What’s Poppin’,

This is the Master Money Newsletter. The Money Newsletter teaches you how to build wealth but also makes you want to high-5 the person next to you. Go ahead, do it. I dare you.

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Here’s what we have on deck today:

📰 Read: The Zero-Based Budget

📺 Watch: How Much You Need to Have Saved and Invested By Age To Retire

🎧 Listen: 9 Financial Rip-Offs You Need to Avoid

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💸 The Step By Step Guide to Zero-Based Budgeting

For most people, the word budget sounds like fingernails on a chalkboard.

No worries fam, if you hate it that much, check out the reverse budget. But hear ya boy out first.

Zero-based budgeting is what I attribute to my wealth early on. Here are the steps to make it work.

Step 1: Calculate Your Income

Determine how much money you earn each month. This includes your salary, freelance work, or any other sources of income. Add up all these amounts to find your total monthly income.

Step 2: List Your Expenses

Make a comprehensive list of all your monthly expenses. This includes rent or mortgage payments, utilities, groceries, transportation costs, debt repayments, entertainment, and any other regular expenses. Be thorough and include everything you spend money on.

Step 3: Subtract Expenses from Income

Subtract your total expenses from your monthly income. This will give you either a positive or negative number. If it's positive, you have extra money left over after covering your expenses. If it's negative, it means your expenses exceed your income, and you'll need to make adjustments.

Step 4: Assign Every Dollar a Purpose

With Zero-Sum Budgeting, your goal is to give every dollar a specific purpose. Start by allocating your excess money (if you have any) towards savings, investments, or debt repayment. If you have a negative number, you'll need to reallocate funds from other categories to cover the shortfall.

Step 5: Categorize Your Budget

Divide your budget into various categories. Common categories include housing, transportation, groceries, utilities, entertainment, debt repayment, savings, and investments. Assign an appropriate amount to each category based on your financial goals and priorities.

Step 6: Track Your Spending

Keep a close eye on your spending throughout the month. Track each expense and ensure it aligns with your budget. This will help you stay on track and make adjustments if necessary. Consider using budgeting apps or spreadsheets to simplify the process.

Step 7: Make Adjustments as Needed

Life is unpredictable, and your budget may need adjustments from time to time. You know what Jessee Mecham of YNAB calls this? Rolling with the punches. If you overspend in one category, you'll need to cut back in another to maintain the zero-sum balance. Be flexible and willing to adapt your budget as circumstances change.

Step 8: Monitor and Review Regularly

I budget daily to stay consistent. You don’t have to be a wack-o like me. Review your budget on a regular basis, such as monthly or quarterly. Analyze your spending habits, identify areas where you can improve, and reassess your financial goals. This allows you to make informed decisions and refine your budget over time.

Step 9: Stay Disciplined and Motivated

Maintaining a Zero-Sum Budget requires discipline and motivation. Remind yourself of your financial goals and the benefits of sticking to your budget. Celebrate milestones along the way to stay motivated and make budgeting an enjoyable process.

Step 10: Use Tools to Help

I think YNAB is the best zero-based budgeting tool on the market. I have been using them for 10 years and they pay me $0 to say this.

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📈 Quick Tip Of The Week - Use the Rule of 72

The rule of 72 is a simple mathematical shortcut that helps you estimate how long it will take for your money to double based on a given interest rate.

Imagine you have a magic money tree that grows at a certain rate each year. Let's say this tree grows by 10% every year. Now, you want to know how long it will take for the money on the tree to double.

Using the rule of 72, you can estimate this quickly. You take the number 72 and divide it by the growth rate of the tree. In this case, you divide 72 by 10 (the growth rate of 10%). The result is 7.2.

So, according to the rule of 72, it would take approximately 7.2 years for your money to double on the magic money tree growing at a 10% rate. That means if you started with $100, after about 7.2 years, you would have approximately $200.

The rule of 72 is a handy way to get a quick estimate of how long it will take for an investment or savings to double based on a given interest rate.

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News You Can Actually Use

Wedding Expenses 💍

​This article from CNBC reveals that wedding guests are now spending more on travel, gifts, and party preparation. Due to increased travel and hospitality costs, coupled with a desire to make up for lost time due to pandemic restrictions, the average expenditure per guest has risen significantly. This trend not only reflects the ongoing inflation and economic factors but also underscores societal expectations and pressures surrounding traditional wedding celebrations.

Financial Wisdom 💰

Ryan Holiday shares 31 lessons he's learned about money in a thought-provoking blog post. His insights range from the value of investing early and the compounding effect to the dangers of lifestyle inflation and the importance of defining one's own financial goals. He emphasizes that money is a tool, not a goal, and the importance of having a good relationship with it.

Success Loop 🔄

The Risk Musings' post titled Success to the Successful delves into a concept known as the 'success to the successful' dynamic, also called the 'Matthew Effect.' This phenomenon describes how initial advantages in a system often lead to further gains, creating a feedback loop of success. The article discusses the role of this dynamic in various fields, from wealth distribution to technological innovation, and urges readers to be conscious of it when designing systems and policies.

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High-Performance Book Club 📚

I get a ton of questions from listeners and readers as to what I am reading. So we decided to let you know via the newsletter. The High-Performance Book Club will be a way to share this. If you want to be Elite in your career, business, or with your wealth, then welcome to the club. If you would like to see our previous picks, you can find them here.

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​Wealth without Cash
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The Personal Finance Podcast 🎙️ ​ ​

​9 Financial Rips Offs To You Need to Avoid (Do not Fall For These!)​

​The 40 Year Mortgage is Here (Money Q&A)​
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Youtube

The 5 BEST Dividend ETFs to Hold for LIFE

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