Answering The Big Question, “Where Did All Of My Money Go?”

How to make a budget 101

9 min readDec 5, 2020
Photo by Michael Longmire on Unsplash

Have you ever looked at your bank account and thought “What the hell happened to all of my money ?” If you have thought that at least once in your life time ,you are not alone . It is not EASY to make money in a honest way ,but its easy to spend money. The more you spend the less you are able to accumulate wealth and if you are unable to create wealth ,you can kiss good bye the dream of you driving a Lamborghini . In this article I will be teaching you how to make a simple budget so that you can keep track of your spending and earnings . This is of course how I do it .With these simple methods you will be able to save and invest money .

How to make a Budget 101 — Step 1

Photo by Tihide Eamath on Unsplash

First get yourself a pen and a paper or open up your MS word . Draw a table (shown in bellow) . On the left top type the word “Absolute Expenses” in the next space type “Non Absolute Expenses” and on the third column right “Earnings”. It should look something like this . Simple right ?

Step 2

In this step lets work out your Absolute Expenses

Absolute Expenses — A term coined by yours truly (me) are the expenses that you cannot avoid ,like your rent ,mortgage ,debt ,fuel ,telephone,gas and electricity and etc .

So in this column all you have do is add your absolute expenses for the week or for the fortnight or for the month . I usually calculate my expenses on a monthly basis . It should look something like this. Very Easy !! You are doing great

These numbers are not actual expenses or earnings these numbers are just for demonstration purposes

Step 3

Once you have worked out your Absolute Expenses let figure out your Non Absolute Expenses .

Non Absolute Expense —A term coined by yours truly (me) are the expenses that you CAN avoid and are NOT necessary ,these include shopping ,eating out ,dating ,buying condom packets (please do to avoid unwanted pregnancies) ,partying etc

It should look something like this .

  • I personally do not consider “Eating out” as an absolute expense because I cook most of the time to save money and for personal satisfaction . Hence for me Eating from restaurants ,going on dates are not vital for my survival but if you are someone who eats outside and someone who doesn’t know how to cook ,Eating Out becomes an absolute expense.

Step 4

Last step is to work out your earnings, in this step all you have to do work out the money that you are getting from your 9–5 jobs or any other income generating activity you do ,its very simple .It should look something like this.

Once you have worked out your budget you would exactly know how much you are making and how much you are spending .

End Result Should look something like this

Step 5

Figuring out the total amount you spend monthly and the total amount you earn monthly is the next step .See very easy and simple . In this example the total income of this person is $6600 AUD . (Add another row for the total)

$4000 + $2000 + $600 = $6600

Then work out the total expenses , Absolute Expenses Total + Non Absolute Expenses Total = Total Expenses

Absolute Expenses Total $600 + $200 + $400 + $150 = $1350

Non Absolute Expenses Total $400 + $200 + $100 + $200 = $900

Total Expenses = $1350 + $900 = 2250 .

Now you are aware of how much you are spending and how much you are earning . In this example this person spends less . After all of his expenses he still has $3750 dollars left (Total Earnings $6000 — Total Expenses $2250=$3750) .

The completed budgeting table should look something like this


In the example we used, this person has more than $3000 dollars to invest or save . His chances of creating wealth and being rich is higher . The idea is to spend less than what you make ,in order to figure this out you need to make a budget so that you know what is going on with your financials. If you are spending more than what you earn .For example lets flip the above example ; if this person only earns $2250 monthly and he spends $6000 dollars for both absolute and non absolute expenses he is living off of $3750 debt ,which is a bad situation to be in financially. Reducing your Non Absolute Expense can have a large impact on your ability to create wealth . When you get your salary stop wasting it at the club or buying Prada . Save that money and invest ,because we never know whats going to happen in the future and if we are not careful with how we spend money we would be in grave danger .

Photo by Alice Pasqual on Unsplash

After completing your budget if you are spending more than you make, be cauticous and try to reduce some unwanted expenses. Use the budget to know exactly which expenses you need to cut back in order to save up some money . If you party every weekend ,make sure reduce that, it wouldn't hurt you if you party only once a month.

Set up a spending Limit

Setting up a spending limit is vital,now that you know exactly where you money is going and how much you bring in , set a spending limit for non absolute expenses.

Photo by Markus Spiske on Unsplash

For instance, if you are spending more than half of your salary to shop reduce that amount, do not spend no more than 5% of your monthly income on cloths. If you are earning $1000 dollars in a month dont spend more than 50 dollars for cloths.

How much should I invest ?

Photo by André François McKenzie on Unsplash

Once you find a way to accumulate a certain amount from your incomes ,the next step is to put that money to work so that money can do the work for you .There are many investment opportunities in Australia or anywhere in the world but if you have a small capital (the amount you saved) stock market or crpyto or forext trading would be viable and easy options for you. I personally invest more 40%-60% of my monthly income.

Build an emergency fund

Photo by Jake Espedido on Unsplash

I am not a huge fan of keeping cash ,specially these days with low interest rates and inflation risk ,however cash is good for sudden expenses .if your car broke down in the middle of the night you need to have some money ,liquidating your stocks or your crypto can take time . I usually deposit out 5%-10% of my monthly income in a separate bank account for emergency purposes.

Moreover We did not factor in any outstanding debt in this budget but if you do have any debt such as housing loans ,Afterpay debt or any form of debt big or small make sure to include them in your budget under a different section .Paying off your debt should fall under the absolute expenses category because it is vital that you pay debt ,having negative debt delays creating wealth.

A Scary Story

Photo by Stefano Pollio on Unsplash

Let me tell you a little story ,if this scares you ,you are one of the smartest people among your friends .I have a friend before COVID he was making crazy money from his job and this guy would always party in every weekend spend a crazy amount on liquor and weed. He had the habit of buying expensive designer cloths (which is not a bad thing ) I buy expensive cloths as well but not at the expense of my net worth . So my friend is a huge spender and at the same time he is bringing in a lot of money, he works hard as well. hen COVID hit the fan, like many ,he lost his job ,lost his only income. He only had 1 month of savings but that was only enough to cover the rent of his very luxurious apartment. He was at a lost. As you can imagine he was in a financial ditch. He had spent so much money on luxurious things but he had forgotten to save and invest . He clearly did not operate on a budget and therefore went bankrupt during COVID. The lesson to be learned here is that if you don’t respect your money and rely on one income you are at flgiht risk .

There is a simple Solution

Unfortunately many people I personally know spends more money than they earn and they rely heavily on credit cards . Their debt is high they do not have a net worth but they have a good income ,yet they continue to spend more than they should in order to show the cyberspace that they are affluent but in reality most of these people dont even have $10 000 worth of appreciating assets . They are living from pay check to pay check ,as long as they go to the job they will be able to showcase their “Global ,Posh Life Style” but what will happen to these people when that income stops or when they get old.

Photo by Johanne Kristensen on Unsplash

.Expert investor and billionaire Warren Buffet one time said that “if you don’t find a way to make money in your sleep you will have to work the rest of your life” .You might ask “how can I make money in my sleep”, while the word passive income might be an alienated concept for most of you Gucci Lovers out there it is a well known concept among the affluent . The concept is simple ,you have your 9–5 job you get a salary from it that is your direct income and you spend less than what you make and then you invest that money and if you invest wisely in stocks or crypto or anything . When you invest wisely in appreciable assets you will realize that money is growing as the price of the asset increase so does you net worth ,this is passive income . Always be careful and smart when spending and making money ,your goal is to be rich not to look rich.




Welcome to my Journey ,Everything thats Entrepreneurship and Psychology