Budgeting Tips I Find Unique

Paul K. Dunn
Jun 16, 2017
6 min read

Over the past few years in my journey of mastering money, I have uncovered unique tips about budgeting that I feel are necessary to good spending habits. Some of the tips came from financial analysts, successful investors and other financial professionals. I wanted to understand the mistakes that caused financial crisis and also the success that created profitable investors. This lead me down the path of learning about How Money Works and Financial Intelligence. In my 5FI Ebook - The Five Financial Intelligences, I layout the foundation of wealth building for those that desire to be rich. Budgeting is the 3rd financial intelligence you need to have in order to have a solid foundation for wealth creation.

There are many approaches to budgeting and plenty of budgeting software available, however with lack of financial intelligence, all of this information would be useless. Taking from my experience with debt, investing, cash flow, profit/loss, and bad spending habits, something needed to be put together that I felt was easy for my readers to understand and implement into their daily lives. Budgeting is not a talent but a skill that MUST be developed in order to realize financial freedom. Using these tips along with a great budgeting system that isn't complicated to use, your quality of life can improve more immediately.

Budgeting is about AWARENESS and TRACKING. In order to know how much money you need to protect, or where the opportunities are for making more money, you will need to create a budget. This budget must lay out your expenses/income as well as assets and liabilities.

UNIQUE TIP 1 - Include but separate taxes

Be sure to include income & property taxes but separate them into their own individual lines. Each tax needs to be isolated so it becomes easier to work with. Use a tax professional after you complete your basic budget to point out more advanced, harder to find taxes. Once taxes have been identified it makes it easier to create strategies for lowering or eliminating them where possible.

UNIQUE TIP 2 - Include but separate interest

Another VERY important thing to include and separate is INTEREST. Separate your interest payment from your principal amount. You may need to call your loan carrier to find out how much interest you pay per payment. Separate each interest payment by item. I have created an example for you below:

Car loan interest payment = How much paid in interest
Car loan principal payment = How much paid towards the balance
Car loan balance = Total amount needed to pay off debt.

Designing your budget this way will improve your habit of looking at the whole picture. You will get to see how much interest is killing your pockets and how much of your money is actually going towards paying off the debt you created. By seeing this every month you can adjust payments to pay off more of the original balance and you will get to see how your interest amount lowers as you do so. Seeing this happen live, is one of the most satisfying things you can achieve when improving your financial intelligence. You get to witness how money works, how credit works, how leverage works and how it can work for you or against you in a major way.

UNIQUE TIP 3 - Yearly financial statement outlook

As mentioned by a financial services professional friend of mine, you should make sure to set your budget up yearly instead of monthly. It allows greater control and a lot more accuracy than any other budgeting method. A simple reason for this is because you see bigger numbers therefore giving you more power to plan long term. Psychologically when you see an investment opening of $2,800 annually vs $150 per month you feel more financially empowered. Another advantage is that it makes budgeting for items like registration, car maintenance, quarterly insurance payments and any of those non monthly expenses easier to include. When you create a bird's eye view of your yearly budget, you bring more accuracy to your budgeting. Accuracy is key in the success of finding opportunities with your money that can be exploited and turned into investment capital. This is a huge advantage over the monthly budgeting formula in my opinion.

UNIQUE TIP 4 - Create and plan for your emergency fund

Your emergency fund will be a key component of your wealth accumulation, because it provides liquid funds accessible immediately for unplanned emergencies. It plays as a buffer to your investment account and should prevent you from dipping into other areas of the savings that are off limits. Setting up an emergency fund is one of the oldest concepts of budgeting and not really unique in that manner. However the amount of people living from paycheck to paycheck is ridiculously high in America, and this money principle seems to be ignored often. After meeting with clients who have 0 saved or very little to show for their years of employment, it struck me that a missing habit, critical to financial success, is proving to be a major cause of financial failure. Creating an emergency fund first addresses making enough money to cover your expenses. Then eliminating your bad spending habits, in order to have enough money free to save. It's a unique habit that takes on 3 areas of your financial intelligence - Making More Money, Budgeting Your Money & Leveraging Your Money. In some cases it can dip over into Protecting your money if the situation is just right. Making this habit change and learning how to maintain your emergency fund is the ultimate wealth creation principle. In business, its called a reserve and you've seen what happened to companies that failed to have one. They ALL failed when emergencies happened. It has become a requirement of Financial Industries to show a reserve or they are not allowed to operate. Our households should run on the same principle.

UNIQUE TIP 5 - Budget for a surplus

A surplus by definition is more than what is needed or used; excess. When you budget for a surplus you purposely plan to go over your budget. The trick to budgeting for a surplus is that you use your money wisely to invest. When we talk about paying yourself first, it means looking out for yourself before the creditors. When budgeting for a surplus the excess money is intended to help you make more money later. Therefore improving your quality of life. Most Americans spend more than they make anyway, the problem is they spend the money on useless junk that only takes money out of their pockets instead of putting money in. If you use this unique tactic to transform your habit of paying yourself first, you will give yourself the opportunity to build enough savings to invest in something worthwhile.

The best way to budget for a surplus is to set a portion of your net income, generally 10%, aside for your investment account first. Everything else gets paid after that money has been removed from spending. This creates an instant deduction in usable income very much like taxes that come out before you see your check. That's how it becomes a surplus. This strategy helps you get used to the fact that you may not have enough to cover everything you owe each month, but not putting aside your investment money is non negotiable. Its truly the only way you can ever plan to have financial freedom. This principle of budgeting can change your future financially in regards to taking advantage of opportunity. Usually the biggest reason most Americans fail to get ahead is because they have little to no money ready when opportunity arises.

I fell into this trap myself when living so close to nothing and missed out on an amazing opportunity to make big money on a deal. I was only able to take advantage of a very small portion of the deal. When success came, I only took home a small portion of the profit. Not worth the investment time I waited for it to mature. Had I been prepared to bet big, I would've won big too. And this is the most important lesson I could've learned when it comes to budgeting. In order to pay yourself first you must plan to place that surplus inside of your budget and pay it no matter what else doesn't get paid. This money is for your future investment which will bring you more income to budget each month. If you look at it that way, you understand how important it is to plan to get ahead using a surplus.

Financial Intelligence is a key ingredient to living a higher quality of life, so have fun mastering the secret principles we reveal in this FREE Ebook..