How to Create the Most Profitable Budget

If you want to make the most of your income and build wealth, here is how to create the most profitable budget ever!

We Must Manage Our Finances the Rest of Our Lives … Let’s Do It Right

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Before diving into maximizing your income and covering how to create the most profitable budget for this year, you must complete some essential tasks to tackle your finances in the proper order and avoid burnout during the different stages of your financial journey. It is highly important that you do the following first:

1. Maximize your income. We cover how to do so here while covering these topics:
   • How to maximize your income opportunities if you work under an employer
   • How to maximize your income opportunities if you are self-employed
   • The importance of understanding tax brackets
2. List your financial goals for yourself. It is a must to list your financial goals before tackling your debt in order to get into a healthy mindset about why you are doing what you are doing so you can avoid burnout. We cover personal financial goals you must make in your lifetime here.
3. List your financial goals with your partner. Whether you are married now or plan to marry in the future, we cover financial goals all couples must make here.
4. List your financial goals for your children. Whether you have children now or plan to have children in the future, we cover financial goals all parents must make for their for children here.
5. Begin to create your budget. We cover the first step on how to begin to create a budget here while covering these topics:
   • How to gather your financial history
   • Evaluating your financial history
   • Estimating your expenses for your budget this year
6. Calculate how to quickly pay off your mortgage (and decide if you even need to). Whether you have a home or properties now or plan to in the future, we cover how to quickly pay off your mortgage here while determining if that makes sense for you if you are investing. Most importantly, we cover how to purchase a home in cash to avoid taking out a loan in the first place.
7. Calculate how to quickly pay off auto loans. Whether you have vehicles now or plan to in the future, we cover how to quickly pay off your auto loan(s) here. Most importantly, we cover how to purchase vehicle in cash to avoid taking out loans in the first place.
8. Calculate how to quickly pay off your debt. We cover how to pay off your credit card and student loan debt the fastest way possible here, so you can save thousands in finance charges and invest that money instead!
9. Establish key savings and investments. We cover essential accounts everyone should have here while covering these topics:
   • Two savings accounts everyone should have and where to keep them
   • Four investments everyone should have and where to invest
   • We begin creating your budget for this year!

If you haven’t downloaded your free budget template yet which shows you how to create the most profitable budget, you can do so here now so we can finish creating your budget for this entire year! We are using the “Budget” tab on your budget template. We completed filling in your numbers as instructed in my previous post here. And, now, we finally cover how to create the most profitable budget by maximizing your budget by completing the budgeting tasks below!

How to Create the Most Profitable Budget

To maximize your income and to know how to create the most profitable budget, you must tackle your finances in the proper order:

• establish your emergency fund and store it in the proper account as noted here
• pay off your debts, including credit card and student loan debt and auto loans
• establish your 3-6 month living expense fund in an HYSA
• contribute up to what your employer matches in your 401(k) or 403(b)
• contribute the max amount allowed toward your IRA account or as much as you can
• contribute above your employer match and up to the max amount allowed this year toward your 401(k) or 403(b) or as much as you can
• contribute towards your children’s 529 college savings plans (if you decide to do so; I cover more on this topic here)
• and invest as much as you can elsewhere (only after maximizing your contributions to the retirement investments noted here)
• pay off your mortgage (don’t focus on paying off your mortgage if your investment accounts are estimated to grow at a higher rate than your mortgage APR)

Now that we have established the proper order of the financial goals you must accomplish for how to create the most profitable budget, here is how to accomplish them as quickly as possible! On my 4-Week Budgeting Challenge Guide, we calendar when to tackle the following tasks so that you are not overwhelmed and properly complete creating your budget by the end of the challenge!

Reduce Your Regular Expenses

Here is how to create the most profitable budget starting with reducing your regular expenses. We all have required expenses which we must pay on a regular basis. It can be so easy to just get used to paying these bills that we don’t realize how much less we could be paying toward these expenses. Therefore, we could be losing out on investing what we could actually be saving toward these regular expenses. So, here are some ways to reduce your regular expenses.

Rent/Mortgage

With your largest expense typically being your mortgage or rent, though it can be easier said than done, you can move! A lot of the time, we have too much house or apartment. We think we need a lot of space, but, it turns out, we can do just fine living in a smaller space. Or, we can live in a more affordable part of the city we live in.

Moving obviously doesn’t have to be permanent. But, it can be one of the best temporary sacrifices, especially during the debt payoff stage of your financial journey. So, since there are a lot of things to consider regarding moving (i.e. location regarding work, logistics with having a family, etc.), take the time today to consider if this is a realistic or worthy task for you.

One easy way to consider if moving would be worth it for you is to shop your city! Simply schedule 20 minutes a day to check what is available for rent or ask your realtor to be on the look out for a property within a specific budget.

If you are a renter, on the “Expenses” tab of your budget template for this year, you will enter the reduced rent amount in the appropriate row where you entered your rent payments. You can play around with the numbers and enter a lower rent amount under the month you expect to move and the consecutive months thereafter.

If you are a homeowner, on the “Mortgage & Auto” tab of your budget template, you will enter the reduced mortgage amount under the appropriate months.

After entering your reduced rent or mortgage amounts, check out the “Balance” column on your “Budget” tab to see how much more you have available to go toward your debts and/or financial goals!

Utilities

Reducing your utility costs can be as simple as checking out what programs or incentives your utility companies have available. Some utility companies offer reduced charges based on income. You simply need to report your income and the reduction is applied to your bill every month until the following year.

You can also seek out government financial incentives by state at this website here. It is actually quite amazing what you can get back in property tax incentives, personal tax credits, rebates, and grants! For example, your local government can help pay for solar paneling which, in turn, reduces your electric bill. Also, you can receive grants and/or rebates based on income. Depending on where you live and the climate, you can even receive rebates on your water bill by installing astroturf, for example. Just click the link and click on your state and you can find what is available for your area.

For internet, since your bill typically goes up after one year, you can either reduce your plan, or you can switch between local providers every year. If you are worried that reducing your plan will leave your internet lagging, especially if you work from home, just try it! You actually don’t have anything to lose (except maybe a bit of slower internet for a month) if you reduce your plan because you can always increase it the next month, if you find it is necessary to be on a higher plan. Bonus: one hack you can try is to actually use your mobile hotspot to use the data from your phone plan to have internet on your laptop!

For cable, to be blunt, regular cable is expensive! I, personally, believe your money could be better utilized elsewhere. One of the least expensive ways to have entertainment available is to simply use an Amazon Firestick which is a remote control you purchase one time to connect your TV to the internet. In turn, you can use streaming services, like Netflix or Hulu, which are much less expensive than regular cable. You can even get away with not using any streaming services as the Amazon Firestick already has a few free apps available with movies and shows. Bonus: YouTube is always free so you can simply stream YouTube on your TV through your Amazon Firestick _{As an Amazon Associate I earn from qualifying purchases.}

For your cell phone(s), just like with your utilities, you can check with your provider for any programs or incentives they have available. There is usually some kind of new deal available every month which you can take advantage of for the next year of your plan. Also, a bit of shopping around can make a huge difference to your bill. The ever popular cell phone service providers who set up shop in your local malls tend to be much more expensive than less popular service plans. For example, Walmart has their own service through T-Mobile which is called Walmart Family Mobile. Their plans are much less expensive than using a plan directly through T-Mobile. Additionally, while the more popular cell phone service providers usually offer family plan deals for four users or more, smaller providers like Walmart Family Mobile offer great deals for couples or smaller families whenever you add a line. For example, one line can be $45.00/month, and adding another line can be as little as $25.00/month. However, I do not suggest getting on a cell phone plan with someone who is not your spouse or family member. Also, I do not suggest getting on a plan with a family member who is not dependable, financially. It is much more worth it to pay a higher bill than to have an irresponsible person mess up your credit and cause your cell phone service to be cut off. Bonus tip: when it’s time to replace your phone, I never suggest purchasing the latest model. That phone that was $800.00 new will be $150.00 in a couple years.

On the “Expenses” tab of your budget template for this year, you will enter all these reduced amounts in the appropriate rows under the coinciding months. After entering your reduced expenses, again, check out the “Balance” column on your “Budget” tab to see how much more you have available to go toward your debts and financial goals!

Insurances

Whether it’s health, dental, vision, homeowner’s or auto insurance, it’s a good rule of thumb to evaluate your coverage at least once a year.

You may need more or less health, dental, and vision coverage depending on the number of dependents you have (i.e. you have a baby or your older baby becomes an independent adult). Or, you may need more coverage due to added health concerns (i.e. your child might need braces this year or you may require consistent therapy).

For auto insurance, while you may have needed more coverage on a newer vehicle, you may want to reduce your coverage on an older vehicle as it has reduced in value. This can include reducing both your deductible and your overall coverage. When adding your children on to your insurance plan, there are incentives for students to receive discounts based on their transcripts and/or enrollment in college. Also, just simply being a safe driver reduces your insurance every year you go without some sort of accident or incident. So, drive safely not only to save lives … but to save money! Bonus: some insurance companies will offer discounts for paying for a whole year of coverage in full. This is just one of the many reason’s why budgeting at least annually, as opposed to monthly, is super helpful. You can plug in the full value of a year’s worth of insurance into your budget and ensure you have enough set aside to pay for your insurance in full when the bill is due.

On the “Expenses” tab of your budget template for this year, you will enter all these reduced amounts in the appropriate rows under the coinciding months. After entering your reduced expenses, again, check out the “Balance” column on your “Budget” tab to see how much more you have available to go toward your debts and financial goals!

Gas/Travel

One of the best ways to save on gas and travel expenses is to simply manage your time. A little bit of planning can save a lot of time traveling. For example, mapping out your day, the night before, can save you from a lot of back and forth. I literally would take my GPS and use the “add stop” feature to map out the shortest distance between every location I needed to go to on super busy days like running errands before and after my daughter’s voleyball games after picking her up from school. Deciding with your partner who picks up who, where, and when is super helpful. Planning like this can save you so much on gas and travel costs whether you drive vehicles or utilize public transportation.

When the time to replace your vehicle arrives, you should seek out vehicles that have a better miles/gallon rate. Not only will you help your wallet, you’ll help the environment as well!

On the “Expenses” tab of your budget template for this year, you will enter estimated reduced amounts in the appropriate rows under the coinciding months. After entering your reduced gas and travel expenses, again, check out the “Balance” column on your “Budget” tab to see how much more you have available to go toward your debts and financial goals!

Groceries

Not only does a little planning save you gas and travel expenses and time, it can also save you thousands on groceries. One of the biggest money-wasters is food that ends up expiring and getting tossed in the trash. That was money spent that has been thrown away. It’s just a matter of planning your meals and purchasing just what you need. Doing so based on grocery store sales is an additional way to save. Add coupons on top and you can even end up getting some items for free!

I highly suggest purchasing freezer and pantry items once a month and shopping for fresh ingredients once a week on the same day every week. When you get used to shopping this way, you end up being more aware of what you realistically consume and become a better shopper.

On the “Expenses” tab of your budget template for this year, you will enter estimated reduced amounts in the appropriate rows under the coinciding months. After entering your reduced grocery expenses, again, check out the “Balance” column on your “Budget” tab to see how much more you have available to go toward your debts and financial goals!

Miscellaneous

For any other expenses you noted after evaluating your expenses last year and estimating your expenses this year, brainstorm any ways to reduce these expenses or evaluate if you can cut them out completely and update your budget accordingly!

How to Get Help When It’s Still Not Enough

If you have done everything possible to reduce your required expenses and it is still not enough, I get it. Our economy has been tremendously impacted since 2020. Everything is much more expensive due to inflation, minimum wage is not increasing to a sustainable level, and many still continue to face unemployment. Fortunately, there is assistance available. Applying for government benefits can provide relief in these difficult times. You can find everything you need here regarding benefits, grants, and loans including the following:

• Affordable Rental Housing
• Benefits
• Financial Aid for Students
• Food Assistance
• Grants and Loans
• Help with Bills
• Military Programs and Benefits
• Retirement
• Social Security Questions
• State Social Service Agencies
• Unemployment Help

Before Moving On to The Next Step

If you haven’t already, you will establish your emergency fund and store it in the proper account as noted here. To establish your emergency fund:

1. On the “Budget” tab of your budget template, you will note the lowest balance listed in the “Balance” column.
2. In the January row, under the “Savings” column, enter that amount.
3. Repeat noting the lowest balance and entering it in the consecutive months under “Savings” until the “Annual Total” at the bottom equals the total of your emergency fund goal.

Once you accomplish this goal, we can tackle your debt! That completes day twenty-two of our budgeting challenge! Day twenty-three continues below.

Tackle Your Debt

Woooooohooooo! Here is how to create the most profitable budget by taking what you save on your regular expenses and applying it toward your debt so you can pay your debt off as quickly as possible!

By now, you will have entered all of your minimum payments into my debt calculator here and entered those minimum payments on the “Credit Card Debt” tab of your budget template. Now, you will look at the “Balance” tab of your budget template and note the balances remaining after income and expenses at the end of each month. Depending on your income and expenses, your budget might reflect an increasing balance or you might have some months where your balance is really low. For example, if you pay auto insurance once a year, your balance remaining after income and expenses, may seem high from January to August and then dips low in September. As long as your balance is in the black, this is a good thing. I say all this to say that you will simply be mindful of keeping this balance in the black as we maximize what you can apply toward your debt! Here is how to maximize what you saved and apply it to your debt:

1. Note the lowest amount in the “Balance” column of your budget template.
2. Take that amount and, on the “Credit Card Debt” tab of your budget template, add that amount to your credit card with the highest interest rate under the January column (or under a later month if you utilized the funds saved to establish your emergency fund first as noted above).
3. Check the “Balance” column again and note the new lowest amount you see this time around.
4. Take that amount and, again, on the “Credit Card Debt” tab of your budget template, add that amount to your credit card with the highest interest rate but under the February column this time.
5. Repeat steps 1-4 for all the months.
6. Once all of your credit card debt is paid off, complete the same steps above except on your “Student Loan Debt” tab instead!

Simultaneously, you will enter these same amounts under the coordinating credit cards and student loans and months on my debt calculator so you can see which debts can possibly be paid off this year! Follow the instructions included with my debt calculator so that you can note what date one credit card will be paid off and move on to the next and repeat. Update the “Credit Card Debt” and “Student Loan Debt” tabs of your budget template accordingly. When I share my lifetime budgeting system with you, you will be able to see when ALL your debts will be paid off! ALL! OF! THEM!

Before Moving On to The Next Step

If you haven’t already, you will establish your living expense fund and store it in the proper account as noted here. To establish your living expense fund:

1. On the “Budget” tab of your budget template, you will note the lowest balance listed in the “Balance” column.
2. In the appropriate month row, under the “Savings” column, enter that amount.
3. Repeat noting the lowest balance and entering it in the consecutive months under “Savings” until the “Annual Total” at the bottom equals the total of your emergency fund and living expense funds combined.

Also, if you haven’t already, you will fully fund your retirement investments as noted here. To calculate your retirement investments into your budget:

1. On the “Budget” tab of your budget template, you will note the lowest balance listed in the “Balance” column.
2. In the appropriate month row, under the “401K” and “IRA” columns, enter that amount.
3. Repeat noting the lowest balance and entering it in the consecutive months under “401K” and “IRA” columns until the “Annual Total” at the bottom equals the total you are allowed to max out and contribute for the year.

Once all your credit card debt and student loan debt is paid off, your living expense fund is fully funded, and your retirement investments are fully funded, you can take that money, that was previously being applied to these debts and investments, and apply it to your mortgage and auto loans or your other investments and other financial goals!

That completes day twenty-three of our budgeting challenge! Day twenty-four continues below.

Tackle Your Mortgage & Auto Loans

Here is how to create the most profitable budget by deciding if paying of your mortgage and auto loans makes sense for you. If your investments are estimated to grow at a higher rate than your mortgage loan and auto loan APRs, you can skip this step. If you desire to pay off your home and auto loans, we will take the money saved from the previous two tasks and apply it to your mortgage and auto loans!

By now, you will have entered all of your minimum payments into my mortgage and auto loan calculator here and entered those minimum payments on the “Mortgage & Auto” tab of your budget template. Now, you will look at the “Balance” tab of your budget template and note the balances remaining after income and expenses at the end of each month so we maximize what you can apply toward your mortgage and auto loans! Here is how to maximize what you saved and apply it to your mortgage and auto loans:

1. Note the lowest amount in the “Balance” column of your budget template.
2. Take that amount and, on the “Mortgage & Auto” tab of your budget template, add that amount to your mortgage or auto loan with the highest interest rate. You will add this amount under the appropriate month column where your budget allows you to pay without being in the red. For example, if you paid off all of your debts by June and, therefore, all of the previous months ended with a $0.00 balance, you will add the amount to the July column of the “Mortgage & Auto” tab.
3. Check the “Balance” column again and note the new lowest amount you see this time around.
4. Take that amount and, again, on the “Mortgage & Auto” tab of your budget template, add that amount to your mortgage or auto loan with the highest interest rate but under the next month’s column this time.
5. Repeat steps 1-4 for all the months.

Simultaneously, you will enter these same amounts under the coordinating mortgage and auto loans and months on my mortgage and auto loan calculator so you can see which of these loans can possibly be paid off this year! Follow the instructions included on how to use my mortgage and auto loan calculator here and here. Update the “Mortgage & Auto” tab of your budget template accordingly. When I share my lifetime budgeting system with you, you will be able to see when both your mortage and auto loans will be paid off!

That completes day twenty-four of our budgeting challenge! Day twenty-five continues below.

Accomplish Your Financial Goals

Here is how to create the most profitable budget by taking all that you have saved and applying it toward your financial goals. Once you’ve established your emergency fund, paid off you debt, established your living expense fund, and fully funded your retirement investments, we can calculate into your budget how to accomplish your other financial goals! We will take the money saved from the previous three tasks and apply it to the financial goals you listed previously for your personal financial goals, the financial goals you made with your partner, and the financial goals you made for your children.

Now, you will look at the “Balance” tab of your budget template and note the balances remaining after income and expenses at the end of each month so we can maximize what you can apply toward your financial goals! Choose which goal you would like to accomplish first. Here is how to maximize what you saved and apply it to your first financial goal:

1. Note the lowest amount in the “Balance” column of your budget template.
2. Take that amount and enter that amount under the “Goals” column in the row of the appropriate month where your budget allows you to allocate funds without being in the red. For example, if you paid off all of your debts by June and, therefore, all of the previous months ended with a $0.00 balance, you will add the amount to the July row.
3. Check the “Balance” column again and note the new lowest amount you see this time around.
4. Take that amount and, again, enter that amount under the “Goals” column in the row of the appropriate month where your budget allows you to allocate funds without being in the red.
5. Repeat steps 1-4 for all the months until you fully fund your first financial goal.

Simply repeat the steps above for your next financial goal until the next one is fully funded, and repeat!

That completes day twenty-five of our budgeting challenge! Day twenty-six continues below.

Keep Growing Your Money

Here is how to create the most profitable budget by continuing to grow your money. This is where we maximize every penny left after funding your retirement investments in order to keep growing your money! Let’s go over additional ways to save and increase money and then invest it.

Keep Saving

As you evaluated your spending over last year as noted in one of our previous tasks here, you may have been shocked at how much money you may have wasted on unnecessary items and expenses. Also, if you have completed my declutter challenge and organizing challenge (both of which can be found here), you have seen how many items have accumulated in your home that you haven’t even used. I say all this to point out the simplest of truths … to keep saving, you must stop spending!

To stop spending on unnecessary items, I share the simplest of budgeting tasks you must complete on a daily basis in order to check how every purchase affects your budget here:

Though these tasks in the video above sound mundane, these are habits that must become second nature in order to truly stay on top of your budget. And, to go along with the video above and get an idea of other budgeting tasks you must be completing on a regular basis (weekly, monthly, and annually) to build wealth, check this video out:

To continue to keep yourself from spending money on unnecessary items, you must stay organized in your spaces and with your finances. This will prevent you from purchasing items you don’t need so you can save and invest it instead. To clarify the many ways that disorganization can cost you money, check this video out:

As you practice organizing habits by regularly staying on top of your budget, regularly decluttering, and keeping your home organized you will naturally be saving money!

Keep Increasing

As these habits of budgeting, decluttering, and organizing become routines in your life, you will be able to easily recognize ways you can increase your income.

As you consistently stay on top of your budget and review your financial goals, you will be driven to find ways to increase your income to accomplish your financial goals more quickly. Here are some ways to increase your income:

• Getting a second job can be one of the best ways to tackle your debts and accomplish your financial goals so much more quickly.
• You can also take advantage of any overtime or extra holiday pay that your employer may be offering.
• While the previous two options are obvious ways to increase your income, there are some not so obvious ways to increase your income as well including taking advantage of cash back offers for things you do need to purchase. For example, you can use websites like TopCashBack here which is the most generous free cashback and voucher website where you can save money on purchases through thousands of merchants online and in-store. If you need to purchase an item, might as well get some cash back!
• To get even more cash back on your purchases, if you have paid off all your credit card debt, you can use a credit card with cash back rewards! When you properly stay on top of your budget, you will know how to pay your credit card balance every month and, therefore, earn money back on your credit cards (rather than losing money on finance charges!)

As you consistently declutter your home, you can make money from the items you no longer need including items you no longer use or that your family has outgrown. Here is how to make money from clutter:

• Have, at least, one annual garage/yard sale. Throughout the year, you can designate some boxes in your garage or a storage closet to collect items you no longer need and use. Then, simply choose a weekend to have a garage sale. I share how to organize a profitable garage sale here.
• Sell higher ticket items on garage sale type apps. Some of your items are worth more than a few dollars at a garage sale. For example, you can get more for name brand items like purses on garage sale type apps like Offerup and Letgo. I share how to make the most from these apps here. The benefit of using these apps, besides making more on higher ticket items, is that you don’t have to wait to organize a garage/yard sale and can sell any time that is convenient for you.

As you consistently stay organized in you spaces and your finances, you can simply increase your money by investing which we go over in the next section.

Keep Investing

Investing is one of the best and simplest ways to grow your money! So, after you have maxed out your contributions to your retirement investments, you should be investing every penny you can in additional ways as noted here (where I share how you can get some free stocks!) To maximize every penny you can and apply it toward your investments:

1. On the “Budget” tab of your budget template, you will note the lowest balance listed in the “Balance” column.
2. In the appropriate month row, under the “Other Investments” column, enter that amount.
3. Repeat noting the lowest balance and entering it in the consecutive months under the “Other Investments” column.

And that’s how you maximize every penny and create the most profitable budget ever! I will be showing you how these financial goals will be calculated more precisely into your actual lifetime budget in my masterclass for the ultimate way to know how to create the most profitable budget.

In order to know how to begin to create a budget and how to truly maximize your income and accomplish your financial goals, you must create a budget for your income now in order to use it in the most profitable way possible. So, if you haven’t downloaded your free budget template yet, you can do so here now and create a budget for this entire year!

Remember, after you create your budget for this year, I show you how it all comes together in a comprehensive lifetime budget that takes minutes a day to maintain. A lifetime budget is the ultimate way to know how to create the most profitable budget ever! Stay tuned!

Happy Budgeting!