Today is something of a culmination of the first part of the 31 Days program: it
basically ties up all of the goal-setting and evaluation to date into a single
document. This document isn’t a set of rules to live by, but a financial picture of
who you are and where you can go. Sound exciting? Let’s get started.

Take out a blank sheet of paper, the time budget you prepared
yesterday, and the approximate hourly wage you calculated earlier.
We’re going to use these two pieces to assemble a true budget.

What do I mean by true budget? Most of the time when people prepare a
budget, it has no connection to their life experiences and their goals. The truth of
the matter is that every person is unique, thus every budget should be unique.
People fail at following traditional budgets because they aren’t aligned to an
individual’s lifestyle, goals, and dreams.

The budget you’re about to complete is a true budget: you’ve built it yourself,
composing it out of your daily life, your hopes for the future, and your dreams for
the rest of your life. Most traditional budgets expect you to change your life for
it; a true budget asks only that you don’t forget to plan for your dreams while
living your own life.

On the blank sheet of paper, make three columns: one for each budgeted item,
one for hours, and one for a dollar amount. We’re going to prepare a monthly
budget here, so take each item from the time budget prepared yesterday, then
multiply that weekly hour number, multiply it by 52 (for the number of weeks in
a year) and then divide that by 12 (for the number of months in a year). This is
the number of hours of work time in an average month that you’ll devote to each
element on your budget.

Now, for the final piece: multiply each hourly amount by your true hourly
wage and enter it. This is exactly how much money you’re alloting to spend on
each category during the month. For regular bills, this number should be very
close to what your monthly bill is; for your extra debt payment and your goals,
this is how much you’re going to be setting aside each month for these. The total
should add up to a number that is less than your monthly take home salary
(remember, you have some extra that you bring home that you use for job-related
expenses).

When I first did this, I read through the items and actually shivered. Why? It was
the most accurate picture of my financial life that I’d ever seen – and it made it
clear to me where I was doing things right and doing things wrong. I had never
felt such a connection between a sheet of paper and my life as a whole.

What will it mean for you? Spend some time reading over the sheet
carefully and thinking about it. There are countless different conclusions
you may draw: maybe you feel that this whole thing is spot-on and is putting you
in a position to live your dreams. Maybe you realize how much of your life is
spent in the now and how little you’re actually spending for the big things
tomorrow. Maybe you believed you were planning well for the future, but you see
some huge areas for improvement. It’s up to you to figure this out.

Tomorrow, we’ll discuss how to keep track of this budget each month, starting by
ensuring that you’re meeting your goals.