How To Budget And Save Money | Money Management Tips

Transcript

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Hey everyone, Stefan here from project
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lifemastery.com and in this video
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I’m going to talk to you a little bit
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about how to budget money and how to
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save money. Saving money is very
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important. You’ve got to make sure that
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you’re putting money aside every single
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month, but the problem is that most
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people they don’t budget their money and
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manage their money in the first place.
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In fact most people they’re living paycheck to
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paycheck where their expenses are
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a certain amount of money and whatever
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money that they’re earning is going
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directly towards paying off those
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expenses. Therefore they don’t
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have any positive cash flow that they
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can then use to save and put aside.
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If you are living that way, if you’re
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living month to month, paycheck to paycheck
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and you’re not saving any money, then
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you’re stuck in what is called the rat
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race. The rat race basically means that
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you’re never going to be able to get
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ahead because you’re just repeating the
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same cycle. You’re not taking money that
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you can save, that you can invest, and
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help use to build your financial future,
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to build a business, to make passive
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income etc. Really the most
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important thing that you’ve got to
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understand before you’re even in a
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position where you can invest money and
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all that sort of stuff, is you’ve got
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to make sure that you manage your money
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and you set up a budget. A budget is
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basically where you say that you’re not
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going to spend more than X amount of
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money. You’ve got to decide what that is,
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what is realistic for you but
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a budget is a way of essentially
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sacrificing in some way in your life,
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which is a very important thing to
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understand. For me I remember in my life
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I never wanted to make a sacrifice. I
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just wanted to make money and spend that
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money, but then I realized by living my
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life that way it was at the cost of my
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future and that by living my life that
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way as time were to go by that I was taking
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away from my future life that I was
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going to have one day. When I had kids
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one day or a marriage or a family or
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whatever it is that I was going to
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struggle at that point in my life.
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You’ve got to think ahead for your future.
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You can’t just live for and think about
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today, you’ve got to think ahead and
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prepare for the future and that means
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sacrificing some instant gratification.
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You’ve got to
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delay gratification and make a
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sacrifice.
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Budgeting you’ve got to decide how
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much is your budget going to be. That
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you’re not going to exceed what that is.
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What I recommend you do before
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that is make a list of all your existing
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current expenses.
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Go through your credit cards or debit
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cards or online banking, your statements,
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go through your receipts, whatever you’ve
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got to go through and go through every
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single transaction that you have and add
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it all up. Because the first place to
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start is you’ve got to know exactly where
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you’re at.
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You’ve got to know exactly where your
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monthly expenses are and how much it is
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that you’re spending on a month to month
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basis. I do recommend you go back
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several months because you’ve got to see
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what the pattern is. It’s even better
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if you can categorize it into different
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categories. A great way of doing
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this, you can use software, you can use
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Microsoft Excel, you can use a Google
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spreadsheet, you can use Numbers if
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you’re on a Mac, but actually set up a
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spreadsheet or track it whatever the way
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that you want and add it up. Get out your
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calculator and add up exactly how much
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you spent on a month to month basis on
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your rent or on your mortgage.
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Whatever that number is write it down,
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put it under a column or a category.
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That’s exactly what your monthly
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rent or mortgage is. Another category is
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going to be putting in exactly what you
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spend every single month on your cell
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phone bill.
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Put exactly what that is. Again, go
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back several months know exactly what
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that is. There might be some months you might
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have spent more than what your
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bill traditionally is but you’ve got to
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know exactly what that is. You’re going to look
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at your Internet bill, your gym
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membership. You’re going to look at how much money
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you’re spending on a monthly basis
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buying groceries,
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eating out, entertainment such as going
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to movies or playing video games or
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whatever that is.
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Again, these are all different categories.
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You’ve got to look through all your
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transactions or statements and add
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exactly what that is to know exactly
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where you’re at. Your car payments,
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gas, your bus pass,
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transportation, taking a taxi, whatever
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that is break it up in the categories.
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Maybe another category could be
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investing in yourself like books
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and courses, whatever. Know exactly
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what you’re investing every month there.
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It could be a coach, it could be a mentor,
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it could be your school tuition
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payments or your student loan.
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Whatever it is guys you’ve got to have a
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spreadsheet or something that’s tracking
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everything. That way you can add
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everything up.
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You know exactly what you spent every
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single month for the last several months.
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When you look at that number it’s going
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to be an eye opener for you. You’re going
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to actually realize the reality of how
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you’re living. Then what you’re also going
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to do is going to add up and
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track exactly how much you’re making every
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month as well. That’s exactly what you
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make from your job, maybe from your
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business, maybe from other income streams
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that you might have such as investments, such
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as … I don’t know things that you might be
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doing on the side, but you’ve got to make
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sure you track all of that as well and
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you’ve got to know exactly what that is.
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Basically by doing this exercise
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you’re going to have a list and you’re
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going to know exactly what your expenses are
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and then you’re also going to know exactly what
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your income is. You’re always going to
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make sure that your income is higher
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than what your expenses are and you have
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what is called a positive cash flow.
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Positive cash flow. Very important,
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that’s what’s going to allow you to save
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money every month. That’s what’s going to
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allow you to invest, to build a business,
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to do whatever it is that you want to do
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and have that savings for whatever it is you
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want to invest in. If
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you find yourself your expenses are too
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high, then you’ve got to set up the budget.
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You’ve got to decide again
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how much do I want to save every
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month? Is it one hundred bucks a month, is it a
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thousand bucks a month and then look at
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ways that you can cut down and lower
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your expenses. That’s creating a
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budget. You might decide, my
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budget is that I’m not going to spend
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more than two hundred dollars a month
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eating out.
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You’ve got to enforce that, that’s what the
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budget is. I’m not going to spend more
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than two hundred dollars a
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month on clothing.
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That’s the budget. I’m not going to
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spend more than X amount of
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money
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on transportation or on alcohol or
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whatever it might be that you’re
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spending money on. In some cases you might
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decide
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got to find a cheaper cell phone
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plan. I’ve got to sell my cell phone and get
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a cheaper phone. I need to get rid of my
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car and get a bus pass instead. Again,
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these are sacrifices that you might have
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to make so that you can save money and
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set yourself up for your future.
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Set that budget and then the other key
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piece is guys, you’ve got to make sure that you
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are tracking this on a weekly basis
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especially the start. On a weekly
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basis. Which means that every single week,
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you’re going to want to go through your
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credit card statement, your bank
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statements, everything and add everything
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up and put them in the categories
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that you have set up in your spreadsheet.
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I recommend doing this weekly
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because it’ll be faster if you do it
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weekly. If you leave it every month
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they’ll be a lot more transactions and
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you’re going to procrastinate you’re not
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going to do it. Weekly helps you
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understand where you are at with your
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budget and it will help you realize hey you
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know what? I spent a little bit too much
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just last week, I’m coming up close to my
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budget so I need to cut back a little
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bit. Do it every week, very important.
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Then the other piece is I highly
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recommend that you use a credit card or
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a debit card for all your transactions
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because if you’re spending cash on
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things, it’s very hard for you to track
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that whereas if you’re buying everything on
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your credit card, then you’re going to be
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able to see everything. You’re going
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to see where your money
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is going and be able to go through
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all those transactions. Using a
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credit card is beneficial because
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it’s helping you build up your credit score
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which is very important especially at a
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young age to build your credit. If you
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have a problem with overspending with
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credit cards, then I would recommend
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setting a limit on the credit card. You
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can call your credit card company and
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say, “I want to have a limit of a thousand
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dollars, of two thousand dollars,” or
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whatever that limit is to ensure that
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you don’t overspend that, but if
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you’re doing that every week you’re
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tracking things, you’re going through your
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statements,
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you know exactly where you’re
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at. You have that awareness and you’re
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ensuring that you have a positive cash
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flow then that’s going to give you the
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ability to save money
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and you’re going to have a better
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sense of control and confidence over your
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life of managing your money.
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It’s very important that you do this as early
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as possible because if you can’t manage
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what you currently have,
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then there’s no point going out there
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to try to make more money because if you
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can’t manage two thousand dollars a
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month, five thousand dollars a month, if
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you make ten thousand or more, if you make a
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million dollars a year, you’re going to
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be in trouble if you don’t know
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how to manage that because then you’re
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going to get into a serious financial
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trouble. That’s why it’s better to
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learn how to manage
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what you already have.
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Master managing what you already
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have and then as things grow you’ll have
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that foundation, this money management
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skills that will help you to succeed at
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a later point your life as well. Thank
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you for watching this video. Hopefully
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you enjoyed it. Check out the videos that
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I have on investing for beginners if
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you’re in a position where you’re able
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to save money and start to invest. If
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you want to learn how to build your
9:48
online business and make more money
9:49
online specifically passive income, then
9:52
check out the link below to a free
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course that I have that share seven online
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business models that help make me an
9:58
Internet millionaire that will help you
9:59
get started building your online
10:01
business. Thank you guys for watching
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this video and I’ll see you in the next
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one.