Spoiler alert: Even smart multi-millionaires have a budget. And what about the multi-millionaires who don’t have a budget? They lose their fortune, just like my family did a couple of decades ago. One big lesson I learned from my family about money is this: become financially savvy and use a budget.

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After researching personal finance for YEARS, trying a ton of budgeting apps and methods, I finally decided to create my own simple budgeting system I would actually stick to. So here’s the ultimate guide to setting up a budget that you’ll actually stick to:

THE ULTIMATE GUIDE TO BUDGETING

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Open 4 bank accounts

These 4 accounts will keep you organized and help you build wealth without overwhelm. Check out more about the 4 bank accounts here. 

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Stop using credit cards

Seriously. You’re setting yourself up for failure. Credit cards are evil and are keeping you stuck in financial mediocrity. If you want to be in debt like everyone else, keep using it. If you want to build wealth and have true financial peace, cut it up baby.

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Team up with your spouse

Before you create a budget, you’ll want to sit down with your spouse. Building wealth without being on the same page as your spouse is basically impossible, so don’t do this by yourself. Trust me, go to marriage counseling if you need to but it is vital you are on the same page when it comes to your finances and goals. You are a team.

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Determine your income

Add up your combined monthly income after taxes.

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Review your last 3 months of expenses

Review your last 3 months of expenses (cash, credit card statements, debit card statements, etc.)

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List all your expenses for each month

List all your reoccurring expenses for each month and write down what day of the month they’re due. This is the time to cut services, call providers to lower your plans, and only keep things you truly need. Simplify my friends!

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List your expenses by week 

Use a simple list on your phone or computer. Fancy apps are a waste of money and time. List your expenses by week and put the day it is typically due in front of it. I like to put a checkbox next to each item and I check it off once a week as I review my budget. At the end of the week, I write down the total amount I spent. If I went over budget I ask myself why? Was it an expense I did not plan for? Or did I overspend because I bought something unnecessary? Also, I like to divide my mortgage into 4 weeks to stay more organized. And I grocery shop once a week. Set-up auto-pay and create a unique budget each month and agree with your spouse what will be included.

Example Budget:

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Fund your emergency account

Save 6 months of expenses and do not touch it unless there is an emergency.

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Fund your savings account

Save for big planned or unplanned expenses. For example new furniture, car repairs, house repairs, cars, etc.

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Fund your retirement account

Invest 15% of your income in a Roth IRA

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Fund your kid’s college account

Invest around $150 a month (from birth) for each kid’s college 529 account

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Pay off mortgage

Pay off your mortgage early!

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Invest, Have fun, and give!

Congratulations! You worked hard and can now have your income work for you.

Cristina Neal