Free Tips on Improving Your Budget Chops
Take whatever's helpful, give it a try, and see what works for you.
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Before Creating a Combined Budget
Combing budgets is a significant and powerful step to achieving financial goals as a household. However, it’s critical to think beyond the numbers. The foundation is trust, habits, and how each of you sees money. It’s common with at least one spouse having mistrust from prior relationships around money. It’s also common to have one spouse or both struggle with giving up individual financial independence. What matters most is being honest with yourself and each other about what merging money really means before you move forward.
Here’s a simple checklist to help you both think through it before you commit:
[ ] I know my income (what I bring in), expenses (what I spend on), debts (what I owe back), and assets (what I own that has value).
[ ] I have shared my full financial picture with my spouse; there are no hidden accounts or debts.
[ ] We agree on saving at least 10% of our combined income.
[ ] We have a plan to live on less than we earn, consistently.
[ ] We’ve talked about what financial security means to each of us.
[ ] We understand each other’s past money habits, good and bad, and choose full transparency going forward.
[ ] We’ve decided how to handle individual spending within a shared system, such as having a joint account that all income flows into and a separate account for each spouse for individual spending and goals.
[ ] We have a plan to pay off any existing consumer debts together (credit cards, personal loans, car loans, student loans, medical debts) and not take on new ones.
[ ] We’ve chosen to track our spending, regularly.
[ ] We both agree that our financial future is a shared responsibility. We’re choosing to put our names on all wealth-generating accounts, including savings accounts, mortgages and deeds, retirement accounts, and brokerage accounts.
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Create a Single Budget as a Couple
Building a combined budget with your spouse/committed partner, where most if not all income and spending is shared, can dramatically speed up your timeline on meeting shared financial goals.
What I mean by creating a single, combined budget for a couple, I’m saying:
All incoming money starts as shared.
Every paycheck from both spouses are deposited into one joint checking account. This also includes income from side gigs and garage sales. Both see what’s coming in and make saving and spending decisions together.And don’t worry - both spouses can have separate accounts as well.
If some financial independence is important, each person can have a separate checking account, but all incoming money starts in the shared account and is transferred to each individual account as agreed.
Consumer debt is shared.
That’s right. Credit cards, medical debt, student loans, car loans, and any other type of consumer debt, regardless of whose name they’re in, are considered joint responsibilities in a single budget. Once both spouses agree on “what’s mine is yours” when it comes to debt, the faster they can find margin to pay down the debts, together.Strategic debt is shared.
This refers to debt that has equity, like a mortgage, and should be in both spouses’ names. Both incomes should be going toward paying down these debts from a single budget.Big savings goals are shared.
Think of vacations, a new primary home, a new home to rent out, home renovations and big repairs: these are joint priorities and should be saved for together in the budget.Small individual goals are respected.
This is incredibly important for couples that want some financial independence while agreeing to merge finances. If one spouse has a personal goal the other doesn’t share, you can still agree to fund it from the joint account and transfer that money into a personal account.All wealth-building assets are shared.
Retirement accounts, brokerage accounts, real estate equity; all should be viewed as a joint endeavor, and both names are on the accounts and contributed to from the single budget.
For many couples, creating a single, combined budget can feel like a stretch, especially if there’s a history of mistrust or financial stress. But when you manage money together, your capacity to build wealth is significant. I strongly consider merging, because you can:
Save more, faster.
If not merged - $5,000 individual income at 10% savings = $500/month
Merged - $12,000 combined income at 10% = $1,200/monthAvoid costly financial mistakes by making decisions as a team.
Grow your wealth faster through shared investing and compound growth.
Buy a home and pay it off faster, together.
Build strong retirement savings that secure both of your futures.
Free each other up to pursue new careers, education, or side income without financial stress.
Review a simple checklist to begin understanding what it means in practicality to merge finances.
Also, check out these 9 steps to building wealth as a couple.
Contact Justin for one-on-one tutoring or small group instruction.
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4 Steps to Zero-Based Budgeting
Controlling your spend is the key to protecting your savings. A zero-based budget is a plan for where every dollar goes after you have allocated how much you plan to save (e.g., 10%). Budgeting isn’t something to see as restrictive or scary. Instead, think of it as a tool. And like any good tool, when you know how to use it, it makes life a little easier. This is how to do a zero-based budget:
1. Organize the budget by month
Monthly budgeting is the easiest way to plan for most people. Most bills are monthly. Many people get paid monthly or biweekly.
For example, create a budget for the month of July.
2. List out income expected that month
Write down every dollar expected to come in that month. This includes paychecks, side gigs, tips, anything you plan to sell, like on Facebook Marketplace, as well as money rolled over from the previous month. Ideally, it all flows through one checking account to keep things clean.
Here’s a sample July income:
July 1 (leftover from June): $200
July 5: $2,000 paycheck
July 14: $2,000 paycheck
July 18: $150 (sell the couch)
July 26: $3,000 paycheck
Total income for July: $7,350
3. List every planned expense or goal for the month
Next, map out where all income is going. This is everything planned for spending or saving for the month, including fixed bills, like mortgage/rent, HOA, utilities, and the car payment; flexible/variable expenses, like groceries, gas, and eating out; savings goals, other debt payments, childcare, travel, healthcare, and subscriptions.
It takes a few months of budgeting to get this part correct, and that’s okay. It took me about three months to get it in good shape.
4. Subtract all expenses from total income
The budget should zero out, meaning income minus expenses, including savings and debt payments, equals zero. Every dollar is accounted for.
If over budget, it’s a sign to reduce expenses where possible or find ways to bring in more income to bring it to zero.
If under budget, it’s a surplus. Decide ahead of time where to put the extra dollars, like towards savings.
Why this works
When your income and expenses are laid out clearly and organized, it puts you in control of your situation and reduces stress. I advise sitting down every month to work on the budget for the next month, agree on changes if you’re doing this with your spouse or committed partner, and re-align on your goals. It’s not always perfect, but it’s the most powerful habit to have to protect your money and plan your future.
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Know Your Net Worth in 3 Steps
Your net worth is the amount of money you’d walk away with if you sold everything you owned and paid off all your debts. It’s basically your financial report card and is an interesting metric to monitor as you gain proficiency in budgeting and meeting big financial goals. Here’s how to figure out your net worth:
1. List Your Total Assets
These are things you own that have value. Think:
Your bank accounts
Retirement accounts
Cars
House
Any valuable items you could sell
Write down how much each would sell for today, not what you paid for them. Add it all up.
2. List Your Total Debts
Write out every debt you owe:
Credit cards
Student loans
Car loans
Mortgage
Anything else you’re making payments on (medical debt, HELOCs, etc.)
Use the payoff amount for each one, not the balance showing online. You may need to call your lenders to get the exact number. Add it all up.
3. Do the math
Take your Total Assets and subtract your Total Debts. That’s your net worth.
Here are some pro tips for assets with debt:
Car loans:
Look up your car’s private sale value on Kelley Blue Book. Add that to your assets.
Call your lender to get the current payoff amount. Add that to your debts.
Mortgage:
Check Redfin or Zillow to see what your home might sell for today. Use that as your asset value.
Call your mortgage company for your payoff amount, not the balance you see online. Use that as your debt.
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How to Build Credit into Your Budget
If you have existing consumer debt (credit cards, car payments, HELOCs, personal loans, etc.), I strongly recommend becoming debt-free instead of following the advice in this article.
This article is intended to show how to build credit when you’re debt free and want to build up a credit score to take on a strategic debt, like a mortgage.
Quick steps:
Create a budget.
Add a line in your budget for the credit card you plan to use. Use only one card and set a strict dollar limit.
Once the month begins, only swipe your credit card for planned purchases.
Pay off the card immediately after each purchase, down to the cent.
Track each payment in your budget against the credit card line you created.
Never go over the limit you set, and never carry a balance into the next month.
Example:
Your take-home pay next month is $5,000.
You add a budget line: "Credit Card - $300."
In week 1, you spend $20.06 at happy hour. Pay off the $20.06 the same day.
In week 2, you spend $129.54 on groceries. Pay that $129.54 off immediately.
Repeat this until you’ve spent up to, but not beyond, your $300 credit card budget.
Use cash or debit for everything else.
Pro Tips about Credit Scores:
It’s not about how much in total you swipe. It’s about how much of your available credit you use. The lower, the better.
If your credit card limit is $2,000, plan ahead to use as little of that as possible. The more of that credit you use, the worse it looks on your credit report.
If you’re going to build credit, do it with a plan and strict limits. Stay in control.
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Ditch the “Emergency Credit Card”
Keeping a credit card for emergencies is ingrained in culture. However, credit cards are consumer debt tools that are detrimental to wealth-building. So I suggest trying a different path.
Here’s how to ditch the “emergency credit card” and feel safe to handle the unexpected.
1. Start saving money
Look at your income and decide on a starter savings rate (%) for every dollar earned (e.g., 10% of each paycheck).
Transfer that savings into a savings account, preferably one that earns interest like a money market account.
2. Control spending to protect savings
Create a budget using the remaining income after saving (e.g., 90%).
Review expenses, find leaks, and cut unnecessary expenses (e.g., unused subscriptions, overlapping services).
This step, when done in parallel with saving money above, is foundational to wealth-building and becoming free of the need to rely on credit cards.
2b. Pay off consumer debts fast
Skip this step if it does not apply. If you have consumer debt, get laser-focused on completing this step with everything you can, so you can move to the next step as fast as possible.
Avoid passive strategies like consolidation that stretch payments out.
Choose an aggressive payoff method:
Debt Snowball (best for behavior and momentum, but not the best money saver)
List debts by smallest balance to largest.
Pay minimums on all but the smallest.
Throw all extra cash at the smallest until it’s gone.
Roll that amount into the next smallest, and repeat.
Debt Avalanche (best for saving money, but harder to execute)
List debts by highest interest rate to lowest.
Pay minimums on all but the highest-rate debt.
Throw all extra cash at that one until it’s gone.
Roll that amount into the next highest-rate debt, and continue.
Pause all investments, including retirement contributions, to unlock extra income and apply it to your debt.
Set a debt-free target date and post your payoff progress somewhere in the house to show progress.
Say no to new consumer debt, period, moving forward.
3. Protect what you’ve built (here it is!)
Now that you’ve unlocked more income from clearing debts, build up an emergency cash fund with at least 6 months of expenses in an account that yields interest. <— This is the key to addressing emergencies without a credit card.
Maintain the emergency fund by replenishing it if you have to withdraw.
So instead of an “emergency credit card”, you have an “emergency bank account” that is yours and yours alone. And because it is parked in an account that yields interest, your emergency bank account is making money.
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Get Out of Consumer Debt in 6 Steps
Consumer debt is high-risk, high-interest debt that doesn’t make you money; it drains your money. I’m talking about credit cards, car payments, HELOCs, personal loans, payday loans, and medical debt.
If you want out of these debts, first take a moment to step out of feelings around guilt, shame and embarrassment (which are all valid - I’ve been there), look in the mirror and say “I’m done with this. I’m tired of the stress. I’m not going back.” When you hit that moment, you’re ready. Getting out of debt is not easy. It’s uncomfortable, and it takes intensity, consistency, and patience.
Here’s how to pay off these debts and get back to wealth-building:
1. Start saving first (10% or more)
Learning to keep money consistently is foundational to becoming and staying debt-free. This is the first step.
If you have little or no savings right now, decide to keep a percentage of your income as soon as you’re paid (e.g., 10%).
Transfer that savings into a shared savings account, preferably one that earns interest like a money market account.
Determine how long it would take to save up $1,000 doing this consistently. Target your first savings goal to $1,000 and increase the percentage to achieve it faster.
2. Get control of your spending
Learning to control your expenditures is just as foundational as saving. This is the second step.
Create a budget using the remaining income after saving (e.g., 90%). This shows you how much you can put towards your consumer debts. Without it, you’re deciding to wing it, and you won’t feel meaningful progress.
Review expenses, find leaks, and cut unnecessary expenses (e.g., unused subscriptions, overlapping services).
3. List everything
Write down every single consumer debt you have, such as:
Credit cards
Student loans (list each one separately)
Car loans
Any other debt you owe back that you’re making payments on (e.g., medical debt, HELOCs)
Ignore your mortgage for now. We’re focusing on consumer debt. That’s the high-interest, high-risk stuff that’s draining your budget.
4. Unlock as much income as possible
Pause retirement contributions. Pause any other savings goals. Sell stuff. Take on extra work. Free up every dollar you can toward one goal of paying off these debts.
5. Decide on a payoff approach
Avoid passive strategies like consolidation that stretch payments out.
Choose an aggressive payoff method:
Debt Snowball (best for behavior and momentum, but not the best money saver)
List debts by smallest balance to largest.
Pay minimums on all but the smallest.
Throw all extra cash at the smallest until it’s gone.
Roll that amount into the next smallest, and repeat.
Debt Avalanche (best for saving money, but harder to feel traction)
List debts by highest interest rate to lowest.
Pay minimums on all but the highest-rate debt.
Throw all extra cash at that one until it’s gone.
Roll that amount into the next highest-rate debt, and continue.
6. Protect what you’ve built
Now that you’ve freed up your income, build an emergency cash fund with at least 6 months of expenses in an account that yields interest.
Maintain your 6-month emergency fund by replenishing what you withdraw.
Becoming debt-free reduces complexity and stress in your finances and frees up your income to focus on the future, not the past.
Contact Justin for one-on-one tutoring or small group instruction.
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5 Steps to Budget for a Home Down Payment
Saving for a home down payment is a big, short-term savings goal for most people. To save for this requires disciplined and consistent budgeting, and ensuring you (and your partner if working together) are optimizing the margin needed in your budget.
1. Set a target monthly mortgage payment
We looked at our income and decided our mortgage payment (including the principal, taxes, and insurance) should be around 25% of our take-home pay. We wanted enough room to cover bills, live comfortably, and save for other goals once we bought and moved in.
For example, if monthly take-home income is $10,000, the mortgage payment is around $2,500 per month.
2. Use that number to set our maximum home price
Next, we used a mortgage calculator to reverse-engineer what price the home should be to fit the target monthly payment. We factored in local property taxes, insurance, and potential HOA fees according to some of the areas we were looking in.
Continuing the example, a $450,000 house could fit a $2,500 monthly payment, with the following:
20% down: $90,000
30-year fixed loan (do the numbers for a 15-year fixed as well and compare - 15-year fixed is the most ideal)
5% interest rate
0.73% property tax rate
$2,221 annual home insurance
$100/month HOA fee
3. Lock in a down payment target
Try and avoid PMI, so aim to save 20%.
In the example above, that would mean saving $90,000.
4. Improve your current financial situation (build security so home ownership is less of a burden)
Free up as much income as possible to boost the margin in your budget (margin = income left over after expenses that can be put toward goals). E.g., pause retirement contributions.
Pay off all consumer debt to free up even more income.
Save up 3-6 months of emergency cash-on-hand. You’ll need this when an important thing breaks in the house.
5. Save for the down payment with intensity
Now that income is freed up from payments and there’s emergency cash in the bank, stick to a conservative budget, leave retirement contributions off, and throw every extra dollar toward the 20% down payment goal.
Pro tip: Decide to wait to engage a realtor until you are nearly at your target down payment amount. This will give you a big boost of confidence and power and keep the stress low.
Contact Justin for one-on-one tutoring or small group instruction.
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