Personal Budget Day 3

Personal Budget Plan Action Items (keyterms):
1. Determine how much you are spending on your Necessities. What percent of your Gross Income?
2. Ask yourself, are there any spending habits you want to change so you can free up more $$ to start building wealth? Are there any expenses that can be changed NOW? In the near future? In the next year? Maybe downsize your apartment, sell the stuff in your storage unit, etc.

Here are Personal Budget PLAN for WEALTH recommendations. Level 1 is where you want to be, but give yourself enough room to breathe if you are not there yet.

Personal Budget Plan Level 1 – Rock Star!
60% Necessities
10% Longest term savings
6% Asset (Intermediate) Savings
7% Emergency Funds
10% Vacation Funds
7% NOW$

Personal Budget Plan Level 2 – You probably have some debt….
70% Necessities
10% Longest term savings
5% Asset (Intermediate) Savings
5% Emergency Funds
5% Vacation Funds
5% NOW$

Personal Budget Plan Level 3 – For those with extreme debt:
75% Necessities
7% Longest term savings
3% Asset (Intermediate) Savings
5% Emergency Funds
5% Vacation Funds
5% NOW$

The driver of the % changes is the amount of DEBT you must pay for in Necessities. If you have zero student debt and zero credit card debt, strive to live at Level 1. Yes, I understand living in Manhattan where rent can top 60% of your income may make this difficult, but perhaps you need to consider additional income sources to justify living in Manhattan or look at other options….

Make sure you understand the ramifications of why you choose to be at a particular level. Remember, it is YOUR CHOICE. This choice determines how quickly you can build wealth. I am your coach, not your guardian. Personal Budget Plan leads the way.

Living with less than 50% (don’t forget the cost of taxes…) in Necessities? Having no trouble meeting the other targets? Take that extra cash and stash it in the Asset Savings Account – you may be ready to invest. Tread Softly….

Wealth Building Tips #1 and #2 are the lion-share of the work. Pat yourself on the back if you have made it this far. You now have a Personal Budget PLAN! In Wealth Building Tip #3 you will automate as much of the PLAN as possible. LIVE THE PLAN!

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