00:00:00
Over the last 10 years, I've tried
00:00:01
almost every budgeting method you can
00:00:04
think of, from old school pen and paper
00:00:06
to slick zerobased budgeting apps. And
00:00:09
here is what I discovered. The best
00:00:11
money system is not the fanciest. It's
00:00:14
the one that you'll simply stick with
00:00:16
and that strikes the perfect balance
00:00:18
between planning for the future while
00:00:20
still enjoying today. So, in this video,
00:00:22
I thought it'd be interesting to share
00:00:24
with you a simple three-phase framework
00:00:26
that helped me take full control of my
00:00:28
finances without the overwhelm, and more
00:00:31
importantly, how you can use it to do
00:00:33
the same. We'll first map your money
00:00:35
flow. Then, we'll allocate your spending
00:00:37
bucket, and finally, we'll reflect and
00:00:39
improve. If you'd like to follow along
00:00:41
using the same tracker that I use, it's
00:00:43
completely free. It's linked in the
00:00:44
description below. You can even fill it
00:00:46
out as you watch and go through it with
00:00:48
me step by step. Let's get into it. So,
00:00:50
here's how I split up my finances.
00:00:52
Income goes to the left. Your three
00:00:54
spending buckets are front and center.
00:00:56
And up the top, there's a dashboard that
00:00:57
shows you exactly where you stand. And
00:00:59
it's colorcoded. So, it will flag up red
00:01:02
if there's something that requires your
00:01:03
focus and attention. I'll explain that
00:01:05
all in just a moment. So, let's start
00:01:07
with phase one. Map your money flow.
00:01:10
First things first, you need to know
00:01:12
exactly how much money you're working
00:01:14
with each month. This is your take-home
00:01:16
pay and it's the amount that hits your
00:01:18
bank account after all state taxes have
00:01:21
been paid. Then you put in the number
00:01:23
after taxes within here. So let's say
00:01:25
you have a day job, any side hustles or
00:01:29
freelancing payments, weekend gigs,
00:01:31
investment dividends, all of that, all
00:01:33
the money that comes into your life goes
00:01:35
here. We're going to work our way
00:01:37
through an example. So let's say my day
00:01:39
job brings in 2350 a month. That is the
00:01:43
number I'm going to put in here. One
00:01:45
thing to note, if you are contributing
00:01:47
to your employer workplace sponsored
00:01:50
plan, say if you're contributing 150 a
00:01:52
month towards it, that amount actually
00:01:54
goes back towards your take home pay on
00:01:56
your paycheck. It will look like it's
00:01:58
deducted, but you want to add that in.
00:02:00
Why? Because that contribution is going
00:02:02
towards your future self, which will
00:02:04
categorize properly in the future U
00:02:06
bucket. So, that 2350 I have right here,
00:02:09
that includes my take-home pay and the
00:02:11
amount that I usually put towards my
00:02:12
workplace retirement account. Then,
00:02:14
let's say I'm doing some freelancing on
00:02:16
the side, that adds up to 150. And let's
00:02:18
say I'm also got another side hustle,
00:02:20
which is 100. So, all of that is in my
00:02:22
income section. And then I will
00:02:24
calculate the total right here, which is
00:02:26
2,600. If you are a freelancer or you're
00:02:29
self-employed, this is a bit different.
00:02:31
It's not the number that hits your bank
00:02:33
account because that number hasn't been
00:02:35
taxed yet. So, the number that you put
00:02:37
in here is the number after you've
00:02:40
calculated and deducted taxes yourself.
00:02:42
It's your net income. This is important
00:02:44
because you don't want to build an
00:02:45
entire budget on money that isn't
00:02:47
actually yours to spend. Phase two is
00:02:49
now to fill in the three Fs. Your
00:02:52
take-home pay, you want to categorize
00:02:54
into these three buckets. The
00:02:56
fundamentals covers the amounts that you
00:02:58
spend on your running living costs. So
00:03:00
this includes things like housing,
00:03:01
transportation, food, insurance, minimum
00:03:04
debt payments. The fund bucket is where
00:03:07
you categorize the amount you spend on
00:03:09
things that make life a little bit more
00:03:10
enjoyable. So dining out, entertainment,
00:03:13
hobbies, and the future you, that's
00:03:15
everything that you're investing towards
00:03:17
your future. So you've got savings,
00:03:19
investments, debt payments above the
00:03:22
minimums. And how much should you be
00:03:23
allocating in terms of percentages
00:03:25
towards these buckets? You've probably
00:03:27
heard of the 50 3020 split. 50% of your
00:03:30
take-home pay should be allocated for
00:03:32
your fundamentals. 30% of your take-home
00:03:34
pay for fun and 20% for future you. This
00:03:38
is a decent starting point and it's what
00:03:39
I'm going to use purely for illustrative
00:03:41
purposes, but it was created in 2005
00:03:44
during a different economic landscape
00:03:45
when housing was cheaper, prices were
00:03:47
lower. Today's reality might look more
00:03:49
like 65205
00:03:52
or even 702010
00:03:54
depending on where you live. So now
00:03:56
let's allocate that 2,600 into one of
00:03:59
these three buckets. We want to make
00:04:01
sure every single pound or dollar has
00:04:04
got a job when it comes to this tracker.
00:04:06
So let's start with the fundamentals.
00:04:08
I've already listed out some popular
00:04:11
categories within this. So housing, rent
00:04:13
or mortgage, utilities, water, gas,
00:04:15
electricity, transportation. So this
00:04:17
includes things like your car payments,
00:04:18
your train tickets for work or any other
00:04:20
transportation costs, groceries,
00:04:22
insurance, and also minimum debt
00:04:24
payments. What you want to do is you
00:04:26
want to go through your bank statements
00:04:27
from the last 3 to 6 months. Most
00:04:30
banking apps actually categorize your
00:04:32
spending automatically, which makes life
00:04:34
a lot easier when you're filling this
00:04:36
in. Maybe utilities will show up in one
00:04:38
line as 170, and then you can put that
00:04:41
number in here as one line, or you can
00:04:43
enter it in and break it down into
00:04:46
separate line. an item. So maybe it's 45
00:04:49
for electricity or 45 85 and let's say
00:04:53
40. Whatever feels more useful for you,
00:04:56
it's up to you. So let's say your rent
00:04:57
is 950, utilities 120, groceries 220,
00:05:02
transport 75, phone 20, insurance 45,
00:05:05
minimum debt payments 80. By the end of
00:05:08
the month, I know I've spent 1,510
00:05:11
towards my fundamental living expenses,
00:05:14
which as you can see up here is 58% of
00:05:18
my take-home pay. And that text has
00:05:20
turned red. So, it's telling me that
00:05:21
I've overspent. I've gone over my
00:05:23
target. My target was 50%. And you can
00:05:26
see again here that is because I've
00:05:28
overspent by 210. What do we do with
00:05:31
this information? I'll show you later on
00:05:33
in phase three when we're doing the
00:05:35
reflections. Now, a quick tip here. You
00:05:37
want to automate as much as your
00:05:39
fundamental expenses as you can. Direct
00:05:42
debits for utilities, automatic rent
00:05:44
payments if that's possible, standing
00:05:46
orders. The less mental energy you spend
00:05:49
on manual transfers, the more mental
00:05:52
energy you have for the bigger important
00:05:55
financial decisions. Next up, we have
00:05:57
future you. And I deliberately moved
00:05:59
this before the fun bucket because
00:06:02
paying yourself first changes
00:06:05
everything. If you budget for your fund
00:06:08
category and you start spending on your
00:06:09
fund before saving and investing, you're
00:06:11
going to find that the money slips
00:06:13
through your fingers very quickly. But
00:06:14
if you put yourself first and you say,
00:06:16
"Okay, this is the amount I'm allocating
00:06:17
towards my future." Then it's a lot
00:06:20
easier to then structure your finances
00:06:22
to last the end of the month and it
00:06:24
feels a lot less restrictive. So this
00:06:26
category includes things like investment
00:06:30
accounts, emergency fund, saving for
00:06:32
specific goals like house deposit, card
00:06:35
deposit, extra debt payments above your
00:06:38
minimums, and if you are not sure about
00:06:40
where you should be allocating your
00:06:42
money when it comes to future U. I also
00:06:43
have a video right here which tells you
00:06:46
the order of priorities when it comes to
00:06:47
extra savings that you have and where
00:06:48
they should be going. So let's continue
00:06:50
with our example. We've put 130 into a
00:06:54
tax reinvestment account, 100 towards a
00:06:57
house deposit fund, and I've added the
00:06:59
workplace retirement contribution back
00:07:02
here. So, remember at the start we had
00:07:04
our take-home pay, and I mentioned that
00:07:07
we have to add back in our contributions
00:07:09
towards our retirement account so that
00:07:11
we can allocate it properly. I've now
00:07:13
put in that number here. So, workplace
00:07:15
retirement account has 150. And this is
00:07:17
important because sometimes it feels
00:07:18
like you're not making any progress and
00:07:20
you're not actually saving or investing
00:07:21
anything because it's invisible because
00:07:23
you're already doing it and that money
00:07:25
is being taken away before it hits your
00:07:26
bank account. So, this really gives you
00:07:28
a clear overview and picture on exactly
00:07:30
where all your finances are going. This
00:07:32
brings the total to 380 or about 15% of
00:07:35
my take-home pay. That's below the goal
00:07:38
that I had initially set. My goal was to
00:07:40
save 20% of my take-home pay. This
00:07:42
month, I've only saved 15%. So, it's
00:07:45
also red telling me it's an area that I
00:07:47
need to look into. Again, we'll talk
00:07:49
about that and how to improve that in
00:07:51
phase three. Another quick tip here, you
00:07:53
want to use as much as possible separate
00:07:55
accounts for your different goals that
00:07:57
you're saving for. So, you can have a
00:07:58
house fund, a car fund, an emergency
00:08:01
fund, and you want to keep them really
00:08:02
distinct because there's something very
00:08:04
powerful about logging in and seeing
00:08:06
exactly how close you are to each
00:08:08
target. If you are saving 240 a month
00:08:11
for a 20,000 house deposit, you can see
00:08:14
very quickly how far you are and how in
00:08:17
this case you could hit your goal in
00:08:19
just under 7 years. The future you
00:08:21
section also works in reverse color
00:08:23
coding. So it turns red if you're not
00:08:25
saving enough relative to your goal. And
00:08:27
then finally, you have the fun and this
00:08:29
covers everything that's optional but
00:08:31
makes life fun. So, subscriptions like
00:08:34
Netflix and Spotify, eating out,
00:08:35
entertainment, hobbies, travel, and
00:08:38
upgrade choices. So, what do I mean by
00:08:40
upgrade choices? This is things like
00:08:42
taking an Uber over getting the bus or
00:08:45
buying a premium brand of food rather
00:08:47
than the regular one. They're not wrong
00:08:49
decisions at all, but they are choices.
00:08:51
They're choices to upgrade something.
00:08:53
So, you want to own them as such. So in
00:08:55
our example, you've got 780 available or
00:08:58
left over to spend on fund now, which is
00:09:00
the remaining amount left over after
00:09:02
you've allocated for your fundamental
00:09:03
expenses after you've paid yourself
00:09:05
first. And now this is what you could
00:09:06
truly enjoy with what's left over. So
00:09:09
here is an example of a breakdown.
00:09:11
Eating out 240, gym membership 35,
00:09:13
subscriptions 25, entertainment 65,
00:09:17
shopping 60, coffee and treats 50, and
00:09:19
then you got miscellaneous as well. We
00:09:21
can see once we've allocated all of our
00:09:23
spending for the month that our goal
00:09:25
right here was to spend 30% of our
00:09:27
take-home pay on fun. We were actually
00:09:29
spending a little bit less. We're
00:09:30
spending 27% which is less than our
00:09:32
goal. And this isn't always a good
00:09:35
thing. So, enter phase three and that is
00:09:38
the reflections part. And this is where
00:09:40
the magic really happens. And it's
00:09:42
arguably the most important part of
00:09:44
being good with money. You don't want to
00:09:46
just fill in your numbers every month
00:09:47
and then just forget about it and think
00:09:48
you've got the job done. The aim is to
00:09:51
spend at least 15 minutes just
00:09:52
reflecting on your numbers. You could do
00:09:54
it on the last Sunday of the month with
00:09:56
a cup of coffee. Make it a ritual for
00:09:58
yourself. Make it fun. What you want to
00:09:59
do is take a look at your numbers. Look
00:10:02
at the bits that specifically have
00:10:04
flagged up and see how you can improve
00:10:06
for the months ahead. That's the aim,
00:10:09
just to keep getting better. So, I have
00:10:11
a few questions that you could ask
00:10:12
yourself when reflecting on your month
00:10:14
spending. First, did you overspend?
00:10:17
Where did you overspend? If you
00:10:19
overspent in the fun category, what
00:10:21
caused that overspending? This isn't
00:10:23
about being hard on yourself, especially
00:10:25
in the first month that you do it. It's
00:10:26
just about understanding patterns. Maybe
00:10:28
you overspend on getting takeouts
00:10:30
because you're always getting home late
00:10:31
after work or you were stressed or you
00:10:33
didn't have time to cook. In that case,
00:10:35
how can you pre-plan for something like
00:10:37
that? Or maybe your fund budget went
00:10:38
over because you had more social plans
00:10:41
than you had expected for. But just
00:10:43
knowing this, having self-awareness when
00:10:45
it comes to your spending patterns,
00:10:47
understanding why you're doing something
00:10:48
will help you make better decisions next
00:10:51
time. Second, how can you reduce your
00:10:53
fundamental living spending? This is one
00:10:55
of the hardest areas to reduce, but it's
00:10:57
also the area where you can save the
00:10:59
most if you are optimizing it. So, think
00:11:01
about negotiating your bills, comparing
00:11:04
other providers and deals in the market,
00:11:06
making sure you are getting the most
00:11:07
value for what you are paying. What I
00:11:10
like to ask myself as I go through the
00:11:12
categories in the fundamentals bucket is
00:11:15
firstly do I need it? Is it really a
00:11:18
need? Secondly, if I do need it, can I
00:11:20
live with less of it? And third, if I do
00:11:23
need it, can I get the same thing for
00:11:25
less? And finally, maybe your fund
00:11:27
spending is consistently low, but your
00:11:29
savings and investments are really high.
00:11:31
Take a step back. If this is aligned to
00:11:33
what you want, by all means, you're
00:11:35
doing great. But if you feel like you're
00:11:37
restricting yourself, maybe you're
00:11:38
really not spending for the present
00:11:41
moment. You're so focused on the long
00:11:42
term that you might actually be letting
00:11:44
the here and now pass you by. Take a
00:11:45
holistic view of your finances and your
00:11:47
life path and see if there is something
00:11:49
you want to do now that you are holding
00:11:51
back on. Some opportunities are time
00:11:54
bound and you don't want to look back
00:11:55
and think you were so focused on the
00:11:58
future that you completely miss the
00:11:59
present. Good money management is really
00:12:02
balancing the art of investing and
00:12:04
planning for your future, but also
00:12:06
spending in a way that doesn't make you
00:12:08
regret the here and now. So, that's it.
00:12:10
That is my three-phase money flow.
00:12:12
Remember, if you want to use the same
00:12:13
tracker that I used in this video, it's
00:12:15
completely free and it's linked in the
00:12:16
description below. Give it a try this
00:12:18
month and let me know how it works for
00:12:19
you. I love hearing about your financial
00:12:21
wins, your challenges, and I'm reading
00:12:22
every single comment below this video.
00:12:24
Thank you so much for watching. If you
00:12:26
want to take everything from this video
00:12:27
and take it one step further, I've got a
00:12:29
perfect video for you. It's called
00:12:31
Financial Literacy in 54 Minutes. I'll
00:12:33
put it up here. It's my most complete
00:12:35
nofluff guide to mastering your money. I
00:12:38
hope to see you there.
![[📺Semua Episode] Girls' Last Tour](https://ruhnrawpgxrzdrgaohnf.supabase.co/storage/v1/object/public/images/video/MMMY4L-Wz30/thumbnail.jpg)
