Creating a budget is simple and one of the first steps to taking control of your finances. A budget assigns a purpose to every dollar. Without one, it’s easy to lose track of how much you are spending or where your money is going. 

Rather than our finances (or lack thereof) controlling our decisions, the goal is to become masters of our money. Someone who masters their money is not burdened by financial anxiety; instead, they intentionally save, spend, and give. They are not stuck; they are charting their financial destiny and chasing after it. 

At the end of the day, this budget breakdown will give you a clearer headspace and a bigger bank account. I advise everyone to use this budgeting template, whether they are living paycheck-to-paycheck or a multi-millionaire. If you’re on the former end of that spectrum, take heart. A good budget can put you on the road to building wealth regardless of your income status.

The word budget can feel restrictive. So, I like to refer to it as a spending account instead. Essentially, a budget gives you permission to spend money on certain things and in certain amounts. This is incredibly freeing, especially when you follow the budget breakdown I share below!

Budget Breakdown: 3 Simple Steps

1. Evaluate Your Expenses 

The first step in creating a budget is knowing your needs. Make a list of what you spend each month (refer to old bank statements if you need them.) Include rent, utilities, gas, food, subscriptions, and miscellaneous purchases. If you have monthly debt like a car payment or student loans, include those in this list. We encourage you to escalate any debt payments using the debt snowball method.

2. Apply the 80/20 Rule

The 80/20 rule means you use 80% of your monthly income to pay for expenses (the list you wrote in #1) and 20% to tithe and invest. If you don’t have any emergency savings, you can save the amount you’d allocate for investments until you have about three months of expenses saved. Then, it’s time to get in the game! 

As you grow on your wealth-building journey, the 80% (your expenses) should decrease, leaving you with more to invest and give away. If you can, I recommend shooting for a 70/30 ratio. That’s living off of 70%, investing 20%, and tithing 10%. 

Here’s the actual budget breakdown:

10% +

Tithe:

There’s a reason this one’s first. It’s an act of surrender when we give God the first fruits of our income. It helps us understand that God is our Provider, and He is worthy. Whether you give it to the church or donate it elsewhere, tithing brings connection within the body of Christ. It really is a beautiful thing.

80% <

Use for Necessary Expenses:

This percentage includes rent, bills, loan and credit payments, food, gas, and whatever you must spend money on to survive. The beauty of this is that you can buy anything you want, including junk, if it falls into this percentage! That may not seem like a big deal, but it means that you’re not going into debt to purchase liabilities. There is a lot of freedom in the 80% if you choose to view it that way!

5% +

Professionally Invest:

Put 5% into a Roth IRA, a mutual fund, or other paper assets. You can easily open a brokerage account with no fees upfront. WealthBuilders Investments is an excellent option for this. They help you invest your money into assets that align with your Christian values.

5% +

Personally Invest:

It is essential to invest some dollars yourself because it teaches you how to build wealth. Many people give all their investments to a professional and never learn a thing about finance for themselves. This will severely cap your wealth-building potential!

You can get really creative with personal investing. I started teaching my grandson how to invest when he was eight. I pulled him aside and said, “Brayden, listen: Poppa is going to teach you how to invest.” So we went out on a Saturday morning and found a garage sale that had an old, broken-down, red wagon. It was rusted over and missing a wheel. That broken wagon was $2!

We took the wagon home, and I found black and red paint in my garage. We bought a new wheel. I let Brayden do a lot of the sanding and the painting. When it looked new again, we put a sign in the driveway and sold it for $20!

Sure, you may not want to put that amount of sweat equity into something, but the point is that my grandson learned how to invest. You can put that 5% into whatever you want, whether it be a business venture, purchasing a rental property, renovating and reselling items, or learning how stocks work yourself. 

3. Understand the Law of Leverage

If you’re going to build any significant wealth, you have to use the law of leverage. Essentially, this law entails using what little you have to create more. Archimedes once said, “Give me a lever long enough and a place to stand, and I can move the world.” Leverage is just that—using resources to move something bigger than you could move alone.

Look at the people around you. God brings people into your life for a reason. Leverage their time by learning all that you can from them. In finance, leverage works in terms of loans. Loans are a way to leverage other people’s capital to grow your assets. When you use it wisely, leverage is the ticket to help you make more money. For example, you can use mortgage loans as leverage to gain a house—good debt—that appreciates over time.

When you invest 10% (or 20%!) of your income, you learn to leverage capital by borrowing against assets that build in value over time. A crucial part of creating a budget is changing your money mindset. You must learn to value money for how it grows rather than just how it can serve your immediate needs.

We hope this budget breakdown has empowered you to master your money in a new way. However, this is just the beginning! If you want to make more money and build generational wealth, we created The Triple X Factor: How to Build Kingdom Wealth just for you. This 15-part video course includes a workbook, devotional, and interactive chart with markers to help you create a comprehensive wealth-building plan. Click here to learn more and purchase yours today.

This blog was originally published on April 12, 2021 and has sense been republished for quality and relevance.