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Here’s an unfortunate reality:
Most people don’t use a budget.
And to be honest, I kind of get it. When I ask people why, they’ll say things like:
“I make more than enough money, I don’t really need a budget.”
“Aren’t budgets simple? They can’t be that useful, can they?”
“A budget sounds like a lot of work…”
“I’m bad with numbers, though...”
“A budget sounds boring!”
Despite these things, a budget is an extremely effective tool for building and protecting wealth.
And budgeting can be way easier and way more automated than you think. Today, we will cover:
Basic budgeting tips that you can use, even without a budget
How a budget ties them all together
The Wealth Potion Auto Budget and how to use it
Let’s dive in.
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Check Your Bank Balance More Often
Be honest.
How often do you check your bank account?
How many of you get nervous when you check your bank account?
Or, do you avoid checking it altogether?
Firstly, recognize that this is totally normal.
Surveys show that anywhere between 22%1 and 45%2 of people shy away from checking their bank balance. This percentage is also much higher among young people.
Financial insecurity can affect anyone, regardless of how many dollars you have in your bank account.
That said, we have to also recognize that avoiding your finances is not going to help you improve your situation. You need to confront your fear.
Exposure therapy is used in psychiatry to treat a wide range of fears, such as fear of going outdoors, fear of public speaking, and more.
And luckily, fear of your finances can be tackled from the comfort of your own home.
Do it now. Stop reading this newsletter article for just a few seconds, and open up your mobile banking app.
(If you don’t have a mobile app, I highly recommend you download one).
Build a habit of checking your bank balances, your investing account, your Bitcoin wallet etc. more often.
Monitor Your Subscription Services
We live in a subscription economy.
Instead of buying individual CD albums or renting movies from Blockbuster, we pay $10-$20 per month to Spotify, Apple, and Netflix for “unlimited” access.
The problem is that these costs add up very quickly.
And subscription fees are especially sinister because you don’t see the money leaving your account each month.
You can sign up for a subscription service one time, and be charged for years.
Recent data shows that 42%3 of people admitted to forgetting about a subscription they were paying for but no longer used.
And these are just the people that found out about it, and admitted to it!
First, track down all the subscription fees that you’re currently paying. If you find one that you no longer use, cancel it! That’s free savings.
Cancelling a subscription is a one-time decision that can save your thousands of dollars in the long run.
For the others, jot them down in a list somewhere. Or, use the Wealth Potion Auto-Budget, which we’ll cover in just a moment.
Set a Financial Goal
Most budgeting apps encourage you to set a goal as soon as you set up your profile.
This is because there is ample data to support financial goal setting. The simple act of setting a financial goal will:
85% of people say that having a clear financial goal makes them feel more confident
81% of people say that having financial goals makes it easier to say no to financial spending4
So even without a full blown budget, you can set a goal for yourself. Some examples for you to get started:
Save $10,000 for your next vacation
Save a 3/6/12 month emergency fund
Grow your net worth by 10% this year
Achieving these goals may require some behavior changes, such as investing more frequently.
I’ve got you covered there too:
Set Up Auto-Deposit and Auto-DCA Investing
This one is a bit more advanced, but if you can pull it off, you can basically skip building a budget altogether.
You’ll need three things:
A bank account
A stock (or Bitcoin) brokerage account that allows auto-deposit and auto-purchase
An investment in mind that you want to hold for the long-term
Put simply, we’re going to invest a certain percentage of your paycheque automatically.
This is similar to the “pay yourself first” method of budgeting, but with the added bonus of automating your investments too.
Earlier, I said that you can “basically” skip a budget. The reason you should still build a budget is so that you can accurately arrive at the correct number of dollars to invest.
You could use a ballpark number of $500 or $1000, but you’ll want to make sure you have enough money in your bank account that you can still afford rent and groceries.
Which is why…
Tying It All Together With… A Budget?
Yes, a budget is boring. And simple. And requires work.
But it works.
A budget is kind of like Buckley’s. It sucks, and it works.
A budget is so effective at building wealth because of all those things.
It forces you to check your bank balance often so you can shore up transactions
It alerts you to subscription fees that deduct money out of your bank account every month
Setting a financial goal is perhaps the most exciting part of your budget.
It reminds you that your cash “savings” aren’t growing by sitting in a bank
So yes, my recommendation is to build a budget.
And to get you started, I’ve put together a free resource for you all. Introducing…
The Wealth Potion Auto-Budget
A budget template is probably the most requested resources from my subscribers.
But so much has been said on the topic already, and there are dozens of budgeting templates out there… How could I add to the discourse in a valuable way?
Then I had an idea…
If people are struggling with a budget being boring and manual, what if it wasn’t?
So I built the Wealth Potion Auto-Budget:
In short, here is how it works:
You plug in your income.
The Auto-Budget creates you a budget automatically*
As you plug in more data (e.g. rent/mortgage), the Auto-Budget rebalances.
(*The automated data is based on the average spending habits of a U.S. household.)
In other words, you get a basic budget with one click.
But the more info you input, the more accurate the budget will become.
PS. This is v1 of the Auto-Budget. I’d love for you all to try it out, and let me know your feedback. Once it’s been tweaked and is in a good place, I will absolutely be doing a more in-depth guide on it.
To your prosperity,
Brandon @ Wealth Potion