The Four Walls

When you are just starting out and beginning to set yourself a budget it is easy to get overwhelmed. Especially if you are finding that your monthly bills are greater than your income!

I have been there and remember how scary it was. I also remember saying "this isn't fun" and "this is stupid, I hate budgeting".

None the less, I was determined to get it right because I learned it was the best way to become wealthy. I still found it difficult to know where to start. That is what I will share with you today.

When it comes to your finances your family comes first. Your priorities are what I call the Four Walls. (Think of the four walls of your home to protect you and your family.)

These Four Walls should be what you spend your money on first (and in this order):

• Food
• Utilities
• Shelter
• Transportation

First we have to eat. This doesn't mean going out to restaurants 3 times a week. This is groceries for food that you cook at home. Going out to eat is a separate category and I personally include it under my "entertainment" category.

Next, utilities include lights, water, electricity, etc. Then shelter, meaning your rent or mortgage payment. As a percentage to your income I suggest keeping this under 30% combined. Rent + all utilities = less than 30% of your take home pay.

If your rent and utilities surpass the 30% of your take home pay recommendation, then you may want to think about moving to a cheaper home and/or downsizing. I'm not against real estate, I just know that it is tough to win with money when your housing and utilities are more than 30%. (The first time I did a budget, my mortgage and utilities were over 50% of my take home pay!)

Finally, transportation as a means to get to work. Now this doesn't mean you need to have a car payment. A car you own (with no payment) still has costs such as fuel, insurance, and maintenance. Other options for transportation is public buses or trains. I went so far to get a bicycle and commuting to work for years. It is the best and cheapest way to commute, unless you can walk.

If you have car payment, then you may want to consider selling it or paying it off very quickly! Again, I know what it's like to have a car payment while having my shelter and utilities over 50% of my take home pay. I did some very unwise things. One of those was buying a brand new truck when I couldn't afford it. I do wish I could go back in time and rectify this mistake I made financially.

Note: I used to include clothing in the list of the Four Walls but found out that if you are reading this then you have enough clothing to get you through this season of setting up a budget. And probably enough until you are out of all debt except your mortgage!