Having limited categories teaches people what to focus on and really hones in on their overspending, this is a much faster and a much better way to budget. If it seems a little odd at first, trust me and try it for a month and you’ll be hooked.
Now, use the expense tracking scratch pad to write down every expense monthly.
Quickly categorize your last month spending by jotting down each expense & amount spent in the matching categories, then add it together to calculate the total spending in the category.
To make it easier you can go through all of your saved receipts from the past month.
It’s easy to have a recipe box or folder where you keep them all.
Another quick way to find expenses is by going through your credit, debit card or bank account transaction.
By the end of this stage you should be able to find, categorize and add up all of your expenses for the month.
(Using Monthly Budget printable)
In order to create a simple budget – we want a simple frame to work by.
Basically, we want to know how much money we earn every month – and how much money we can actually spend.
To do this successfully, we will use the zero-based budgeting concept.
It’s pretty straight forward
With a zero-based budget, you have to make sure your expenses match your income during the month.
That way you’re giving every dollar that’s coming in a job to do.
How to Make a Zero-Based Budget?
1. Print 1 page of the Monthly budget printable for each month.
Write down any of your monthly income.
List every kind of income you are getting on a regular basis.
1When we say income, that should include paychecks, small-business income, side hustles, residual income, child support, and any other cash you bring in.
If it’s money and comes into your household’s bank account, it’s income!
Be sure to write it down and add it all up in your budget.
If you follow the Debt Snowball Method – Pay you stalled debts first
If you follow the Debt Avalanche Method – Pay the highest interest debt first.
Income – expenses – savings – debt payments = 0
You have a budget now!
Now that we did this once – let’s make this a monthly habit.
Personally, it takes me around 45 minutes every month to “take care” of the budget. And it consists of 3 simple steps
Every first week of the month I update the budget for the last month.
To start, collect all of your invoices, receipts, credit card & bank statements from the last month.
Now that we collected all receipts – fill the expense by category worksheet the same way I showed you before.
Doing this once a month is the most important habit you can have to achieve your financial goals!
But, to make it even more effective, I want to add 2 more Steps.
In this worksheet you can write down all of your monthly, quarterly and yearly bills.
We keep track of them every month to make sure we always pay our bills on time – and avoid fines or extra fees.
I love this dashboard because it allows me to visually see my progress, and find areas where I can improve.
There are only 5 numbers we need to update in the dashboard.
To get all of the numbers – just use the monthly budget worksheet.
By updating using the Dashboard – we get a clear dashboard of where we are going financially.
Using a budgeting app can make the whole process of tracking your expenses more easy and automatic.
We recommend using Digit App.
Digit is a savings and investing app that can automate some of your finances to help you achieve important goals.
Whether it’s paying off a credit card, saving up for a down payment, or contributing to an emergency fund, Digit could assist.
The app analyzes your spending habits, intelligently setting aside money from your bank account (in amounts you’ll hardly notice) to meet your financial goals.
Just tell Digit what your goal is — like paying off your credit card or building an emergency fund — and let their smart algorithms do the rest.
Digit can help you avoid overdraft fees, pay off debt faster, save bucketloads on interest, and even set aside money to invest and grow your wealth. Digit users save an average of $2,500 per year!
Truebill gives you more control over your budget, helps you cancel subscriptions you no longer need, and even lowers your bills for you.
If you feel overwhelmed by the idea of calling up your subscription services, cable company, or cell phone carrier in an effort to save money, you can just have an app like Truebill do it for you.
the company has helped users save more than $14 million by finding and canceling unwanted subscriptions, reducing monthly bills, and securing refunds on their behalf.
But the app is about more than just those immediate savings; it also helps you recognize and change your own spending habits so you can have better control over your money.
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