How to Use the Budgeting Tool?
The budgeting tool takes you through four steps where you will write down your income, expenses, assets, and liabilities. The tool will then calculate your budget and the key metrics about your current situation.
We recommend spending 10-20 minutes when creating your first budget.
Your answers are saved in the tool. You can always come back and edit your budget!
Creating your first budget takes 10-20 minutes, but you might need more time if you are not very familiar with your numbers.
Before you start, remove distractions and allow proper time to focus on creating your budget.
It will also help if you get all your papers nearby before you start.
Enter Your Income
The first part of creating your budget is entering all your income into the budgeting tool.
Note that you should estimate your monthly income. If you have some yearly bonuses or other sources of income that are not paid out monthly, make sure to estimate how much those income sources are per month.
Write Down Your Expenses
The expenditure tab has a lot of different fields for different types of expenses.
Fill in the ones that are relevant to you and leave everything else as $0!
Enter Your Assets
In the assets tab of the tool, you are asked to enter all your assets, such as investments, home equity, and cash.
The total value of your assets might change a bit from day to day, but try to give an accurate estimate of your current assets.
Write Down Your Liabilities
On the liabilities tab, enter information about your liabilities, such as loans, credit card debt, and child support, and alimony.
Some values, such as outstanding mortgage and credit card debt should be the total amount, but fields such as child support and alimony should be how much you pay per month.
See the Results
On the results page, you will see a snapshot of your current budget and some key metrics about your financial situation.
Your answers are saved in the budgeting tool, so you can always come back and edit your answers!
Understanding the Key Metrics in the Budgeting Tool Results
When you go through the steps and enter your info into the budgeting tool, you will see some key metrics about your financial situation on the results page.
These metrics have been explained in detail in our course The Financial Freedom Blueprint. Check out the course if you are not a member yet!