Rocks
This Rock allows you know exactly where your money is going each month and even allows you to search the last year to see how much you spent in a certain category.
What is Tracking Your Spending?
Your housing costs should be around this percentage of take home pay.
What is around 28%? (Will take 25-30%)
The number of months you should have saved in your emergency fund for fixed costs to provide security, protect against job loss, or unexpected costs.
What is 3-6 or 3-12 months?
This category should take no more than 60% of your budget.
What are FIXED COSTS?
Known from notebook paper, this financial principle means creating breathing room in your money through saving and restraint. The poor do not have this, but the wealthy create it.
What is margin? Margin in money from savings, planning ahead, spending below means.
Keeping this Fixed Cost low will allow you get 'margin' and frees up money for savings and investments. This is why it's a major Rock.
What is Housing Cost?
The percentage of your overall budget FIXED COSTS, all together, should take.
What is 50-60%?
This type of expense—like a known upcoming insurance premium, car repair, holiday shopping, vacation—is best handled with a sinking fund rather than an emergency fund.
What is a planned or irregular expense? Using your emergency fund for these would be considered a misuse.
This category should be around 10% of your budget according to the Bible.
What is TITHING / GIVING?
While extra income is often earned by trading time for money, this approach increases your earnings without adding more hours.
What is asking for a raise or increasing responsibility at work?
Getting rid of this, with its high interest, frees up money each month and is therefore a Rock.
What is Getting Rid of Debt?
The type of life insurance most everyone recommends to help your family in case you die.
Term Life Insurance which is a specific amount for a specified amount of time, getting your family through the most expensive years.
This type of savings account typically earns higher interest than a traditional account and is a way to offset inflation and increase your 'flow' a bit.
What is a High Yield Savings account? 3% or higher
This category should be around 10% of your budget and includes emergency and sinking costs funds.
What is SAVINGS?
These are three ways to increase the FLOW into your bucket.
What are increasing your income (raise, second job, extra shifts), a HYSA, capital gains, dividends, tax return, inheritance.
Without this system, extra income tends to disappear; this system organizes money into fixed costs, saving, investing, spending, and giving.
What are Categories or Buckets?
The category FIXED COSTS includes these things.
What are rent, mortgage, utilities, internet, groceries, bills, insurance, debt, car, clothes (?), subscriptions (?)?
Having a fully funded emergency fund of 3-6 months provides more emotional well-being than this.
What is earning $200,000?
This category should be around 10-20% of your monthly budget and is not touched for a long time.
What are INVESTMENTS?
These cause your bucket to leak money.
What are general expenses, inflation, debt with high interest payments, lifestyle creep, taxes, fees, expense ratios.
This silent wealth-killer happens when your spending rises with every raise, leaving you no better off financially despite earning more.
What is Avoiding Lifestyle Creep.
You should think twice before adding fixed costs (like debt, bigger house, new monthly subscription or membership) because of this long-term effect on your finances.
What is it locks in higher monthly spending forever?
This is the primary purpose of an emergency fund: to prevent you from going into this when life happens.
What is debt?
This category will be what remains and is important for enjoyment, typically between 10-30%.
What is GUILT FREE SPENDING?
Two families live in similar homes and drive similar cars, yet one is quietly building wealth while the other is not. This principle explains the difference.
What is seen vs. unseen money? What is spent vs. what is saved, invested.