Budgeting In 26 Minutes

I have finally learned how to budget properly I recently did a video called financial literacy where I covered KH Academy's like 30-hour course that literally covered everything about personal finances from budgeting to investing to Insurance to real estate I thought it was a really comprehensive good overview but I also feel like personal finances is a quest that is very much worth deep diving into which is why I'm now going to Deep dive into each of these topics separately starting off with budgeting the primary resource that I chose to learn from is you need a budget which is a budgeting software app that has a corresponding book to it as per usual it is not enough just to listen to me talk about stuff so at the end of this video there will be a little assessment in which if you can answer all the questions then congratulations you have been educated on the art of budgeting now without further Ado let's get started a portion of this video is sponsored by hostinger let's first properly Define budgeting a budget is a plan to help you manage your money it shows you how much money you have need to spend on things and how much money you can save or work towards other goals think of your budget as like a financial GPS and not having a budget sort of just like stumbling through life low-key stress all the time because you don't really know how much money you have or if you're spending it on the right things the book lays out four rules to budgeting rule one is sort of like the foundation of everything and it's also what rule 2 3 and four is based on the idea is that every dollar that you bring in has to have a job that job could be paying for your groceries or paying down your debt or your electricity bill whatever it just needs to have a purpose rule two addesses expenses that are not necessarily monthly you see we tend to think of a budget from a monthly perspective which is really good but unfortunately a lot of spending in life doesn't necessarily happen in monthly intervals for example you might have like a yearly Amazon subscription like three times a year water bill these non-monthly expenses tend to be what throws a lot of people off rule three is to roll the punches this is when you future proof your budget because alas life does not happen the way that we often want it to and rule four is to age your money this is all about getting out of that paycheck to paycheck cycle giving yourself the Breather room to be able to zoom out and see your finances from a bird's eye perspective like aging your wine the older your money is the better it gets okay so now before I actually go in detail with each of these rules I do want to make a note in saying that actually going through this process was a pretty emotional experience for me I was sort of surprised because it's just like money right but the book does kind of touch on this the way that you treat your money is a reflection of the way that you grew up and the belief systems that you have there's another book that's called I will teach you to be rich which maybe I will cover that at some other point but I think he calls it money scripts in my specific case I always like kind of did the right thing like when I was working a corporate job I would always you know put in my money for retirement like 401K employer matching invest in stuff I do like all these things right on paper it looked like I was doing it but really I wasn't actually tracking my money the reason for this I realized is because I grew up in a very chaotic environment there was no point in having plans for things like if I plann for something to happen tomorrow or like a year later it would not work out anyway so I sort of like got that in my head where there's just like no point in planning like what's the point in planning it's all going to change anyway and I feel like that sort of spilled over to a lot of different aspects of my life including budgeting so I just never really like saw the really big purpose of having a plan anyways I don't know if any of you guys can relate to this but other money scripts or beliefs that you had growing up that impacts the way that you manage money include maybe adults around you that are just like stressed about money all the time and try to avoid it so you end up avoiding money stuff as well normalizing debt maybe everybody around you just has debt and you thought it was like a perfectly normal thing to have it's not normalizing the belief that you don't have any control maybe you were ashamed a lot about your financial mistakes and of course like the quintessential one which is that money is the root of all evil rich people are terrible so you should just like be poor let me know in the comments what kind of money scripts that you have regardless of that the fact that I am making this video right now and you're watching this video means that we are trying to overcome these and become better with our money so I am proud of us okay let's move on to rule one which is to give every dollar a job so you just got paid and you go like Yay wow amazing look at my bank account I am rich but hold on a lot of that money is actually already accounted for rent natural gas electricity internet phone groceries and toiletries car payments and Fuel and insurance and student loans and then you're left with BR not a lot see if you actually didn't know how much each of these things cost it can be very easy to fall into this feeling of like holy where did all my money go that is why rule one is to give every dollar a job meaning that every single dollar needs to be tracked and have a specific purpose so you'll never end up with a situation of not knowing where your money goes some wise dude on said that if it is not measured then it is not real or something like that anyways so how do you do this well first you want to start with the money that you currently have in your bank account not money that you used to have and not money that maybe you'll have in the future but right now the money right now and ask yourself what do I need this money to do before I get paid again and you want to start with your immediate needs first the bills that you have to pay to like sustained life like the list that we had earlier rent to Natural Gas Utilities blah blah blah and yes debt as well that is an immediate need then you want to move on to your priorities like saving for a vacation a new laptop maybe a house finally you want to allocate money to things that are nice to have but you also won't die if you don't like eating out and buying fancy clothes you also actually want to create like a category specifically just called fun money which is basically like just some money some allowance that you can use to do whatever you want like buy an extra donut buy a Nudo figurine because yours broke whatever it's important to know that these budgeting categories you have needs to be very personalized what is considered an immediate need or a priority can be really different for different people for example for me eating out with my friends is actually a really high priority item and that's because I'm self-employed like I work on the internet I can literally go weeks without ever talking to anyone so I actually really prioritize spending money to eat out with other people because it also doubles as my social interaction so I don't you know like lose my mind while for somebody else maybe you have an office that you go to you have colleagues and you have like a close community of friends then eating out might not be like a very high priority because you can get your social interaction through other means okay so all of that to logically hopefully make some sense let's actually see what it looks like in implementation using an example first we start off with the money that you have in your bank account the book specifically says to not wait until you get your next paycheck or like you know wait for like a normal month or something like that just start right now then you want to add in your categories the wab app gives you some generic categories like rent such mortgage electric water internet phone groceries toiletries like blah blah like a lot of these things so you can start with that and twe it to fit your needs you can also just use paper or pen or a spreadsheet and just list out those rough categories I'll put on screen out some of the general categories that people usually have and by the way throughout this entire like budgeting process I used AI a lot in going back and forth and figuring out a lot of these things so that's definitely a very useful tool anyways you have these categories and that money from your bank account you want to start allocating money to these categories it can be really helpful to just reference your past credit card or your bank statements to see how much money that you've been spending the past month on these things don't worry so much about like if last month was like a special month or you know something happened out there honestly like every single month there's always happening anyway just go with your past statement don't worry so much about it these numbers are also not set so try to put a number down and if you absolutely don't know just go ask AI what is the average utility bill for this square footage at this location and just put whatever that says for example starting with $5,000 in your bank account your allocations might look like this and yes in my case online courses and books is absolutely like a must have because I make videos like these and now you're left with $2,220 next you want to start adding things that are not NE necessarily monthly for example you might have an Amazon Prime subscription which is $139 annually this touches on rule two which goes into the specifics about these like non-monthly expenses so it's okay if you're missing some of these right now but the ones that you do know you have like you see on your statements where you just know off the top of your head you can start putting that in so then the way you want to do this is just average it out per month if it's $139 annually that is $11. 59 per month so just put that into your budget so now is probably where your ideal and the actual starts referring greatly if you've never budgeted before looking through your bank statements and your credit cards you're going to see a lot of other charges that are not really necessary for life but it's just there and you actually want to put that into your initial budget right now because it's a reflection of your real spending patterns for example for me this would include Spotify which is $12 a month YouTube premium which is $14 a month crunchy roll for anime $16 per month a lot of Ubers and lifts like $200 worth eating out $478 $ clothes $100 Healthcare $12 because I'm out of the US now and flights $1,250 you might also notice you have some random subscriptions that you really don't want like for example I have like multiple Apple Care subscriptions I literally don't know why this is actually also a really good opportunity to go through your statements and see if there's any like random subscriptions that you're not even using and you can just go ahead and cancel those then you don't need to add it into your budget anymore okay so after adding all of these me personally I started feeling very ashamed of myself because I did not realize I was spending so much money on things that I don't consider to be like a really big priority so just so you know you're not alone if you feel that the key is just to realize that this is your starting point and things are going to start changing once you actually know what you're spending your money on okay so assuming that this is your list from the $2,220 you now currently have $238 left and by the way at this point if you're just out of money that's actually pretty normal for people who don't generally have a consistent budget but we still want to move forward with the next categories which is your highest saving priorities category which are the things that you actually care about saving towards in the financial literacy video there is a framework where you can create smart goals which is um specific measurable achievable realistic and time bound goals for your finances so I'm not going to go into details about how to do that again here you can check out the video if you want but just using myself as an example one of my short-term financial goals is to build back an emergency fund by adding $20,000 by the end of this year 2020 24 was super chaotic and I actually used up a significant amount of my emergency fund so I do want to build that back up again another one of my short-term smart goals is to take my parents to a all expensive paid trip in Autumn and that would cost me around $10,000 one of my medium-term goals is to save up $100,000 to put into investment or towards buying a home uh depending on the market cuz the housing market is all over the place so either investment or buying a home anyways those are just some of mine and if you don't mind I would actually love to see in the comments what some of your goals are as well by now you should have a list a spreadsheet where if you're using whap something that looks like this as some of you may realize that you're spending money on things that maybe are not as important to you as your high priority saving goals which is actually a good wakeup call in realizing that you're assigning money to things that are lower priority than to your actual High saving priorities so starting from next month you might want to start reassigning the dollars to other things we'll get to Shifting the money around and maybe rep prioritizing things later but for now congratulations every single dollar has now been assigned to a job some other additional useful notes from the book include um the fact that if you have debt then that definitely should be one of your bigger priorities to pay that debt down the book also explicitly says that it's okay to feel guilt while you're going through this process but it's just very important for you not to just ignore it and go back to not having a budget and just be like oh I can't handle it you know just try to adjust yourself and realize that this is simply the starting point and finally try to be realistic with your own spending patterns don't just be like oh like cutting out entire categories of your current budget because human behavior takes time to actually adjust so it's much better to be realistic and start with your current behaviors and try to change them as opposed to immediately now we'll keep modifying this budget as we move into rule two which is to embrace your true expenses as we're learning more about budgeting and making financial goals you might now feel a little bit more motivated to make more money towards your goals a great way of doing this is through side hustles and freelancing but in order to get the side GS you often have to have a pretty professional online presence and the easiest way of doing this is to create a website to Showcase your offerings today I want to show you guys how easy and affordable it is to create a website using hostinger AI Builder okay so here is their Landing site and we click Start now out of these two choices I'm going to choose the Business website builder to take advantage of the AI tools I'm going to choose 48 months to get the best deal and I actually have a coupon code for you guys so if you use Tina hang click apply then you will get an additional 10% off the website I'm going to make today is one that I want to showcase my offerings as a freelance AI consultant that can help automate and incorporate AI into different business work streams here all I have to do is enter a brand name and a description for what I want the website to do to make this even easier I'm actually just going to screenshot this and put it into chat gbt to ask chat gbt to come up with a prompt and voila create website all right this is looking pretty good empowering businesses through AI Solutions it has an area in which I can showcase some of the automations that we do we have some testimonial sections and here I can display some of the past projects that we've done so honestly this already looks really good but if I want to change anything I can very easily just click and change anything that I need maybe I don't like this background videos I can change it to something else and they also have an AI writer so for example if I want to be more specific here about one of our clients I could say write a description for emails we did for a customer service client and when we're ready we can click connect domain where you can input your one free domain and go live there you have it you can literally make a very professional website in minutes you can start building your website now by going to hostinger. com tahang and don't forget to add the code Tina hang at checkout for another 10% off thank you so much Hoster for sponsoring this portion of the video now back to the video here you are sir your account is now overdrawn by $4 have you ever had the feeling of being hit with a random bill out of the blue like in 2024 I was in the US I didn't have any health insurance and I messed up my foot so I went to the ER and I was hit with a $3,000 bill just a couple months later also pretty recently I actually had a $1,350 bill because it was a bill that was built every 2 years and I completely forgot about it so when something like this happens unexpectedly at best you get like a spike of anxiety and like self-hatred and like guilt but at worst you don't have that money and you end up having to throw it onto a credit card and go into debt because of it you see rule two is a special case of rule one that specifically deals with expenses that don't neatly wrap into monthly bills cuz unfortunately life often doesn't wrap up into nice monthly bills the Mantra is to think long and to act now so you don't get caught by surprise there are two major categories of these non-monthly bills predictable versus unpredictable but inevitable predictable bills even though they still often take us by surprise are bills when you know when it is due and the amount but they just don't happen on a monthly basis an example of this is the $1,350 subscription that I had that was build every 2 years it also includes things like water bills insurance premiums and property taxes so I talked about this already but the way that you deal with that is that you simply adjust the amount and budget it per month like my $1,350 bill I can split that over 24 months and budget in $56. 25 into my monthly budget then I wouldn't be caught by surprise when the next payment comes another type of predictable expense does not have a set amount to it for example you know that your shopping bill is going to probably increase in December because you need to buy gifts during the holidays where your AC Bill your electric bill will be increased during winter time but you don't have a set amount for how much it's going to be don't fall into the Trap of thinking oh because I don't know how much it is so then I just shouldn't budget it you still want to budget this by referencing how much it cost in the past and if it's like a new thing and you don't actually know honestly just ask chachy BT like for example I recently moved to Hong Kong and I know that my AC bill is going to be a lot higher during summertime but I don't know how much so I just asked Chach B how much should I be expecting my AC electric bill is going to be for the one-bedroom apartment and it told me will be around $150 per month during the months of May June July August and September so I should be budgeting a $750 total for those months and I wouldn't be surprised by the extra AC charge now the other big category is unpredictable but inevitable these are things that you know you have to spend money on them at some point but you don't know when and you don't know how much you know you probably will get sick at some point but you don't know when and you don't know how replacing a tire wherein inevitably needs to be replaced or buying a gift for a wedding expenses in this category can often make you feel like you're not in control and this category is also the biggest reason why people usually give up on budgeting but the trick is to think about them earlier on put into your budget some saving goals I basically just asked chbt for these categories and it gave me medical Electronics unexpected flights chbt knows me scary well cuz I do have a lot of unexpected travels and travel expenses for things like eating out in hotels during those travel times so rule two is not just about saving for unexpected expenses that are coming up it's actually also a great way to get ahead of your saving goals like saving for a new laptop a vacation or buying a home my short-term goal is of building an emergency fund and taking my parents to travel and my long-term goal of 100K in Investments SL for a home I can also use rule two in order to break that down into monthly chunks that I'm saving towards by the way of all this sounds a little bit abstract and you're kind of like Tina like I just want to see like an exact detail step-by-step guide what I'm going to do is if you let me know in the comments just like literally type live stream okay just type Liv stream I will actually make a live stream in which I will go through each of these steps together if you want now before I go on to rule three I do want to address a certain demographic of people like me which are people with variable income so to other people in this category I don't know about you but after I quit my corporate job where I was getting like monthly paychecks and I started working by myself um my budget just like went to because I was like oh like how can I possibly budget my income is variable right and the book does address this saying that you know like people like us are actually people who need the budget the most because we have variable income it means that we need to have better plans and not just ride the roller coaster having a lot of money um when a paycheck hits and then having like really little money when we don't get any payments so there's a few ways of doing this but the way I do it now is that I simply take the average income that I get throughout the year and then minus another 20% just to be like extra safe yeah I won't go into too much detail about this now because I don't know how applicable it is but I will do it in the live stream if you want let's now go on to rule three which is the roll with the punches let's do a little exercise think about your perfect day for me it goes something like this I wake up naturally at 6:00 a. m. to the birds chirping I get ready and I put on all my clothes that I laid out the night before I eat a quick breakfast and then I'm out the door to go on a hike for 2 hours during those 2 hours I'm enjoying those views and thinking about lots of wonderful ideas for videos that I'm going to film then I come back at 9:00 a. m. I sit down and I write down all of my wonderful ideas and start a session of deep work until noon in which I come up with a perfect script for my next video now this is actually what happened today I woke up at 8 a. m. to my alarm clock blaring and me being super tired cuz I was up until 3:00 a. m. writing this current script for this video I then hung out on the balcony for a little bit because I didn't have time to go for a walk followed by three backtack calls and I'm sitting here right now trying to finish filming this video before I have another call in 30 minutes more of the story is that life is a show and it very rarely goes as planned and that is the essence of rule three rule of the punches your budget is not a reflection of your ideal life your budget is a reflection of your real life and the Mantra that they repeat in the book many times in this section is changing your budget is not failing I must confess that before I actually managed to make this budget and make it work I have tried budgeting like at least 10 times in a variety of different ways at this point it was a lot easier when I was working my corporate job and after I went like self-employed and freelancing holy like it just went to anyways the reason is because I did not Embrace rule 3 I would just have like this ideal budget that I wanted to stick to and then when life happens which it always like happens like super chaotic things happen I just end up being like Oh like you know this is not going to work I suck at budgeting I'm bad at money I should give up and just like not have a budget but really embracing this rule means being able to shift the dollars that you have in your budget to different priorities when you need to not just like rage quitting there is a finite amount of money in your budget and according to rule one we need to assign a job for every single dollar but it doesn't mean that the job of your dollar can't change if your priorities shift like maybe this month you don't contribute your $200 for your vacation because your phone screen cracked and you need to take that money and you know put it on your phone screen fixing your phone screen instead so something that recently happened to me is that my normal process of paying myself got disrupted like what I normally do is I transfer a certain amount of money from my corporate account to my own personal account in order to pay my own expenses and this has been working fine for like the past 2 years but for whatever reason it got flagged this time around and I was not able to get my money from my corporate account to my personal account and it was literally is like stuck in limbo and it's actually still stuck in limbo for like a month now where I just like don't have the money on either side now this really with my budget because everything I was budgeting for I was not able to contribute to anymore right so what I instead had to do is readjust my priorities instead of like saving certain things for this month I just took all the money that I had left in my bank account and put them all towards the basic urgent like rent and groceries I know at some point I'll get this money back fingers crossed probably and when that time comes I'll just go back and then you know fund my normal savings and things like that but it doesn't need to like actually screw with my entire budget let's now go on to rule four age your money imagine a grain silo that is filled with grains like wheat or barley or oats now the point of this Silo is that you want to store food that you can use and dispense in a longer period of time when times are good you can top up your Silo and when times are bad you know you can take out from that Silo and that's a b help you sleep much better at night realizing that you have enough food for the next week or month or even year now change this food analogy to money and it works the exact same way having a big money Silo can give you so much peace of mind you know that even if you have an unexpected big expense somehow you lost your job or something like that you would still be okay for a certain period of time for you to recover and to rep prioritize that's why rule four is to break out of that paycheck to paycheck cycle I build up that Silo reservoir of money that you can depend on what is the best way of doing this so it's actually very simple all you have to do is that you need to spend less than you earn the book quantifies this as the age of your money based upon when you earn that money and when you spend that money for example if you just got your paycheck and then you immediately spend that money the age of your money is zero but say you earn money last month and you only have to spend that money this month that means the age of your money is 30 days and if you're in debt your money actually has a negative age because that money is technically spent before you even actually get it which is another argument for why it is that debt is very bad and you should prioritize getting rid of your debt the goal is to age your money as much as possible the general rule of thumb is that if you can age your money for 3 to 6 months that's considered you're doing really well it means that you have 3 to 6 months of buffer room if you manage to do this it is like this magical sense of relief that comes with it you're able to breathe easier not have to think about any bills like setting up all your auto pays because you know that there's always going to be enough money to make sure you're not overdrawn and it just gives you the time and the perspective to be able to make better decisions you're not forced to do things because you feel like you're running out of money and especially if you have variable income like me you don't need to worry about someone not paying you on time or like something happening and a project getting canceled so how do we actually age our money well there are a few different ways of doing this the first one is simply to budget that in and make it one of your saving priorities so every time that you get a paycheck in you're allocating 10 20% of those dollars into aging your money that you won't touch this by the way is also what we call the emergency fund which is also what I am saving right now or if you really really want to get out of this like paycheck to paycheck cycle and you just want to like age your money like crazy you should also look into just earning more money technically by saving money or like decreasing cost you can age your money but there's a finite amount and making more money is actually not as hard as you may think it is you could do things like get a second job start freelancing sell your stuff maybe you have like an old monitor that you don't use or you can Outsource your stuff like rent out your van air B& B your place offer your services to carry furniture Outsource your muscles I don't know and the last tip is to pay attention to Hidden windfalls these are the little money surprises that we get here and there which normally we might not pay attention to for example you might find like a $20 bill one of your old pants realizing that you're getting an extra paycheck tax return an employer benefit or just the chance to take on a freelance job or to work in a few extra hours which up to this point you might have been just like spending it on other stuff instead of just being like yeah hey I have extra money and then spend it on you know going out or something like that you can take that money and prioritize aging your money you'll be surprised like just a accumulation of few of these things can really get you out of that cycle of paycheck to paycheck and it can substantially age your money and generally speaking the more that you age your money the easier it becomes and soon enough you have a nice little buffer okay so those are the four rules of budgeting like I said earlier just type in the word live stream in the comments if you want me to do a live stream where we'll actually go like step by step and Implement all of these things to your actual budget but regardless I hope you're now able to have a better understanding of budgeting and as promised here is a little assessment if you are able to answer these questions correctly then congratulations you have now been educated on budgeting I will see you guys in the next video or live stream