How to Create a Budget in 3 Easy Steps

Budgeting is the difference between hoping for financial freedom and intentionally building it.

As a child, I enjoyed eating guava from my grandmother’s guava tree. Her tree produced yellow and pink guavas the kind you bite into and the juice begins to drip down your chin. But the tree did not produce delicious guavas every spring overnight. My grandmother had to planted it first, nurture it, and protect it from insects. Money works the same way. Financial freedom does not happen because you manifest it every morning. Financial freedom happens when a seed is planted, tended, and protected with intention and consistency. That seed is your budget. In this blog, I will share three money management principles that will help you plant, nurture, and protect your money so it can be fruitful and multiply.

Principle Number One: Give Every Dollar a Job (Budgeting Basics)

One lesson I learned from helping my grandmother maintain her garden is that every seed has a purpose. For instance, the role of a guava seed is to flourish and grow into a guava tree that bears good fruit. Similarly, every dollar you earn needs to have a specific job before it hits your bank account. A budget is a financial plan that helps you assign a task to your money and monitor how well that task is performed over time. One principle to keep in mind as you develop your financial budget is to be realistic with your fund allocation. In my 10 years of experience helping people plan for their financial goals, I have noticed that most people are unsuccessful in following their financial budget because it is not realistic. In other words, their budget does not reflect their liabilities and spending habits truthfully; therefore, they find it difficult to stick to the plan (if this sounds like you, I recommend the group coaching program, where you get to be part of a community that keeps you motivated and accountable to your financial goals). There are many different budgeting philosophies, but there is one I personally love because it is simple and it works. I learned it in the book The Richest Man in Babylon, by George S. Clason. In the book, the main character, Arkad, teaches that 10% of what you earn is for you to keep, and the remaining 90% of your income is for you to allocate to your everyday necessities and financial obligations.

Principle Number Two: Water The Tree (Invest)

Another lesson my grandmother taught me about gardening is that plants need to be watered early in the morning before the sun grows too strong. She believed this was best for the plants’ growth. Similarly, your journey to financial freedom needs to begin at an early age so that compound interest can take its course and your money can multiply. For instance, if you invest $300 every month into an account that yields 8% annually, and you do this for 25 years, then at the end of year 25 you will have a total of $287,510, of which $197,210 will be from the interest earned (To calculate different amounts and time frames, click on the financial calculator link located on the footer section of the website). Ultimately, prioritizing your investment activities is key to achieving financial freedom.

Principle Number Three: Protect The Fruits (Pay Your Debt)

            Every spring, my grandmother’s guava tree used to flourish and produced new guava fruit that could be eaten by summer. This was a very important time for the tree because as it flourished, it attracted insects that caused bacteria in the fruit and made the guavas unsuitable for eating. Therefore, protecting the tree during that time was crucial. Similarly, debt is a plague in your personal finances. Debt stops you from growing and expanding; therefore, if you want your money to grow and produce good fruit, it is of utmost importance that you eliminate your debt. For example, one tool available for you to use is our debt eliminator, which helps you track your debt, implement strategies for paying it down faster, and celebrate debt elimination milestones.  Lastly, your financial garden will not grow on its own, so book a free 15-minute consultation and let me help you get the first seed in the ground.