Steps to Financial Literacy - Step 7 of 10!

Good morning, folks! I was asked by several readers to give a few extra days of prep for Step 6 of this mini-series. I encourage anyone else to reach out if they have any questions or concerns. With that being said, let's march to Step 7! Based on the information you have gathered on this journey thus far, you should be able to have a rough idea of what your budget will look like. You may be scared because it looks like you spend more than you make. You probably do. This is actually relatively common and why you stumbled upon AWP in the first place. Also, the reason I know this is because I was once in your shoes. Humble Pie is my favorite dessert. It’s not actually tasty, but it is eye-opening and forces you to look in the mirror. Believe it or not, you now have the tools to make a change and get moving in the right direction.

There are many options for how to prepare your budget, ranging from apps to websites. While these can be useful tools, and can even potentially make the budgeting process easier, we do not recommend using these tools as your primary budgeting system - at first. This is because it makes budgeting less of a focus in your mind. If you can just set it, let it collect your financial information, and show you the results, it is less likely that you will review your finances regularly and critically. At least for a few months, and preferably until you are on a sound financial footing, we recommend going old school with paper and pencil (or spreadsheet for the tech-savvy folks). This will force you to actively consider your daily purchases and discuss the finances at least monthly (we actually prefer every two weeks in the beginning).

After a few months of getting your mind squarely focused on a positive cash-flow budget, a budgeting app is a perfect way to streamline your expenses. If you notice a few days going by without checking the app, it may be too soon. The important thing is to keep an eye on your finances to get you out of debt. My favorite thing about budgeting apps is that you can easily look back at previous months or years to see the progress you've made. Another plus is noticing spikes in spending for those expenses that do not occur monthly. For example, my car insurance bill is due every March and September so I budget monthly to get a pay-in-full discount.

Please continue to share this content to your friends, family and co-workers! AWP is able to release free content periodically thanks to your support and contributions. We are happy to serve all our clients and look forward to releasing Step 8 within the next week!

- Budgeting - Consulting - Financial Planning - Passive Income  - 
Guiding Every Generation to Eliminate Debt, Create Wealth and Find Independence.
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