Speaker 1: Welcome to How the Money. I'm Joel and I and
Speaker 1: that today we're discussing different approaches to budgeting. Yeah, Joe,
Speaker 1: what's so great about this episode is that we're not
Speaker 1: only going to talk about why it's so important for
Speaker 1: us to budget that the many benefits, and how we
Speaker 1: can achieve the different goals that we've set for ourselves,
Speaker 1: but we're gonna specifically talk about some of the different
Speaker 1: methods of budgeting. Depending on your personality, right, just depending
Speaker 1: on the type of person you are, there's gonna be
Speaker 1: some what your anagram number is, that's actually what we
Speaker 1: should have called it, like anagram budget. You're really into that,
Speaker 1: aren't you know? I'm not my wife is I'm not? Well,
Speaker 1: you keep calling me, uh four? Is that what you say?
Speaker 1: I am? And you're you know you're a five? I
Speaker 1: think five. But literally, I only know that because of
Speaker 1: what other people say about types. I haven't read a
Speaker 1: book listen. I listened to one podcast episode because my
Speaker 1: wife asked me too, but like, you must listen to this.
Speaker 1: But other than that, I don't know what they're about it. Yeah.
Speaker 1: The fact is, if you have tried to budget before
Speaker 1: and have failed, I think there's a good chance that
Speaker 1: maybe you try to budget in a way that didn't
Speaker 1: necessarily fit to how you naturally think about things. And
Speaker 1: so that's what we're gonna talk about this episode. Yeah,
Speaker 1: we personal finance is personal for a reason. We all
Speaker 1: have like things that click in our brain make more
Speaker 1: sense to us. And so if we can talk about
Speaker 1: budgets and help people find a way of budgeting that
Speaker 1: makes sense for kind of how they think about things,
Speaker 1: then we want to do that because we want people
Speaker 1: to master their money, no matter what their personality type is,
Speaker 1: no matter what their tendencies are. But Matt, before we
Speaker 1: get into that, I saw recently that our good friend
Speaker 1: Warren Buffett are Yeah, are good, buddy? Pause, He's on
Speaker 1: speed out. He's in my t mobile phave five. He's
Speaker 1: one of my favorites. Yeah, he just ditched his flip phone.
Speaker 1: He finally went to a smartphone for the first time
Speaker 1: at the ripe old age of eighty nine. Nice. He
Speaker 1: got with the times. Man, he's gotten too old to
Speaker 1: teach the dog new tricks. You have the newest version
Speaker 1: of the iPhone, I think, so where you go? Good
Speaker 1: for him? But man, how cool is that this guy
Speaker 1: who's one of the richest guys in the world, and
Speaker 1: he says, you know what, I don't I don't need
Speaker 1: the trappings of new technology. I don't need the latest
Speaker 1: and greatest. And he's just kind of that. He's that
Speaker 1: kind of guy. He's lived in the same house for
Speaker 1: like fifty years or something, and he's been rolling with
Speaker 1: his flipphone for such a He's a stubborn old man,
Speaker 1: is what it sounds like, Like how much how much
Speaker 1: of that is himning frugal versus you know, him not
Speaker 1: wanting to learn the new technology. That's a good point.
Speaker 1: But the fact is, though that he is older than
Speaker 1: he was and he's just like, dang it, I guess
Speaker 1: I'm gonna have to learn the new technology. I could
Speaker 1: see him in his office playing candy Crush, like just
Speaker 1: swiping all over the place. Right. It does make me
Speaker 1: not feel so great about rocking my iPhone se which
Speaker 1: I still am. By the way, I've got I got,
Speaker 1: I got the iPhone sc and I kind of wear
Speaker 1: it as like a badge of honor, the fact that
Speaker 1: I still have this crazy old iPhone. But you know
Speaker 1: what I mean, it still works. I still take really
Speaker 1: good photos. With it, throw pictures up on Instagram, take
Speaker 1: pictures of the kids. It still makes phone calls, maybe
Speaker 1: more than maybe Warren would trade with you. He doesn't care, yeah,
Speaker 1: because he's like, I don't really need it, Like I'll
Speaker 1: take an older version. That's fine. But it's funny too
Speaker 1: because what his company, Berkshire Hathaway, owns like over five
Speaker 1: of Apple stock. So I'm sure he would have thought
Speaker 1: that they would have like thrown in a free iPhone
Speaker 1: right in there, right, and maybe maybe they did. I
Speaker 1: don't know, but I mean, I don't know. I just
Speaker 1: appreciate that. I think we can all learn a lesson
Speaker 1: from someone who has, you know, more money than they
Speaker 1: could ever spend more money than they know what to
Speaker 1: do with, and yet they still live simply that That's
Speaker 1: something that that I strive for, no matter where I'm
Speaker 1: at in my earning cycle, no matter what my life
Speaker 1: looks like, I want my life to have simplicity to it.
Speaker 1: And so, yeah, I don't know, I respect him for that.
Speaker 1: And by the way, one other thing that he said
Speaker 1: recently at their the annual shareholders meeting of Berkshire Hathaway
Speaker 1: is he said, you should think about buying stocks as
Speaker 1: buying a business. And I think that specifically that the
Speaker 1: change of phrase, using terminology in that way, it can
Speaker 1: really frame things appropriately for us. And so I loved
Speaker 1: what he said there. Instead of saying I'm buying stocks,
Speaker 1: say I just you know, bought a portion of a
Speaker 1: business today. I like that approach. I think it makes
Speaker 1: a lot of sense. Yeah, I think that the temptation
Speaker 1: with stocks is that you you buy and sell right like.
Speaker 1: That's that's that's what he's fighting against our day trading
Speaker 1: people who are getting in and out of the market quickly,
Speaker 1: because that's when you lose when he's looking for value
Speaker 1: inequity within the business and people aren't buying businesses and
Speaker 1: selling businesses left and right, although folks do that with stocks,
Speaker 1: And so I agree, I think that's a great way
Speaker 1: to frame it, except that you're buying a business that
Speaker 1: you don't have to tend to, which is like, sounds
Speaker 1: like the best kind of business down in the easy
Speaker 1: button on that business purchase. Yeah, all the way, man,
Speaker 1: Let's go ahead and introduce our beer for this episode,
Speaker 1: we are drinking another beer from Goose Island. This is
Speaker 1: Bourbon County Wheat Wine Ale and again This one was
Speaker 1: sent to us by listener friend of the show, Alex,
Speaker 1: So thank you so much, Alex. Yeah, all right, Matt,
Speaker 1: let's get onto the subject at hand. We're talking about
Speaker 1: different approaches to budgeting, and we're not going to dissect
Speaker 1: anyagram numbers here, but we are going to talk about,
Speaker 1: you know, how people can figure out what budget is
Speaker 1: going to work best for them, because in all likelihood
Speaker 1: you need some sort of a budget. But budgets are
Speaker 1: often viewed as like a four letter word. I envision
Speaker 1: people screaming budget when they stub their toe, as opposed
Speaker 1: to you know, another unsavory words would be a curse
Speaker 1: word for you, right, budget, But only couples keep a
Speaker 1: written budget of any kind, and I can't imagine that
Speaker 1: the numbers are much higher for single folks either. So
Speaker 1: let's say you do find the audacity to start creating
Speaker 1: a budget. Well, there are so many different ways that
Speaker 1: you begin, and that can be overwhelming for folks. Right there,
Speaker 1: there are different apps that offer to help us in
Speaker 1: various methods, and different money experts claiming that they're gonna
Speaker 1: be able to help us actually stick to it this time.
Speaker 1: So Matt, I think it's our goal on this episode right,
Speaker 1: to make budgeting a little simpler and a little more
Speaker 1: approachable for people and how they live life. In this episode, yes,
Speaker 1: completely man, Most people like they buck at the idea
Speaker 1: of starting or you know, keeping and maintaining a budget.
Speaker 1: But we want to help you read lines that budgeting
Speaker 1: can actually help you achieve your greater goals and provide
Speaker 1: you with some piece of mind when it comes to
Speaker 1: your money situation. Budgeting can help you live within your
Speaker 1: means and achieve your goals that you've never been able
Speaker 1: to and maybe it can help you avoid the fights
Speaker 1: that plagued your relationship when it comes to money. And also,
Speaker 1: you know, like we said, we're not only just going
Speaker 1: to highlight the benefits of budgeting, but we're gonna show
Speaker 1: how it can look different based on the different personality types,
Speaker 1: based on your personal preferences. Yeah, and the biggest reason
Speaker 1: for any of us to budget, the whole reason behind it,
Speaker 1: is that budgets help us achieve our goals. Right, because
Speaker 1: money is a limited resources for most of us except
Speaker 1: for our friend Warren, but we all have to prioritize
Speaker 1: and to put money towards the different goals that we
Speaker 1: each have. So it's important for us to focus on
Speaker 1: those greater wise behind our money, like why we do
Speaker 1: things what we want for our life, and then letting
Speaker 1: our money kind of fall in line with those greater
Speaker 1: goals before we take a deep dive into the actual
Speaker 1: specific numbers. So, Matt, let's go over a couple of
Speaker 1: the common goals and reasons that people do find themselves
Speaker 1: in need of a budget. And I think the first
Speaker 1: one is kind of out of complete necessity, right, just
Speaker 1: just to be able to make ends meet. Budgeting is
Speaker 1: a crucial factor for a lot of people who have
Speaker 1: to stretch the dollars that they make in a given
Speaker 1: month to fit all the needs that they have in
Speaker 1: that very same month. Right, And so even if you
Speaker 1: have a steady W two job, if there's not enough
Speaker 1: money to go around, a lot of folks will will
Speaker 1: need to find discipline inside of a budget with their
Speaker 1: money in order to just survive, just to be able
Speaker 1: to put food on the table, pay rent, and make
Speaker 1: sure they have gas to fill up their car to
Speaker 1: get to and from work. So yeah, just to avoid
Speaker 1: going into debt, to be able to make ends meet
Speaker 1: every month, let alone to achieve you know, potential other goals.
Speaker 1: Budgeting is just a necessity for tens of millions of Americans.
Speaker 1: And so if we can get some of those people
Speaker 1: on the budgeting track, I think we'd be we'd be happy,
Speaker 1: right absolutely, man. And you know, in addition to folks
Speaker 1: trying to get by, there's a lot of folks as
Speaker 1: well who are in careers where they're not on a
Speaker 1: fixed wage, right, Like, it's important to make a plan
Speaker 1: in order to have enough money to invest, save, and spend.
Speaker 1: There is incredible flexibility, right that I personally absolutely love
Speaker 1: as a freelancer owning my own business, but the income
Speaker 1: is flexible as well, and that can really be a
Speaker 1: challenge if you don't have that steady paycheck coming in
Speaker 1: every two weeks. Yeah, Matt. And another reason why budgets
Speaker 1: are are such a good thing to have for so
Speaker 1: many people is to save up for those bigger goals.
Speaker 1: And I think so many times without a budget, we
Speaker 1: see what we bring in every month, and we kind
Speaker 1: of dole it out every month to the things that
Speaker 1: seem like the most urgent. And if we do that,
Speaker 1: we avoid being able to save and invest for longer
Speaker 1: term goals that we have saving up for a trip,
Speaker 1: or a new car, hopefully a new use car, but uh,
Speaker 1: but down payment on a house. I mean, most folks
Speaker 1: default to spending every single penny they make, and sometimes
Speaker 1: more going into credit card debt. And while those immediate
Speaker 1: needs and wants can be put on credit cards, this
Speaker 1: is a dead end path, right because you can't put
Speaker 1: your hirement on a credit card. And so for folks
Speaker 1: that find that they constantly have to put their larger
Speaker 1: goals on hold, well, a budget is a perfect solution
Speaker 1: for someone like that. Yeah, totally, man. We know we
Speaker 1: talked about how achieving goals is one of the biggest
Speaker 1: reasons that we budget, but specifically achieving savings and financial
Speaker 1: goals is is such a huge part of that. Personally,
Speaker 1: for me, one of the reasons I like the budget
Speaker 1: is just having an understanding and having knowledge about what
Speaker 1: I'm spending my money on. Right, Like, some folks are
Speaker 1: a little nerdier like me, and they'd like to know
Speaker 1: all the details, and so I know, for me, when
Speaker 1: I'm able to understand and wrap my brain around the
Speaker 1: big picture, I'm able to stick with whatever plan I've
Speaker 1: you know, decided I'm gonna do because I understand the
Speaker 1: why behind that, right, And so for me when I budget,
Speaker 1: if I know why it is and how it is
Speaker 1: i'm doing this and I can I'm able to kind
Speaker 1: of see it from the start all the way to
Speaker 1: the finish, I have a much better chance of completing
Speaker 1: that and seeing it to the end. I remember being
Speaker 1: a kid and I would ask my parents why a lot,
Speaker 1: as most kids do. I could especially see you being
Speaker 1: the white kid why, And yes that I was just
Speaker 1: much more likely to actually obey or follow through when
Speaker 1: something when I knew like why I was doing it.
Speaker 1: And I think all of us have a little bit
Speaker 1: of that to ourselves, right, and so much more than others.
Speaker 1: But the more we can understand kind of how things work,
Speaker 1: why we're doing it, what direction we're going in, the
Speaker 1: easier it is to actually follow through on that thing.
Speaker 1: And so, yeah, sorry mom and dad that I was
Speaker 1: that kid. It's like, well, why, it's because I said so.
Speaker 1: Maybe later I'll explain it to you. Definitely douse that
Speaker 1: at some point in my parenting already. Uh well, And
Speaker 1: another great reason for folks to start budgeting as well
Speaker 1: as to avoid money fights, right, if you have a
Speaker 1: significant other, budgeting can get you both on the same page.
Speaker 1: It's easy to talk in generalities, but money is a
Speaker 1: very specific and concrete thing, and so there's no better
Speaker 1: way to talk about the specifics of money than with
Speaker 1: a budget. Like that's speaking money is a budget, right,
Speaker 1: Like you want to learn how to speak money. It's
Speaker 1: a budget, Like that's the textbook easiest way to communicate
Speaker 1: about it. Yeah, but just can really improve how you
Speaker 1: communicate about your money with a signal again other, Yeah,
Speaker 1: we've received a listener email recently, so I'm talking about
Speaker 1: how budgeting is actually really helped change their life and
Speaker 1: their their dynamic as a couple, and that the budget
Speaker 1: has essentially been that place for them to be able
Speaker 1: to communicate well about money, and money is kind of
Speaker 1: the the diving off point to be able to talk
Speaker 1: about bigger goals, the things that you guys want to
Speaker 1: achieve together. And so, yeah, I just enjoy getting emails
Speaker 1: like that because it's really fun to see that money
Speaker 1: has this much greater impact beyond just the excess and
Speaker 1: the ohs, beyond the dollar signs and the decimal points.
Speaker 1: That being able to as a couple communicate well about
Speaker 1: money has led to just increased clarity in their discussions
Speaker 1: on a lot of topics in their marriage. That's awesome, man, right,
Speaker 1: I know, yeah, so cool. And I always enjoy seeing
Speaker 1: how talking about money well and a budget being that
Speaker 1: exact thing helping you to be able to talk about
Speaker 1: money well actually leads to good conversations for couples in
Speaker 1: all these other areas of life. For sure, it's really
Speaker 1: encouraging to see budgets being talks about as something that
Speaker 1: rings a couple together, not as something that like one
Speaker 1: is hitting the other person overhead with, right exactly. And
Speaker 1: I think the reason that a budget can be especially
Speaker 1: helpful for couples as well is because essentially, like all
Speaker 1: it is is a plan for your money. Like it's
Speaker 1: a plan that you both agree to or that you
Speaker 1: just agree to yourself if you're single, but it's something
Speaker 1: that you've created to help you achieve your goals, right,
Speaker 1: whatever those goals might be. It's just an intentional approach
Speaker 1: to what you're going to do with your money so
Speaker 1: that you don't get to the end of your working
Speaker 1: career of your lifetime wondering where all of your money
Speaker 1: has gone. And that's easy to do. I mean, I
Speaker 1: know that we feel that which is like the hours
Speaker 1: in our day sometimes that we we waste them more
Speaker 1: like what did I even do today? I think I
Speaker 1: especially remember some of those days when I was younger. Well,
Speaker 1: now I've got kids pulling on me, a lot of
Speaker 1: stuff to do, but I totally remember the days like
Speaker 1: that in my early twenties where I don't know what
Speaker 1: I got accomplished that day, but you're like, it's six thirty.
Speaker 1: I guess it's time to eat. Yeah, and and so yeah.
Speaker 1: I think the same thing can definitely be true of
Speaker 1: our money, that if we're not thoughtful about it, if
Speaker 1: we don't have kind of a plan, we can waste
Speaker 1: that money and miss out on the bigger goals that
Speaker 1: we that we have that are buried underneath that we
Speaker 1: just haven't even gotten around to finding out what they are. Sometimes,
Speaker 1: And Matt, that plan is the budget. And we're gonna
Speaker 1: talk more about that and get into kind of specific
Speaker 1: budgeting styles for different personality types right after the break.
Speaker 1: All right, we're back in the break, Matt. We're talking
Speaker 1: about budgeting and different approaches to budgeting. One approach would
Speaker 1: be to not have a budget at all. That doesn't
Speaker 1: really sound like a method or an approach. It is
Speaker 1: an approach some people take, and I guess it begs
Speaker 1: the question, though, are there people who don't need to budget?
Speaker 1: And so I think you and I actually kind of
Speaker 1: disagree on this point, so let's hash it out. I
Speaker 1: would say that, yes, there are some folks, a small
Speaker 1: sliver of folks that can get away with not having
Speaker 1: a budget. I think budgets are best at helping us
Speaker 1: put our money towards the areas that we value in life,
Speaker 1: and they can be a pivotal part of of increasing
Speaker 1: what we save and invest. But if you are kind
Speaker 1: of this natural saver, someone that generally likes to max
Speaker 1: out there for oh one k, who's always looking to
Speaker 1: put more money aside, you might not need a budget.
Speaker 1: And and Matt, that was that was kind of me
Speaker 1: before I got married, was I I didn't feel like
Speaker 1: I needed a budget because I felt like I was
Speaker 1: naturally just looking for ways to save more of my
Speaker 1: money and invest for the future, and so taking the
Speaker 1: time to create and stick to a budget just didn't
Speaker 1: feel necessary for me. And again, I don't think that
Speaker 1: this is something that is applicable to most folks out there.
Speaker 1: I think most folks need a budget, Like, they need
Speaker 1: that to build communicate with their spouse, and they need
Speaker 1: that to allocate their money in a way that aligns
Speaker 1: with their values. But I think for a few people
Speaker 1: at least, not budgeting can be a method that makes sense.
Speaker 1: All right, Matt, I see you roll in your eyes,
Speaker 1: So tell me why I'm wrong. Well, here's the thing.
Speaker 1: I don't think it necessarily has to do with, you know,
Speaker 1: whether or not you are saving or seeing enough money,
Speaker 1: right Like, So I would argue that everyone needs to
Speaker 1: have a budget. Most Americans have a really tough time
Speaker 1: saving and putting enough for their income towards retirement. Like,
Speaker 1: that's one of the biggest reasons to budget, right, That's
Speaker 1: what we've been talking about. But let's say there is
Speaker 1: someone who is one of the rare folks who is
Speaker 1: frugal and saves a ton of money. Right, retirement is
Speaker 1: getting maxed out. Extra money is going towards other investments.
Speaker 1: Maybe money is going towards smart real estate deals. And
Speaker 1: so in this example, I would argue that the budget
Speaker 1: needs to be there not to get that individual to
Speaker 1: save more, but to spend more of their money, right, Like,
Speaker 1: chances are if that you were to sit that person
Speaker 1: down and ask them, like, what are the important things
Speaker 1: in your life that you value? Like they'll name a
Speaker 1: few things, and then I would ask them if they're
Speaker 1: spending their money in a way that reflects those values, right.
Speaker 1: It's like, so, for example, a lot of folks will
Speaker 1: say that they value friendship or relationships. I think that's
Speaker 1: one of the ways that folks who are super savers
Speaker 1: and who are really unto the money might get carried
Speaker 1: away and they're like, oh, you know, like I don't
Speaker 1: want to go out for drinks because I'm trying to
Speaker 1: I'm trying to say, Or they're like, I don't want
Speaker 1: to go on that vacation because that's gonna that's gonna
Speaker 1: put my five date, my financial independence date back, you know,
Speaker 1: it's gonna push it down the road another year, like
Speaker 1: that kind of thing. But if you ask them like,
Speaker 1: is this something that's valuable to you? Like is this important?
Speaker 1: They would say yes, and and so it would It
Speaker 1: takes sometimes, I think a budget to highlight that, Like
Speaker 1: there are lasting memories that you might be missing out
Speaker 1: on were you to to skimp in those situations. See,
Speaker 1: that's why I like you. I like being your friend
Speaker 1: because I feel like you bring a perspective sometimes that
Speaker 1: I don't have. I'm trying to get you to spend
Speaker 1: your money, well, not you specifically. This is a hypothetical, right,
Speaker 1: but I mean that that honestly, that kind of like
Speaker 1: was me for a while back in the day, and
Speaker 1: I feel like having a budget, talking about it with
Speaker 1: Emily and are us having shared goals together, it's been
Speaker 1: really really helpful. And now it would be hard for me,
Speaker 1: you know, to to live life with that one because
Speaker 1: I do feel like it informs kind of the values
Speaker 1: that I have and it does force me in a
Speaker 1: good way to spend money on the things that do
Speaker 1: matter to me. And that is something that I like
Speaker 1: you and I we we fight for for people. We
Speaker 1: want people to experience that where they are able to
Speaker 1: save and invest well for the future while well also
Speaker 1: spending money today on things that they care about. Right,
Speaker 1: I mean, that's that's the magical place. That's a good
Speaker 1: place for people, and that's what a budget can, I agree,
Speaker 1: really help people do. Yeah. I feel like so much
Speaker 1: of of what I guess I'm trying to communicate here
Speaker 1: is that, uh, folks see budgets as being something that
Speaker 1: that are restricting, right, but in reality that I'm trying
Speaker 1: to like flip that around and trying and turn it
Speaker 1: around for folks and say, like, no, there's freedom in
Speaker 1: a budget. And I've seen this specifically with my wife
Speaker 1: Kate as well, Like she feels and she's always felt
Speaker 1: this way, but she'll feel a little guilty for spending
Speaker 1: money because she knows that, like, oh, I know I
Speaker 1: could save this and that would be a smarter thing
Speaker 1: to do. But if we've identified that, like, no, this
Speaker 1: is important for us to do, this is something that
Speaker 1: we want to put our money towards, well, then if
Speaker 1: you look at the budget and there's still money left,
Speaker 1: there should be complete freedom to spend that money and
Speaker 1: not feel guilty about it at all. Yeah. No, I
Speaker 1: love that, all right. So let's talk about the other
Speaker 1: methods besides the non method of not budgeting that we've
Speaker 1: kind of thought out here and and and we What
Speaker 1: we're trying to do in these is trying to ascribe
Speaker 1: kind of a personality style and kind of what budget
Speaker 1: might be best for you. So let's go through them.
Speaker 1: The first one we want to cover is kind of
Speaker 1: like the newbie budget, or if you are kind of
Speaker 1: new to the game, you've never really created one before,
Speaker 1: and you have no idea where to start. Well, then
Speaker 1: we would suggest considering a fifty budget that's probably best
Speaker 1: for you. That means that of your budget is for
Speaker 1: your needs, is for your wants, and twenty of your
Speaker 1: budget should be dedicated towards savings. This is kind of
Speaker 1: like a less rigid approach and can kind of act
Speaker 1: as like a guiding light if you're looking to keep
Speaker 1: things simple, because we can make budgets as simple or
Speaker 1: complex as we like, and if you're new to the game,
Speaker 1: keeping it simple with UH with essentially three main categories,
Speaker 1: that's just kind of a good way to ease yourself
Speaker 1: in to the process of budgeting altogether. And at the
Speaker 1: same time, apps like Mint and Wine app can help
Speaker 1: you keep track of your spending to make sure that
Speaker 1: you're sticking to the budget that you've set up for yourself. Yeah.
Speaker 1: What's great about those apps specifically too, is like there's
Speaker 1: a good amount of automation built in, but then as
Speaker 1: you kind of progressed down the path, you can get
Speaker 1: a little more advanced, kind of complicated with it. As
Speaker 1: needs arise, you can personalize it and so you know,
Speaker 1: like you said, so that's maybe for someone who who
Speaker 1: doesn't know where to start. Well, maybe like you're someone
Speaker 1: who just really doesn't like the numbers, right, like maybe
Speaker 1: you're more of a free spirit. You can simplify things
Speaker 1: even more by going with the eight twenty budget, and
Speaker 1: that's where you're setting aside of your income towards retirement
Speaker 1: and then everything else, like, well, it doesn't matter what
Speaker 1: you spend your money on, like it is completely up
Speaker 1: to you. You've already prioritized what's arguably the largest financial
Speaker 1: goal of maybe being financially independent at some point, but otherwise,
Speaker 1: like you get to do what you want with your money.
Speaker 1: And so an easy way to implement this is that
Speaker 1: if you have a job as a four o one K, well,
Speaker 1: you can increase your contributions towards your four oh one
Speaker 1: K to that percentage you know, And we say, but
Speaker 1: it just depends on where you are, Like maybe for
Speaker 1: you that's just ten percent for now, uh, and then
Speaker 1: slowly over time you can crank that up to fifteen.
Speaker 1: That's up to you. But what we're trying to point
Speaker 1: out though, is that we want you to prioritize saving
Speaker 1: for the future without too much complexity. We want to
Speaker 1: make sure that you get that one thing right and
Speaker 1: then everything else. It doesn't really matter so much as
Speaker 1: long as you're surviving. You just want to make sure
Speaker 1: that you're taking care of those long term goals. It's
Speaker 1: also worth mentioning Joel that, to you know, operate with
Speaker 1: the uh the free spirit budget, you're operating from the
Speaker 1: standpoint of having enough money. Not everyone has enough, and
Speaker 1: so if this is you like, realize that this is
Speaker 1: a bit of a luxury to say I'm just gonna
Speaker 1: worry about retirement and then I'm going to spend my
Speaker 1: money on whatever else I want. That's not the case
Speaker 1: for most folks. Yes, the pre spirit budget a ka
Speaker 1: that treat yourself budget right or you're still at least
Speaker 1: at minimum prioritizing that timber cent contribution. Yeah, like it
Speaker 1: does your future self because you need that exactly it is.
Speaker 1: I guess what we're pointing on here is that it
Speaker 1: doesn't have to be more complicated than that, at least
Speaker 1: for now. I think over time, as your budget becomes
Speaker 1: slightly more sophisticated, that can be a healthy thing. But
Speaker 1: that this is a great first step. All right, let's
Speaker 1: talk about Matt. Probably the category you fall into, just
Speaker 1: just to guess, is the type a budget. And we
Speaker 1: think that a zero based budget makes a lot of
Speaker 1: sense for the person who wants everything lined up down
Speaker 1: to the penny. Right. So if you're highly organized and
Speaker 1: great with spreadsheets, you can use those strengths to really
Speaker 1: make your money work for you by giving every single
Speaker 1: dollar a name. Yeah, man, this is me all the way.
Speaker 1: I am all about this sort of highly mechanized process
Speaker 1: of of handling my money. Uh. And the biggest reason
Speaker 1: for that is because I'm able to remove emotions from
Speaker 1: the equation. Right, Like when you have this this process
Speaker 1: basically in line where you don't really have to think
Speaker 1: about it, you follow the rules that you've you know,
Speaker 1: predecided ahead of time. Uh, it removes human error from
Speaker 1: the the equation. And that's what I love about having
Speaker 1: a budget this way. That's when you become like Ivan
Speaker 1: Drago and Rocky for You're you're basically like a robotic
Speaker 1: version of a human. Yeah. I love that, like punching machine.
Speaker 1: You don't need emotions, right exactly, just train hard every day,
Speaker 1: eight hours a day. No, I mean, it's it's true.
Speaker 1: But for people that have that kind of personality that
Speaker 1: really that need the specifics to be on point in
Speaker 1: order to feel comfortable about things. I think a zero
Speaker 1: based budget makes a lot of sense because you're you're
Speaker 1: able to to usher everything that comes in to a
Speaker 1: specific category, and I think that brings a lot of calm,
Speaker 1: a lot of zen into people's lives. Who who's speaking
Speaker 1: my language? Yeah, you thrive basically on the ability to
Speaker 1: know exactly what's coming in, exactly what's going out and
Speaker 1: where that's going. And you know, if if you were
Speaker 1: trying to get a type a person to do a
Speaker 1: free spirit kind of budget, that would make them to
Speaker 1: go bonkers vice versa tough time with that, right, And
Speaker 1: I think that that's why these different kind of personality
Speaker 1: types and budgeting accordingly is so helpful. Yeah, everything is
Speaker 1: in its right place, man. And with a zero based budget,
Speaker 1: you have the added benefit of being able to see
Speaker 1: exactly what you're spending your money on, and you can
Speaker 1: see trends over time as well. Recently, we look back
Speaker 1: at our spending and because I've been known this for
Speaker 1: a decade now, like we were literally able to compare
Speaker 1: what we spent at the grocery store to the past,
Speaker 1: you know, thirteen years, which is but I mean, I
Speaker 1: think it's totally awesome. I think maybe other people think
Speaker 1: that that's insane, but I love it, dude. I feel
Speaker 1: like we could use your budget track overall national inflation,
Speaker 1: you know, like in every category. Uh, you want to
Speaker 1: hear something that's really interesting though, by the way, like
Speaker 1: specifically to grocery, Like why I brought that example up,
Speaker 1: please tell me is because so obviously we saw we've
Speaker 1: seen our our grocery budget go up over time, but
Speaker 1: I've also calculated the overall budget per person and not surprisingly,
Speaker 1: such a nerd um, we are still spending just about
Speaker 1: the same amount that we're spending when it was just
Speaker 1: me and Kate proportionately to the size of a family
Speaker 1: because you only feed your children one meal a day,
Speaker 1: exactly one meal, just like Kate and I eat no snacks.
Speaker 1: But for real, like we we've seen an increase by
Speaker 1: the number of you know, members we have in our family,
Speaker 1: which is really cool. It's cool to see that that
Speaker 1: is one area in our life that we have not
Speaker 1: seen inflate at all, when there have been other areas
Speaker 1: that have inflated, right, like entertainment. We've seen that go
Speaker 1: up over time for you know, various reasons, but it's
Speaker 1: really cool to see some specific areas like grocery. We're
Speaker 1: kind of really sticking to like our original roots, which
Speaker 1: is a lot of fun. Yeah, yeah, that's that's impressive, dude.
Speaker 1: All right, Let's talk about the next budgeting method that
Speaker 1: works for a specific personality type, and that is the
Speaker 1: over spender. So if you tend to spend too much
Speaker 1: and bust your budget every single month through credit card
Speaker 1: spending or or even just spending on your debit card,
Speaker 1: and you're getting over draft notices and having to pay
Speaker 1: extra money to the bank because of that, well, then
Speaker 1: the envelope budgeting method might be best for you. The
Speaker 1: way that it works is to have actual physical envelopes
Speaker 1: that you fill with the money every month at the
Speaker 1: beginning of the month for categories like eating out, groceries, clothes,
Speaker 1: and whatnot. So it's it's pretty straightforward and it helps
Speaker 1: you actually stick to your budget because there is truly
Speaker 1: a finite amount of cash in these different envelopes. Matt,
Speaker 1: I've never actually done this, but for somebody who is
Speaker 1: battling the temptation to overspend consistently because they just can't
Speaker 1: keep the plastic out of their hands, and they're racking
Speaker 1: up credit card debt because of it. I think going
Speaker 1: to something as strict as the envelope method, uh specifically,
Speaker 1: that's a really good way for the overspender to kind
Speaker 1: of combat those urges and to to be able to
Speaker 1: actually stick to a budget. Yeah, and I think a
Speaker 1: lot of folks might laugh at the idea because like,
Speaker 1: what are you gonna carry around like five different like
Speaker 1: paper envelopes? But so old school and it it is
Speaker 1: old school. But I wanted to mention that there are
Speaker 1: specific special wallets made, you know, exactly for the envelope
Speaker 1: budgeting system. They've got their little dividers in there, and
Speaker 1: you can slide your bills in there that you're not
Speaker 1: like walking around with, you know, wads of cash like
Speaker 1: folded over on themselves, like stuff in your stuff in
Speaker 1: your back pocket. I gotta imagine that's a thick wallet though.
Speaker 1: But but yeah, I mean, I think the envelope method
Speaker 1: is is certainly not ideal. And you know we talk
Speaker 1: about how you know we prefer if you can use
Speaker 1: credit cards, Well we we much prefer you to use
Speaker 1: a credit card over overpaying in cash. There's just a
Speaker 1: lot of advantages to to using credit cards instead of cash.
Speaker 1: But desperate times call for desperate measures. And if you
Speaker 1: are a person who is tempted to overspend consistently, then
Speaker 1: then you have to resort to a budgeting method that
Speaker 1: is going to act actually help you live within your means.
Speaker 1: And I think the the envelope method is is definitely
Speaker 1: one that you should strongly consider. If that's the case,
Speaker 1: most definitely a man. And let's let's cover two as well.
Speaker 1: This isn't necessarily a personality type, but I wanted to
Speaker 1: cover if you have a variable income, whether your income
Speaker 1: is steady every two weeks or if it bounces around
Speaker 1: throughout the year, budgeting is still going to be important
Speaker 1: for you. You you might just need to use a
Speaker 1: slightly different technique or maybe a combination of some of
Speaker 1: the different techniques that we've mentioned. But I think one
Speaker 1: of the most important things to do is to make
Speaker 1: sure that you have some financial margin in order to
Speaker 1: weather these ups and downs of having a variable income.
Speaker 1: Just because you have a variable income, I don't necessarily
Speaker 1: think that means that your expenses need to go up
Speaker 1: and down based on your income. For most folks, they
Speaker 1: know that it takes a certain amount of money to live,
Speaker 1: right like month to month. I know that this is
Speaker 1: this is what it takes for us to live. And
Speaker 1: so when you have enough margin built in, when you
Speaker 1: have an emergency fund, like that's just what we call
Speaker 1: our cushion, our margins, just our emergency fund. When you
Speaker 1: have that there, you're able to weather those ups in
Speaker 1: the downs, and you're able to kind of even out
Speaker 1: your income because you know that, like okay right now,
Speaker 1: And dude, I'm saying this out of experience. This month
Speaker 1: for us super lean. Not a lot of folks are
Speaker 1: getting married this time of the year. Uh in Atlanta,
Speaker 1: and I had to take two thousand dollars out of
Speaker 1: our emergency fund. Maybe they aren't, they just didn't book you. Dude, Hey,
Speaker 1: you know what, maybe that's the case. I don't think
Speaker 1: we're not talking about that, but I know that next
Speaker 1: month is going to be fantastic, and so having those
Speaker 1: funds set aside to to get us through, you know,
Speaker 1: a leaner month, that's all you need. Like it would
Speaker 1: be kind of silly to say, oh, no, we need
Speaker 1: to really cut back this month because we don't have
Speaker 1: the right income when we know that next month is
Speaker 1: going to be more than enough. Yeah, man, I completely
Speaker 1: agree with you. You know, I think that financial additional
Speaker 1: financial margin is super helpful for for folks who live
Speaker 1: life with variable income and and then you know what,
Speaker 1: the lean month, you've got the money to to fund
Speaker 1: your lifestyle for that month, and then the next month
Speaker 1: you make up for it with your increased income, and
Speaker 1: you'll be able to put that additional income back towards
Speaker 1: that cash cushion and replenish it most definitely. Yeah. So
Speaker 1: I'm glad we were able to talk about some personality
Speaker 1: types and how different people can approach budgeting. But Matt,
Speaker 1: there are also some kind of universal principles that we
Speaker 1: need to talk about that really apply to anybody doing
Speaker 1: any of these different budgeting methods, and we'll get to
Speaker 1: some of those right after the break. All right, Joe,
Speaker 1: we're back from the break. We're talking about some different
Speaker 1: methods to budgeting. So the next step is to actually
Speaker 1: create a budget for yourself with real dollar amounts, right
Speaker 1: regardless if you're the person who has a plan and
Speaker 1: thinks you know exactly what your category amounts should be,
Speaker 1: or if you are completely clueless and have no idea
Speaker 1: where to start. If you're either of these people, I
Speaker 1: think regardless, everyone should begin with tracking their expenses. All
Speaker 1: you need to do is look to last month's spending
Speaker 1: and start there in order to be successful. The idea
Speaker 1: here is to start with numbers that are going to
Speaker 1: be realistic and are gonna get you close versus pulling
Speaker 1: you know, random numbers like out of the air. And
Speaker 1: then maybe halfway through the month, you know it's the
Speaker 1: fifteenth thing, you look down and you realize, oh, we're
Speaker 1: over budget already. Well that's not fun. Oh I was
Speaker 1: way off exactly. So if you're if you're going to
Speaker 1: fail at somebody, nobody wants to do anything that they're
Speaker 1: going to continue to fail at. So set yourself up
Speaker 1: for success and be realistic. Yeah, you're gonna drop that
Speaker 1: budget quick if that's the case. So all right, Yeah,
Speaker 1: I agree tracking is huge, Matt. I think auto tracking
Speaker 1: is an easy way to do it, and of course
Speaker 1: I think it's the way a lot of us are
Speaker 1: going to choose to do it because there are apps
Speaker 1: and tracking software that can really kind of aid us
Speaker 1: in this process. And we mentioned wine app and Mint
Speaker 1: earlier and those are kind of the top tier apps
Speaker 1: when it comes to budgeting and helping you do do
Speaker 1: better and and auto tracking what you're spending and helping
Speaker 1: you keep that budget, and it requires less personal monitoring
Speaker 1: to make sure expenses or categorized properly. There's even the
Speaker 1: service called Tiller Money. I don't know if we've talked
Speaker 1: about this before, but they will automatically import expenses into
Speaker 1: Excel or into Google sheets to to save time. I
Speaker 1: personally don't use it, uh, and that's primarily because of
Speaker 1: the acts of actually manually entering these expenses in like
Speaker 1: that can help me to realize and you know, truly
Speaker 1: feel those expenses. We've talked before about how automating your
Speaker 1: money there's a lot of benefits to that, but what
Speaker 1: we kind of want to shy away from is automating
Speaker 1: all of our expenses because you know, like for a
Speaker 1: lot of us, if we don't see it, like we
Speaker 1: don't really think about it out of sight, out of mind,
Speaker 1: and so if we are not looking at what we're
Speaker 1: spending our money on, sometimes it can be hard for
Speaker 1: us to make those changes and make sure that we're
Speaker 1: spending our money on the things that we want to
Speaker 1: be spending our money on. Yeah, man, And speaking of
Speaker 1: writing things down, you know, there's a Japanese budgeting method
Speaker 1: if we're talking about manual tracking. We just talked about
Speaker 1: auto tracking and how those those apps can help you. Well,
Speaker 1: if you do it manually, I think there's there's a
Speaker 1: great deal of benefit we can derive from that to
Speaker 1: This Japanese budgeting method is called kakaibo. I think that's right. Okay,
Speaker 1: all right, that's my guess. And yeah, I think that
Speaker 1: what it does is it prioritizes actually physically putting pen
Speaker 1: paper and writing things down, keeping a written record of
Speaker 1: the things you've purchased and what you're doing with your money.
Speaker 1: And there's such a powerful association that's made in our
Speaker 1: brains when we put pen to paper. That's why people journal,
Speaker 1: That's why people keep a diary. I mean, essentially, this
Speaker 1: is like an expense diary. You're writing down all the
Speaker 1: different things that you spend money on, and it's it
Speaker 1: helps you to reflect on those things. Yeah, And I
Speaker 1: think where you come down on this, I think it's
Speaker 1: gonna come down to your comfort level with technology, like
Speaker 1: your personal comfort level whether you use apps frequently and
Speaker 1: and they kind of fit into your lifestyle or whether
Speaker 1: you kind of write things down is going to have
Speaker 1: more of a sustained impact and ability to help you
Speaker 1: stick to your budget. What I mean, whatever is going
Speaker 1: to help you the best, whether it's more automatic or
Speaker 1: whether it's more manual, we definitely want you to go
Speaker 1: in the direction that is going to most allow you
Speaker 1: to actually stick to a budget and keep doing it
Speaker 1: month after month. It also depends to you on how
Speaker 1: much of romantic you are, right, Like if you if
Speaker 1: you have an old soul and you want to have
Speaker 1: like a scroll with like a fountain pen, you know, like,
Speaker 1: if that's what works for you, go for it. I've
Speaker 1: got this old peach of piece of parchment paper from
Speaker 1: ancient Egypt, and that's where I keep my budget every month.
Speaker 1: Papyrus and that like the original paper was like papyrus. Yeah,
Speaker 1: this is not just like that crappy font. Also keep
Speaker 1: my budget in hieroglyphics too, so that random people that
Speaker 1: peek at my budget they don't really know what it means.
Speaker 1: But also to Matt, another app by the way, that
Speaker 1: can be helpful to people. We've mentioned it before in
Speaker 1: the show A couple of times. Dollar bird, and that's
Speaker 1: kind of like a monthly It almost combines these two
Speaker 1: things of kind of a manual budget keeping technique by
Speaker 1: tracking expenses on a calendar. And and so yeah, we
Speaker 1: love that app too. It's it's really neat. Whatever works
Speaker 1: best for you, that's what we want you to do, though.
Speaker 1: And let's real quick talk about budget busters, right starting
Speaker 1: with your previous month's expenses, like we just mentioned, like
Speaker 1: that's a great way to get started with those realistic numbers.
Speaker 1: But then don't stop there. Make sure that you are
Speaker 1: looking at prior year budget busters, those big expenses that
Speaker 1: only occur maybe once or twice a year. And then
Speaker 1: once you identify those things, you want to start saving
Speaker 1: monthly amounts for those now. So for example, what I'm
Speaker 1: thinking of are some of the different insurance premiums that
Speaker 1: you have, or or car maintenance that always kind of
Speaker 1: creeps up when you at least expect it. And it
Speaker 1: doesn't have to be like crappy things as well. It
Speaker 1: can be fun things like saving up for Christmas or
Speaker 1: birthday presents, or maybe going on that vacation, Like you
Speaker 1: know that you're you're gonna want to go on a trip,
Speaker 1: start saving for that now, so it doesn't totally can
Speaker 1: completely wreck your budget when the time comes. Also, you
Speaker 1: have to be flexible with a budget, right. A budget
Speaker 1: doesn't necessarily rigidly conform, even for the type a budget
Speaker 1: or who has a zero based budget. Even those folks
Speaker 1: know that the budget doesn't always go according to plan.
Speaker 1: Even though we zero based budgets might strive for perfection,
Speaker 1: doesn't always end up perfect. Right. You're not gonna be
Speaker 1: able to do it every single month, that's for sure.
Speaker 1: And that's because no month is completely normal, and so
Speaker 1: it's really important to address your overspending quickly. Yeah, and
Speaker 1: so that if that happens to be you, like, all
Speaker 1: you need to do is just move that budgeted money
Speaker 1: from one category over to another in order to ensure
Speaker 1: that you're not going over for the entire month. It's
Speaker 1: not a huge deal money, it's fungible. Just because it
Speaker 1: had one name on it at one point doesn't mean
Speaker 1: you can't switch it up and slide it over to
Speaker 1: a different category. So, for example, maybe you overdid it
Speaker 1: unclosed this month, Well, it's not a big deal to
Speaker 1: cut back on eating out in order to make up
Speaker 1: for it. This will help you to master your budget
Speaker 1: and to make it more fun because it's something that
Speaker 1: you're actually succeeding at and when you're winning at something,
Speaker 1: that will also make it way more enjoyable. Yeah, for sure.
Speaker 1: And I think when I think about budgeting at its core,
Speaker 1: essentially it's imposing at least some amount of current hardship
Speaker 1: on yourself so that hardship doesn't get imposed on you
Speaker 1: by outside forces in the future. By budgeting well and
Speaker 1: spending less than you make, you'll much more easily avoid
Speaker 1: the real money hardships that so many people have to
Speaker 1: deal with in life. And I think if you can
Speaker 1: find the budgeting style that works best for you, and
Speaker 1: you can find a way to make it work for
Speaker 1: you when it comes to the way you track and
Speaker 1: being flexible with that budget, we truly believe that you
Speaker 1: can have a much greater sense of control over where
Speaker 1: your money is going. You can be happier about where
Speaker 1: you're spending your money and even the places that other
Speaker 1: people might look and say that's ridiculous, I can't if
Speaker 1: you spend money on that, you can take joy in it,
Speaker 1: you can be happy about it, and at the same time,
Speaker 1: by creating some constraints in your life. It's going to
Speaker 1: actually lead to a greater sense of freedom by having
Speaker 1: this budget. Because having a budget where the money that
Speaker 1: comes in every month goes out in ways that actually
Speaker 1: reflect your values, it's just such a freeing way to live. So, yeah,
Speaker 1: budgeting not a four letter word, and in actuality, budget
Speaker 1: is a a six letter word, and it's actually a
Speaker 1: helpful six letter word. Yeah, man, most definitely. All right,
Speaker 1: next time you stop your toe, don't yell budget. Now
Speaker 1: you can yield something else budget. All right, man, let's
Speaker 1: take it back to the beer. This episode, we were
Speaker 1: enjoying Bourbon County wheat wind Ale by Goose Island. Joel,
Speaker 1: what were your thoughts on this beer? Man? I thought
Speaker 1: this beer was intense in all the right ways, and
Speaker 1: it was really unique too, because a wheat wine. I mean,
Speaker 1: that's not many people make wheat wine. It's not a
Speaker 1: real popular style, right, but I will say it doesn't
Speaker 1: have wine in it, like it's called wheat wine. But
Speaker 1: like in reality, it's just a very maul t beer, Okay. Yeah,
Speaker 1: And you can tell that like and and it it
Speaker 1: has kind of some like dark fruit notes, I would say,
Speaker 1: And at the same time it has like a touch
Speaker 1: of honey as well, so it felt a little light
Speaker 1: at the same time. I thought it kind of hit
Speaker 1: both ends of the spectrum, and so yeah, I think
Speaker 1: with the dark fruits the light honey touch, there's a
Speaker 1: bit of complexity to this one. Uh, and it was
Speaker 1: really tasty. I enjoyed it nice. Man. Well, I want
Speaker 1: to want to back it out and I want to
Speaker 1: talk about the bottle because you and I we're kind
Speaker 1: of discussing the bottle before we hit record earlier. And
Speaker 1: it's such a classy bottle, Like it's all black for
Speaker 1: the most part, and it's got this label hanging off
Speaker 1: of it. Um, it's almost like kind of got this
Speaker 1: cool little tag like a flag, Yeah, like a little
Speaker 1: flag kind of wave, and uh, it's just got this
Speaker 1: really classy look to it. So first of all, it's
Speaker 1: got that going for it. And then for me, when
Speaker 1: we poured this beer, it almost had the sweet banana
Speaker 1: kind of smell to it. And when I took that
Speaker 1: first sip to me was super bready almost like a
Speaker 1: like a caramel flavor to it. I think it's awesome
Speaker 1: that you mentioned honey because it also makes me think
Speaker 1: of did you ever have bit oh honey, it's the
Speaker 1: old school candy. It's like this little brown Oh, I
Speaker 1: know what you're talking about, kind of sugary, kind of
Speaker 1: CARAMELI I'm thinking. I guess they just kind of reminded
Speaker 1: me of some of those dark, old, kind of classic flavors.
Speaker 1: That's what this being reminded me of. Tasty one. Glad
Speaker 1: to enjoy it on this episode with you, my friend.
Speaker 1: All right, Well, that's gonna do it for this episode.
Speaker 1: For anyone who wants the show notes, just check out
Speaker 1: our website. It's how to money dot com. Yeah, Juel,
Speaker 1: And in addition to our episode notes, we have some
Speaker 1: other articles up on the website, and specifically, if you're
Speaker 1: looking for a new credit card, we would recommend you
Speaker 1: checking out how to money dot com forward slash credit cards.
Speaker 1: We want to make sure that you are using your
Speaker 1: credit card in a way that gives you the maximum
Speaker 1: benefit based on the way that you spend your money.
Speaker 1: That's what that article is all about. And if you
Speaker 1: do sign up for a new card via any links
Speaker 1: in that article, it helps out the show. So thanks
Speaker 1: in advance. All right, Joel, that's gonna be it for
Speaker 1: this episode, Buddy. Until next time, Best friends out best
Speaker 1: friends out the boo