This is a series of posts aimed at tracking, planning, building, and adjusting your wealth building plans.

Step 1: Budget

There is a lot of wealth building advice out there on the internet. Almost all of it starts with budgeting and planning. You need to have an understanding of your inputs, outputs, and cash flow to make in roads to wealth building.

Spreadsheet

I use a simple spreadsheet to capture our household monthly income and expenses.

Monthly Expenses Cash Flow Budgeting Spreadsheet

These are just example numbers and categories, but you can take the sheet and modify it to fit your scenario. The first two columns capture the expenses I know the household will have every month. The "Total" cells capture total monthly expenses, income, and monthly free cash.

The center Jan 2025 section captures actual costs that month. Each month I move the monthly actual expenses to the Mo/Mo Moving Average's tab of the spreadsheet which computes month over month averages, min, and max of the household spending.

I also capture my FICO score over time just to keep an eye on it.

Month over Month Moving Averages

Here is a snapshot of the Mo/Mo Moving Average tab of the spreadsheet.

Month over Month Budget data

As I build up data over time I make adjustments to the Cash Flow tab to increase the accuracy of the budget. This is a living document that I update every month.

Free per Month

Use the Free per Month quantity to understand how much you have left for saving to an emergency fund, holiday/birthday, vacation funds, and investments such as stocks, bonds, or starting a business. If you don't have enough to fund your retirement you can use that data to make adjustments in spending, identify new income streams or both.

If you have zero or negative free cash use that data to start a plan to start attacking your highest interest rate debt first, pay off the credit cards one by one, and then start saving.

Conclusion

Building an understanding of your cash flow is the first step to building wealth. The understanding of income, expenses, and the flow of money will allow you to make decisions on savings, retirement, investments, and other financial goals.

Here is the spreadsheet, Personal Finance Budget Template, you can make a copy and begin your wealth building journey.