Welcome back to the Net Worth Podcast.
Speaker 1: This week we are diving into how to budget like a boss and strategically boost your net worth.
Speaker 2: Check out the full edition on our website, wearenoyack.com.
Speaker 1: So often when you hear the word budget, the first thing that springs to mind for most people is deprivation, right?
Speaker 2: It’s this feeling of limits, of saying no to things you want.
Speaker 1: Yeah, exactly.
Speaker 2: But that’s such a common misconception.
Speaker 1: And it’s one that this edition of Noyack Wealth Weekly really challenges uh head on.
Speaker 2: It makes the case that budgeting isn’t about restricting yourself at all.
Speaker 1: Instead, it’s about providing direction, bringing clarity to your finances, and, well, giving you a profound sense of control.
Speaker 2: Think of it less as a straight jacket and more as, you know, a statement of your financial priorities, building a life with purpose.
Speaker 1: Precisely.
Speaker 2: And if we connect this to the bigger picture, budgeting really transcends mere money management.
Speaker 1: It becomes an active tool for shaping your entire financial future.
Speaker 2: This approach completely transforms what many consider, frankly, a tedious chore into a powerful lever for financial empowerment.
Speaker 1: And critically, it’s directly linked to robust net worth growth.
Speaker 2: It’s about intentionally guiding your money where it can work hardest for you, instead of just letting it drift.
Speaker 1: That’s beautifully put.
Speaker 2: And the great thing is this edition of Noyack Wealth Weekly really provides a, well, a comprehensive toolkit for anyone looking to master their money.
Speaker 1: It includes a clear five-step plan.
Speaker 2: introduces two effective frameworks to help you categorize spending, and even points out common pitfalls to avoid.
Speaker 1: One feature I find particularly exciting, and it’s mentioned within this edition, is how technology can act as your personal financial co-pilot.
Speaker 2: Our Wealth Management Tool, for instance, is designed to simplify budgeting techniques, explore different frameworks visually, and even generate personalized savings plans.
Speaker 1: Tailor-made for your goals.
Speaker 2: What’s truly transformative here, I think, is how modern financial tools can completely remove the tedious stress often associated with budgeting.
Speaker 1: Imagine not getting bogged down by endless calculations or uh the painstaking manual tracking of every single penny.
Speaker 2: Technology can automate so much of that heavy lifting.
Speaker 1: This frees up your mental energy to focus on the why behind your budget, aligning your daily spending effortlessly with your long-term net worth goals.
Speaker 2: It’s a powerful example of leveraging efficiency.
Speaker 1: That really is a game changer for many.
Speaker 2: Okay, so let’s really unpack this five-step plan outlined in this edition because it’s specifically designed to help you not just manage money but actively, you know, accelerate your net worth.
Speaker 1: The first step, though simple, is absolutely foundational to wealth building.
Speaker 2: Pay yourself first.
Speaker 1: Mm-hmm.
Speaker 2: Classic but crucial.
Speaker 1: Right.
Speaker 2: Now, the core concept here sounds obvious, but it’s often overlooked.
Speaker 1: Most people budget after they’ve spent their money.
Speaker 2: This edition points out that this is entirely backward if you want to build wealth efficiently.
Speaker 1: You need to fund your future before you fund anyone else’s business.
Speaker 2: The practical application, or the Do This action, is simple but incredibly powerful.
Speaker 1: Set up an automatic transfer on payday.
Speaker 2: This addition suggests aiming for, 10 % of your income if you can comfortably do it, but even 5 % is a strong start if that’s what’s feasible right now.
Speaker 1: This money should go directly into savings, investments, or towards paying down high interest debt.
Speaker 2: The key is that it’s non-negotiable.
Speaker 1: It happens before you even see the money.
Speaker 2: And this seemingly small move isn’t merely about saving a few dollars.
Speaker 1: It’s about proactively building your assets and reducing your liabilities, like at the same time.
Speaker 2: By making this automatic and non-negotiable, you are essentially guaranteeing that your net worth increases with every single paycheck before you even have a chance to miss that money.
Speaker 1: It cultivates an incredible foundational habit for consistent incremental wealth growth that compounds powerfully over time.
Speaker 2: It really does.
Speaker 1: OK, so once you secured your future self, Step two is all about choosing the right budgeting framework.
Speaker 2: The truth is there isn’t a single one size fits all approach to allocating your income.
Speaker 1: And this edition wisely highlights two of the most popular and effective strategies.
Speaker 2: First, we have the 50-30-20 rule.
Speaker 1: Can you walk us through how that one breaks down?
Speaker 2: Absolutely.
Speaker 1: Yeah.
Speaker 2: The 50-30-20 rule is a really popular starting point for many people.
Speaker 1: It suggests allocating your after-tax income into three distinct categories.
Speaker 2: 50 % goes to your needs.
Speaker 1: These are your non-negotiable essential expenses like rent or mortgage, utility bills, groceries, transportation, that sort of thing.
Speaker 2: The basics.
Speaker 1: Right, the basics.
Speaker 2: Then 30 % is for your wants.
Speaker 1: These are your lifestyle choices, such as dining out, entertainment, travel, maybe streaming subscriptions.
Speaker 2: And finally, 20 % is dedicated to savings and debt repayment.
Speaker 1: This includes building your emergency fund, making extra payments on loans, or contributing to investment accounts.
Speaker 2: This framework is particularly effective, I’d say, for those with relatively stable fixed expenses and who want a kind of balanced approach.
Speaker 1: OK, that makes sense.
Speaker 2: And then this edition also introduces the 75/15/10 rule, which offers a slightly different emphasis.
Speaker 1: How does that one stack up?
Speaker 2: Yeah, the 75/15/10 rule is a fascinating alternative, especially for those maybe navigating different financial landscapes.
Speaker 1: Here, 75 % of your income is allocated to daily living expenses, which is a broader category covering basically all your regular expenses.
Speaker 2: It’s similar to needs, but with a bit more flexibility built in.
Speaker 1: OK.
Speaker 2: Then a significant 15 % is earmarked specifically for long term investing.
Speaker 1: This is where you focus on building serious wealth for the future, think retirement accounts, real estate investments, other long term assets.
Speaker 2: The remaining 10 % goes into short term savings for things like vacations, car repairs, or maybe those known unknowns that pop up.
Speaker 1: This framework can be particularly well suited, I think, for individuals in high cost of living areas, maybe freelancers with variable income, or really anyone whose primary focus is aggressive investment and wealth accumulation.
Speaker 2: That raises an important question, actually.
Speaker 1: For someone trying to decide between these, what subtle shift does that broader 75 % for daily living allow compared to the stricter needs category in the 50-30-20 rule, especially if you’re trying to invest aggressively?
Speaker 2: That’s a great observation.
Speaker 1: Yeah.
Speaker 2: The beauty of this 75/15/10 rules 75 % daily living category is its inherent flexibility.
Speaker 1: Like you said, in high cost areas, your actual needs might naturally eat up more than 50%.
Speaker 2: By broadening that first category, this framework kind of acknowledges that reality, making it less restrictive day to day while still ensuring a significant chunk that dedicated 15 % is always channeled directly into long-term investing.
Speaker 1: I see.
Speaker 2: It shifts the emphasis from like a strict categorization of every little expense to ensuring a dedicated substantial portion of your income is perpetually building your future net worth.
Speaker 1: It’s less about micromanaging categories maybe and more about macro prioritizing growth.
Speaker 2: makes a lot of sense, especially for people who situations aren’t quite standard.
Speaker 1: OK, moving on to step three, budget backward from your goals.
Speaker 2: This is such a powerful mindset shift and it’s something this edition really champions.
Speaker 1: Most people instinctively try to save what’s left over at the end of the month, right?
Speaker 2: which almost never works consistently.
Speaker 1: really, yeah.
Speaker 2: It’s far more effective to put your financial goals first.
Speaker 1: The do this action here is truly empowering.
Speaker 2: Choose a real, tangible financial goal.
Speaker 1: Maybe it’s a down payment on a house, saving for a child’s education, or that dream retirement.
Speaker 2: Put a specific number on it and then give it a clear deadline.
Speaker 1: Then you simply divide that total number by the total number of months until your target date.
Speaker 2: That gives you the exact monthly amount you need to set aside.
Speaker 1: It completely transforms your goals from these abstract dreams into concrete funded milestones, making your budget a direct reflection of your deepest aspirations.
Speaker 2: It literally puts your money on a mission.
Speaker 1: This step is fascinating because it really harnesses the power of intentionality.
Speaker 2: By defining those aspirations as funded milestones, your budget becomes a direct engine fueling your net worth progress.
Speaker 1: It turns those often vague some day dreams into this much by then realities.
Speaker 2: This proactive, goal driven approach doesn’t just help you save.
Speaker 1: It strategically accelerates your path to financial freedom by giving every dollar a defined purpose toward building your wealth.
Speaker 2: It’s truly about turning wishes into will-haves.
Speaker 1: Definitely.
Speaker 2: Speaking of practical steps, step four is a brilliant actionable strategy.
Speaker 1: Use the two account system.
Speaker 2: The power here lies in its simplicity and uh separation.
Speaker 1: It becomes incredibly difficult to accidentally overspend when your discretionary spending account literally runs dry.
Speaker 2: Built-in guardrails.
Speaker 1: Exactly.
Speaker 2: This edition suggests keeping two separate checking accounts.
Speaker 1: One account is dedicated to your fixed expenses, think your recurring bills, rent or mortgage, essential subscriptions.
Speaker 2: The other account is purely for your discretionary spending, like dining out, shopping, or your weekend fund money.
Speaker 1: To do this action involves moving a fixed fund budget amount weekly into that discretionary account.
Speaker 2: The simple ritual helps you avoid accidental overdrafts and provides incredible clarity on where your money is going.
Speaker 1: It makes overspending a conscious choice.
Speaker 2: not an accidental slip-up.
Speaker 1: And what’s truly fascinating here is the built-in, almost passive discipline this system provides.
Speaker 2: It creates a clear, undeniable boundary between your essential financial commitments and your flexible spending.
Speaker 1: This not only prevents overspending, but actively protects your wealth accumulation.
Speaker 2: By segmenting your funds this way, you ensure that your long-term net worth goals are prioritized and shielded from impulsive decisions.
Speaker 1: It turns financial awareness into, well, an intuitive, automated process.
Speaker 2: And finally, step five.
Speaker 1: Which, as this edition emphasizes, is perhaps the most crucial for long-term success.
Speaker 2: Make it a weekly ritual.
Speaker 1: Consistency really does win the entire financial game.
Speaker 2: If you only check your money once a month, you’re often catching problems too late, you know, after the damage is already done.
Speaker 1: Yeah, you’re looking backwards at that point.
Speaker 2: Right.
Speaker 1: The do this action is simple and quick.
Speaker 2: Block out just 15 minutes every Sunday for a quick money check-in.
Speaker 1: During this time, you review what you spent that past week, assess if it aligned with your plan, and then look ahead to what’s coming next week.
Speaker 2: This habit might seem small, but it compounds over time, building serious financial momentum and keeping you tightly aligned with your net worth goals.
Speaker 1: And if we connect this to the bigger picture, this consistent weekly tracking ensures that every single dollar you earn is actively working effectively toward increasing your net worth.
Speaker 2: It keeps your plan on track, allows for immediate minor adjustments before they become major problems, and ensures your budget remains adaptable to life’s inevitable changes.
Speaker 1: This regular proactive engagement prevents small deviations from becoming significant roadblocks to your financial growth.
Speaker 2: It’s the difference between, say, steering a ship daily versus only checking its course once a month when you’re already miles off course.
Speaker 1: OK, so we’ve covered the five core steps.
Speaker 2: But here’s where it gets really interesting, because this edition also gives us a clear warning label on common budgeting mistakes to steer around.
Speaker 1: These are the pitfalls that can derail even the most solid budget and seriously impact your net worth.
Speaker 2: First up, not tracking expenses.
Speaker 1: As this edition wisely states, you can’t change what you can’t see.
Speaker 2: It’s absolutely fundamental to know where your money is actually going.
Speaker 1: You’d be surprised how many people genuinely don’t know where a significant portion of their income disappears each month.
Speaker 2: This is such a critical point.
Speaker 1: Without tracking, budgeting becomes pure guesswork, really.
Speaker 2: People often find, when they actually start tracking, that small Seemingly insignificant daily purchases like that morning coffee or a quick lunch out add up to hundreds sometimes even thousands of dollars each month.
Speaker 1: Knowing where your money goes is the absolute first step to redirecting it toward your net worth goals.
Speaker 2: It’s like trying to navigate without a map.
Speaker 1: You might be moving but you won’t know if you’re going in the right direction.
Speaker 2: Spot on.
Speaker 1: Another big one and this is a common trap is setting unrealistic goals.
Speaker 2: You can’t realistically expect to go from say zero dollar savings to saving $2,000 month overnight.
Speaker 1: That’s just a direct recipe for burnout, frustration, and ultimately giving up.
Speaker 2: Yeah, you set yourself up to fail.
Speaker 1: Exactly.
Speaker 2: This edition emphasizes building slowly and sustainably.
Speaker 1: Start with what’s manageable, then gradually increase as your habits solidify.
Speaker 2: And then there’s forgetting your regular expenses.
Speaker 1: We’re talking birthdays, holidays, annual memberships, car maintenance, vet bills.
Speaker 2: These are expenses you know are coming, right?
Speaker 1: But they often get overlooked in monthly budgeting, leading to budget busts and Well, frustration.
Speaker 2: You absolutely need to plan for them.
Speaker 1: That’s so true.
Speaker 2: That set it and forget it mentality with budgeting often crumbles when those regular expenses hit.
Speaker 1: A common strategy to combat this, and it’s effective, is to divide those annual or semi-annual costs by 12 or 6, respectively, and then set aside that smaller amount each month into a dedicated savings bucket or sinking fund.
Speaker 2: This cushions the blow when the actual expense arrives and prevents it from derailing your carefully planned budget.
Speaker 1: It’s about proactive planning versus reactive scrambling.
Speaker 2: Good tip.
Speaker 1: And finally, a really critical mistake outlined in this edition is having no emergency fund.
Speaker 2: One unexpected bill, whether it’s a car repair, a medical issue, or a sudden job loss, shouldn’t derail your entire financial plan and potentially force you into high interest debt, which directly eats away at your net worth.
Speaker 1: Absolutely destroys it.
Speaker 2: Right.
Speaker 1: This edition suggests a simple fix.
Speaker 2: Add a Life Happens line item to your budget and fund it weekly or with every paycheck.
Speaker 1: It’s not wasted money.
Speaker 2: It’s essential preparation for the unexpected.
Speaker 1: It protects all the hard work you’re doing to build your net worth.
Speaker 2: It’s your financial shock absorber.
Speaker 1: each of these mistakes, while they might seem minor on their own, can collectively create a significant drag on your net worth.
Speaker 2: It’s like death by a thousand cuts, financially speaking.
Speaker 1: So recognizing and actively addressing them is just as important, if not maybe even more so than diligently implementing the positive steps we’ve discussed.
Speaker 2: Avoiding these pitfalls means you’re not just consistently moving forward, you’re also diligently protecting the financial gains you’ve already made.
Speaker 1: You’re preventing those setbacks that can erode accumulated wealth and delay your financial freedom.
Speaker 2: It’s the defense that allows your offense to thrive.
Speaker 1: So as we wrap up our deep dive into this incredibly insightful edition of Noyack Wealth Weekly, it really hammers home the core message.
Speaker 2: Budgeting isn’t about constraint or deprivation at all.
Speaker 1: It’s actually about gaining profound freedom through clarity.
Speaker 2: When your money moves, truly reflect your values, not just your old habits or what’s easiest in the moment, you naturally start to feel more confident.
Speaker 1: You feel significantly less stressed about your finances and way more in control of your entire financial life.
Speaker 2: It’s a truly empowering transformation.
Speaker 1: That’s right.
Speaker 2: The final word from this edition really encourages you not to wait for perfection or for the ideal time to start.
Speaker 1: Just get started today.
Speaker 2: Don’t let the pursuit of an immaculate, perfect budget prevent you from taking action right now.
Speaker 1: And this raises an important question for you, our listener.
Speaker 2: What single actionable change will you commit to making this week to align your money moves more closely with your deepest values?
Speaker 1: And how do you imagine that shift will enhance your personal sense of freedom and control over your net worth?
Speaker 2: Something to think about.
Speaker 1: Remember to subscribe to Noyack Wealth Weekly on our website wearenoyack.com to read the article behind today’s conversation and to get our weekly newsletter straight in your inbox.
