The 5 Steps of Budgeting Bro

Budgeting Bro

Updated Mar 21st, 2022

  1. Start thinking about your financial life (Take Charge)
  2. Figure out where you currently stand with a balance sheet and income statement (Assess)
  3. Set a budget (Set Goals)
  4. Track your spending to meet your budget (Track Progress)
  5. Realize your financial goals (Achieve)

Start thinking about your financial life

What do you want to accomplish financially? This is where some higher level thinking and self reflection comes into play. What do I want to do for income? Is my income enough? Do I want to buy a house? When can i pay dowm my debts? Do I want to get married? Do I want to have children? Can I afford to send those kids to college? When will I retire. Would I like to travel? How many vacations per year would I like to take? Your answers will be unique to you. Want to get you finacial house in order? Good, on to the next step.

Figure out where you currently stand (with a balance sheet and income statement)

a balance sheet is a snapshot in time of your current financial situation. This is where you get a sheet of paper or open up a spreadsheet and list out all of your assets and all of your liabilities. So your assets are going to be things that you own everything from the cash that’s in your wallet to the money that’s in your checking account or savings account how much you have in your investment accounts that sort of thing. Your liabilities are going to be everything that you are so for instance do you have a car payment car loan do you have a student loan do you have credit card debt essentially list out all of these different things and I suggest putting the amount down but then also putting down things such as your current minimum payment your interest rate for the interest rate is fixed or variable looking into this more detail later and we also have sample sheets here.
Get yourself a personal income statement: the personal income statement is important because this is where you’re essentially going to list out everything that you are expecting to pay in a certain period so I say for the month you’re going to list out your rent and your utilities and your Netflix payment and your car payment and your student loan payment and your minimum credit card payment we are also going to put in our income. This form is going to help you put make sure number one that you’re paying all your bills on time is going to give you an idea of how much your monthly expenses are going to be you’re also going to be able to keep track of your income and with this information and you’re going to be able to see if there is a definitely a deficit or a shortage. Again we have some samples sheets that you can check out here to help you get started and of course there’s a more detailed aspect 2 creating these files which you can find here. Later on we’ll go through these different line items and see if it’s something that maybe you can reduce or eliminate entirely. So let’s for example say that you realize that you’re just you’ve committed too much in the way of spending so you have to take a hard look at some of the things that you’ve signed up for maybe paying on a recurring basis such as hate do I really need a Netflix membership for hey can I cancel this absurdly High cable bill and get a Netflix membership and save some money check out this article here about looking at your income statement to find ways to save money.

Set a Budget

Now we are getting to the good stuff. What we recommend is after you come up with your income statement and you pretty much list out how much your income is and how much our expenses are hopefully you have a sir plus there’s extra money there from there you’re going to give yourself what I like to call a free Spin budget. Once you give yourself a free spend budget hopefully you still have money left over from there this would be your target savings rate. If you don’t like where your target savings rate it is let’s say there’s not enough money in that bucket then there’s a couple things you can do. There’s always two sides to every story and budgeting and financial planning is no exception. You can either one make more money or to spend less money and I guess the third option would be to burn the candle at both ends and do both of those things. I alluded to this earlier but let’s say we decide to cut our cable bill and get a Netflix and Hulu account. Let’s say we decide to pick up a part time job bartending or delivering pizza. The ultimate goal of the budget though is coming up with this free Spin bucket which encompasses everything from buying groceries to going to out to eat 2 entertainment things like going to the movies or going to the bar. Once this step is completed and you feel pretty good about it now is the important time Act execute accomplish.

Track your spending to meet your budget

This step is the meat and potatoes. Most people have overspending problem.

In order to track my budget  I create a file in which I’m going to put all of the financial transactions that happened during that period. You could create a monthly file  or a weekly file which is what I recommend or even a daily file. Since I don’t want to be creating new worksheets every single day  and I think monthly is a little too long  I have found that Weekly works best for me.  This is what I recommend  but if another. Works for you  then so be it. When it comes to putting your transactions and I mean every single transaction into that workbook for that said given week, there are a couple different ways you can go about it. First of all you can manually enter every single transaction  and then later go back and compare with your financial statements from that your credit card company or your bank and just double check that everything’s in there. Lately my Approach has been  a little different just because it’s easier  and I can still maintain compliance. What I do is I go back after the period ends  and just look at the statements and kind of manually pull them in from the different areas. To make this easier I typically try to use one card for all my transactions for that particular period. So Thursday to Wednesday I will put all of my transactions on Sat Capital One card  and then the following week in this case would be the following Thursday to Wednesday I would put it on say my debit card. This helps me have to go it helps prevent having to go to multiple sources I can just go to One Source. And since I use a different card for different weeks it’s easy to see where the one weekend and one with the next week begins . This would be different then see if I use my debit card for every transaction and then when I went in after the fact to review I had a tough time distinguishing On The Fringe days which transaction went into which week. Especially since some banks don’t report the transaction date just the posting date. depending on how good or bad you are at spending over spending. Or put another way I guess how good you are at meeting your targets will depend on how tightly you need to keep an eye on your budget. If you are someone who has a tendency to really go over the edge then I would probably recommend tracking on a daily basis. If you don’t have a problem with overspending but you’ve noticed the need to keep tabs on your money and budget maybe Monday works for you or even quarterly although I highly doubt quarterly. Personally I found and I recommend weekly as the interval and I’ll explain why. The easier it is to track my spending the better chance I have at consistently tracking the spending so I wanted to be as easy as possible on myself. On the other side of the spectrum I think monthly is too long I could be off to a great start for the first 10 days and then things could go to hell the next 5 days and then I’m like two weeks in and I really don’t have any idea where I am I think I’m a little too far from my number. This interval will also depends on say your income how often you get paid so for example I get paid on a Wednesday night Thursday morning like overnight so I track weekly and then my I guess free spend tracking. Is a Thursday to Wednesday. Depending on your personal situation you may choose a different interval I think most people just like the standard we could say like Monday it’s Monday starts and Sunday ends are you also may get paid on Monday night into Tuesday so it’s a Tuesday start your free spend week and Monday is the final day. The interval is not as important as the actual compliance. And again the easier it is for you the more likely it is that you can consistently continue the system. For a long time when my spending was out of control and I finally decided to rein it in I used daily tracking.

Realize your financial goals

This is the time to enjoy the fruits of your labor. Look back and realize how far you’ve come. Take some time to enjoy it as we are all quick to move on to the next goal.

Similar to Fitness Goals

Very similar just reversed (In financial goals we want to take in more than we expend). Also similar in that we know what we need to do it’s just the discipline and the execution where we fall short.


Step One: Piece of mind, Stop neglecting, Self Reflection, Big Picture, Dreams and Aspirations.

Step Two: Get House in Order. Put CEO hat on, (You incorporated). Financial Docs (Balance Sheet and Income Statement)

Step Three: Immediate versus ongoing. Short versus long term.

Step Four: Free Spend Concept, Free Spend Sheets, Setting it up, Maintaining It, Tips and Tricks. Other docs (flow summary and Debt Paydown)

Step Five: Hit Targets (Met your goals, paid down debt, saved for college, emergency fund, saved for retirement)


Personal Finance boils down to: Invest in yourself through financial education and learnings new jobs skills to increase your productivity. Save more than you earn and invest that money, plan for a ready day, use debt intelligently.