005 MPSOS – The Absolute Simplest Budget That Works

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Oh no, here we go talking about Budgets.  Everyone but nerds seem to hate them but we all know we probably should have one.  But how do you get one that works for YOU?  Variable income, unforeseen expenses, there are so many reasons a budget won’t work.

How to create the Absolute Simplest Budget That WORKS.

It’s not easy but it is simple:

READY…

• Get the supplies needed (paper, pencil with eraser, calculator, calendar) and a good location for you and your spouse to meet that is away from all distractions

AIM…

1. Create a list of any and all possible expenses
2. Decide which item is most important and write #1 next to it, find the 2nd most important item and write #2 next to it, etc…
3. Re-write the list in order of priority and put the amount you plan to spend on that item on the right side of the page
4. Write down your expected amount of household income at the top right corner of the page.  Subtract Prioritized List Item #1 from the income and write down the new total.  Then subtract #2 and total, then #3, etc…  Stop when you get to Zero.  That’s all you can do this month
5. Look at the finished draft and ask your spouse “Can we do this”.  If not, go back and make changes.  If the answer is “Yes” then….

FIRE!

• Live on your budget. 
• Don’t be discouraged when you forgot to include something or unexpected events happen. You can always get together with your spouse or accountability partner to change the budget. This is an extremely simple thing to do if you us Excel or a similar spreadsheet program. I created a vid-torial to show how to Create the Absolute Simplest Budget That Works In Excel.

How to budget with a variable income

The Absolute Simplest Budget works extremely well for someone with a variable income. Write down what you anticipate your take-home pay will be for the month but forecast on the low side. When you bring home more money, add the additional amount to the top-line number and re-calculate down the page to see how much father you can go down the list. I would highly recommend you use Excel, Numbers (for Mac), or Open Office (free spreadsheet program by Oracle) to make this process easier.

Also in this episode: Holla From The Impala – You Can’t Make 12%

Related posts:

1. How2Budget 101
2. A Calendar, A Budget, and a To-Do List
3. 002 MPSOS – Three things that help make you rich