A budget is a plan for how you’re going to spend your money. It puts you in charge and in control of every dollar that you earn or spend. Dave recommends telling every dollar where it should go—before the month begins—using a zero-based budget. This means that your income minus your expenses equals zero.
Remember that feeling you had when you found $20 in your old coat pocket? That’s the same feeling you’ll have when you create (and stick to) a budget. You’ll find money you didn’t even know you had—and build wealth doing it!
Step 1: Write down your total income.
This is your total take-home pay (after tax) for both you and, if you’re married, your spouse. Don’t forget to include everything—full-time jobs, second jobs, freelance pay, Social Security checks, and any other ongoing source of income.
Step 2: List your expenses.
Think about your regular bills (mortgage, electricity, etc.) and your irregular bills (quarterly payments like insurance or HOA) that are due for the upcoming month. After that, add up your other costs, like groceries, gas, subscriptions, entertainment and clothing. Every dollar you spend should be accounted for.
Step 3: Subtract expenses from income to equal zero.
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