3B: Bill, Build + Blow --How To Build Your Budget
Giving every dollar a job isn’t just some cute saying, it is a fact. A lot of times, the reasons why our budgets have a hard time staying ‘balanced’ is due to not being able to hold ourselves + our monies accountable. That is pretty much what it means to budget.
The spreadsheets. The budget planners. The budgeting apps. Zero budgeting. 50/30/20. The random scraps of paper scattered from the windows to the wall. But your budget still ain’t hitting. Oftentimes, I get questions about where to start or even pick up. I never judge when I get this question. Folks know what they are supposed to do, but the getting ‘started’ only goes good on Drake’s song. Yet, when it comes to folks' wealth journey and figuring out their funds is when it gets hard. Just like companies have an expense ratio, you do as well. You need to determine if your expenses out spend your ration of money that comes in weekly or monthly.
The reason why I push the 3B methodology when it comes to budgeting is due to the fact you give each dollar a holler for them to handle. The logic for this being the starting base is that it allows you to get in alignment with your money. It has worked for me for years to the point that other methods are known, but not needed.
In short here is what Bill, Build + Blow or 3B looks like -
Bill: Know how much all of your bills are hitting for. For this group, you might have to split them into sub-groups to fit the following: expenses in which we have to pay those people each month, quarter or year. Configure what are your fixed (insurance, memberships, etc) and variable (electric, mortgage, car note).
Build: These ‘bills’ are what you are paying for future use - savings, stocks, real estate. These are down payments to the life you want to experience later. Yes, ‘expense the experience’... even later. You need to actually work out and write out what your financial objectives for short term + long term plays. Use the time in the strategy to understand the money vehicles (or ways) to get to your goals. Stacking is one of the most easier things to do from learning to looking into accounts, small is still a start!
Blow: This is for my spaver and misbehavers. This category allows you to give yourself barriers from going broke. Calculate what you spend on the extra expenses (shoes, bags, Target). Know this number to know how to configure what this ‘allotment’ looks like for you. If you followed my personal FB for a while, you would’ve remembered my logic on buying gym shoes. When I brought a pair, I bought a share.
So I’m sure that you are thinking that this is all cute, right? I know ya. So for you to be able to build this plan, here are some steps in getting into formation.
Know your dough. Pull your statements from the last 3 months from you starting to build your budget. Even if we are starting in the new year, looking at Black Friday or shopping holidays could easily allow you to build your saving reserves. Look at charge fees as well. Like I said within the “Bill” category, group them into sub-categories as well.
Bills, Bills, Bills. This is where a LOT of folks get tripped up like untied shoelaces. Look at all your bills. Can you consolidate or cancel some ish you aren’t using right now?
After you look through the screenshot of your bank account (statements), you will get annoyed at your spending. Get over it. You’re making changes now. You need to know the pockets or chunks in which you make purchases (hair, hobbies, home, etc).
Give each group or transaction type a bank account, seriously. It helps you build discipline and habit. To learn why I say this, read this article.
Now that you know your transactions, and place them into groups by “Bill, Build + Blow”. Track how you spend towards each of those groups for at least 1 month. Why? This will allow you to see changes in your spending + get used to it.
If you mess up, don’t give up. Determine what you need to do to fine tune each group method. You see, the 3B allows you to customize it to YOUR expenses + income. This gives you alignment to your smoney goals and strategy. If you determine that your numbers aren’t adding out, cut and coints. This means, make cuts to expenses that can’t be allocated within your “Blow” group. Look into ways to increase your cash flow. Don’t get discouraged if this happens.
Here’s a tip in case you are having a hard time looking at your monthly expenses on a wide view - do weekly budgets. Seriously. When I was a contractor, I did this to track my spending even tighter. There is no one way to wealth. Stay flexible to be able to funnel your funds even more!
How has your battle with the budget been holding up?! Tell me below!