Episode 4.
Why do you need a budget?

Question:

Key Points:

• Financial Safety is on the second level of Maslow's Heirarchy of needs
• A budget doesnot give you any less money (or any more money)
• The point of a budget is to help you spend money the way you want to spend it, and you don't spend more than you have.
• Allocate the money that you have in priority order. When you run out of money to allocate, then you run out of money you can spend
• "Income tax is really big"
• There are a lot of different line items on the budget, but there are not separate accounts for most of them; they're all in the same checking account.
• Filling in the line items that you know you are going to pay is to figure out how much is left for the line items you don't "have to" spend money on
• There are a bunch of apps and accounting software out there to help you make and stick to a budget: YNAB (You Need A Budget) is a popular one.
• You need to get out of being a "paycheck to paycheck" spender, so that you have a buffer.
• You can build that buffer by allocating money to the savings line item in the budget, not overallocating total, and then sticking to what you have allocated to other line items
• Play the slide the marble (or anything like a marble) on the table. If you can get the marble to stop right at the edge, every time, then you don't need a buffer. The same thing goes in your checking account.
• Leaving a ton of money in your checking account because you are afraid of running out of money is also not good.

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