Budgeting Tips for 2025

be on sale right now. I don't know, because I am recording this probably two weeks prior to when this comes out, so it might be even be less than that. But when you pre order by What You Love without Going without going broke from your favorite book retailer, whether that's bookshop dot org or Barnes and Noble or Amazon. We will send you a link so you can join in on this meal planning class. We're going to help you make a three hundred and sixty five day meal plan,

but not word for word, step for step. It's going to be a framework class, but it's not going to just be dinner. It's going to be breakfast, lunch, snacks, the whole shebang. So head to buy What youlovebook dot com. We've got links to several retailers for you to buy the book, and on that same page, buy what you lovebook dot com is where you enter your order confirmation so that you immediately get that link for the live class.

That's on December twenty ninth, so just two days if you're listening to this live, and you'll.

think you should start with budgeting. I think the biggest budgeting tip that we can give you for twenty twenty five is to not start with your budget. Ooh hot, take it's to start with your spending. Start looking at what you are already spending on first, and then you can plan for future spending. And so what we like to recommend if you're a listener of the show, you know you could recite it word for word. If you're new, welcome, it's the ninety day transaction inventory. That is where you

should start looking at your spending for the past ninety days. Yeah, yes, I know, we just went through the holidays. All of your spending was abnormal. But here's the thing. This gives you, your most recent ninety days gives you a clear picture of what your spending habits are now, not what they were in the fall, not what they were over the summer,

but what they are now. Because that's what we're working to get out of, is the spending habits that we've kind of let ourselves get get into over the holidays. That's what we're trying to move forward to from. So that's what we look to when we are before we even start a budget. And so what that means is you're going through if you have a budgeting app. You can very easily hook all of your cards up to that and look at all of your expenses. We love monarch.

If that's something that you want to pay for, it's something I pay for. Frugal Friends podcast dot com slash monarch will link up a discount code in the show notes. But if it's still going on, we do get discount codes for them, but Frugal friendspodcast dot com slash monarch, and that's really makes it very simple. You do not

have to do that, though. You can also go back into your statements on each of your cards and just copy and paste into a Google sheet and then you can sort from there either by date, by a category, by the store, whatever, So you can do it either way. You can use your budgeting app or you can use a Google sheet. And what you're looking for from there is not how depressed should I be about my spending?

That's not it. What you're looking for are patterns. So if you're familiar with atomic habits or if that's on your twenty twenty five reading list, we use habit cues or triggers to kind of give us an idea of what triggers are spending. So we're looking for who was I with when I made these transactions, where was I coming from, where was I going to? What mood was

I in? So we're looking for patterns, and then when we identify a pattern, we're looking for what the cues are and then we can pick a couple to start working on and changing. And that is how you are going to change your spending to be able to stick to a budget. You can make this perfect budget, this perfect plan, but if you don't have the skills and direction to execute it, you will never get there and you will just feel guilt after guilt of spending and

shame after shame every month for overspending a budget. And we do not want that for you. And that's why we say start with the transaction inventory and I identify what needs work first.

the book. So when you pre order by what you love without going broke, or.

do you want to keep spending on? This is where we're going to create a plan, and this one is in this article. So it talks about creating a budget based on your priorities, and this is literally what our

whole book is about as well. We call them values, although We also talk about goals and priorities within our book as well, But this is where we are going to start to define the parameters for our spending, for our money, the resources that we bring in each month, what do we want to do with that, How do we want to allocate that money? And this is going to be based on they say priorities, we'll say values,

and a combination of the two. So you are going to have to take a look at what are some of your more overarching financial goals, whether it's step payoff or maybe increasing investing or just kind of maintaining you identify what that is and kind of the amounts of money that you want to be able to put towards these things based on also how much money you're bringing in every month, and then be able to identify where

can some of that discretionary spending go from there. But we recommend beginning with your values, and that you've heard us talk about before usually is going to be within the four fs, family, faith, friends, and fulfilling work. So being able to identify how can I get more out of these categories, more of the things that I want than I need, my higher level needs, and in what ways has my previous spending from my ninety day trensit inventory pointed me towards the fact that I might be

spending unnecessarily to get after these needs. What could I be doing instead? And so literally putting down your goals, your values for faith, family, friends, fulfilling work, how you can engage in those things for just a more meaningful lifestyle, and then fill in the blanks with all, right, where will the money go? Then as a result of that, it could mean that as a result, you find free

ways of getting at your higher values. So you've got more money to put towards your investment goals, your debt

payoff goals, your current educational goals, you name it. But it also allows for some of that freedom and flexibility and spontaneity to be able to spend on the dinner out with friends and the special activity with family because you really know that these are going to help enhance your time and energy with your highest values, rather than just throwing money at something unintentionally, not really thinking through where our money is going when we're scrolling the internet

or we're walking the aisles of the store.

and not money. How can I fill my space with more more of the things that bring connection, or bring self esteem, bring spontaneity, all these higher needs that we have that are connected to our values, and then we trickle down into the money part. So if I am not in a season in my life where I can have friends over in my house because it is under construction, which was an actual thing both of us experienced for several years, then we allocate more money to that value.

But then we get creative with other values like how can I make extra money to compensate sort of things. So when you're thinking about your budget, don't just be thinking about it as budgeting of financial resources. Think of it as meeting these values with all of your resources.

It allows us to only have one vehicle, which I don't even think about that very often how much that saves us. But what that does allow for us then is we're able to on a whim decide yet we want to go out to eat. That would be a really fun way of getting out of the house, doing breaking up our typical routine, paying for just convenience. And I'm open to that. And I can do that because not out of deprivation, but just out of a lifestyle that I've built. I don't really care about all these

other peripheral things. Like what I'm doing on the weekend is finding free activities and getting together with friends and

trying out new recipes. And so the money that I'm spending is, yeah, on a couple of ingredients here and for some gas to go to that free activity and maybe yeah, electricity and water to have friends over to my house, Like this is where the money's going, So that I then am able to make some of these more spontaneous decisions or go on like a really beautiful trip once a year, that kind of a thing, just to kind of make it a little bit more granular for us. That's some examples.

going to prioritize it more highly. If you are fine having debt, yet you are sitting with revolving credit card debt, you need to prioritize that more highly. I would encourage you to prioritize it most highly. And the way that I think about paying off debt is I will use this phrase from the One Thing by Gary Keller and j Pompazon, and the whole book can be summarized into one phrase. What is one thing that which, by doing I can make everything else easier or unnecessary in the future.

And how we think about that for our money is what's one financial goal that I can focus on and prioritize that makes the most things as many things as possible easier or unnecessary in the future. And we truly believe debt is one of those things. There's there's three that we'll talk about for the rest of the episode. Debt is one of those highest priority things. It is

the first thing special, specifically high interest debt. So that's where we would say, and we still plug it into our values, right because when we get rid of debt that has a ten fifteen, twenty, twenty five thirty percent interest rate, when we're no longer paying interest on that debt, that is ten to thirty percent more money that we have every month based on that value. So that could be tens of dollars, that could be hundreds of dollars. But the more interest we pay to the bank, the

less money we have for all of our values. And so that is definitely the first thing to prioritize when we are thinking about financial goals.

travel credit card with the best rewards. These are important things for that and if that's something that's on your radar for this year, we do recommend smart Credit. You can go to smart credit dot com slash Frugal Friends, and they specifically are a program that you can engage in for a time for a portion of time and they will kind of give you the pointers and things that you can be doing to be able to optimize your score. So the next thing that we're going to

recommend prioritizing is retirement. But this is one of those things that can be on autopilot. While we like to focus on one thing at a time and not be dividing our attentions everywhere and feel really chaotic with our finances and thereby not really accomplished much with it. This is one of those things that you can be investing for retirement and it not have to totally always be on your radar. So this is when you're looking at what's the amount of money that you're bringing in, what

are your monetary obligations. How much money can you be putting towards your wrath IRA. Can you be signing up for your employers for oh one k and getting the match? This is just sound financial. These are things that we can and should be doing, even if it only means a small amount of money, Even if it means you can't totally max out your roth IRA, that doesn't mean

don't do it. Progress is better than perfection. So whatever you can be doing, even alongside debt payoff and there might be different opinions on that, so definitely do what you feel is best for you. You know, if you think that you can pay off debt in a very short amount of time, you'd rather do that before focusing on retirement. Okay, but if you're someone like me who took seven years

to pay off debt. Time in the market for folks like us is going to be better than as Genlos to say, timing the market and so being able to even put a little bit amount of money towards that while you're also maybe more so focused on these other goals is going to be really helpful.

just barely making it. Some people have a good income but for some reason are still living paycheck to paycheck, and some people are working way too hard and are miserable at their job and it's affecting all the other areas of their life. So that's why we say look

for ways to change your income. No matter where you are, you should every year be taking an inventory of what have I done at work or in my business in the last year, what have I really liked, what have I not liked, What do I want to do differently this year, and how do I want to change my income? Do I want to increase my income by going for a promotion for a different job changing industry. Do I want to essentially lower my income by increasing because I

want to increase my education. Or do I want to lower my income and take on less of a workload. Do I want to increase my hourly rate by and decrease the number of hours work? These are there are endless possibilities, right, but we need to be taking into consideration our work every single year, usually at the beginning

of the year, but it can be done anytime. You're listening to this because if we float along and just do life and only focus on our expenses, then we're going to end up in a place doing stuff we don't want to do for forty hours a week or maybe more, and feeling like we've lost it. We've lost it somewhere, and so being intentional about your work and your income is a high priority just for your life, but also because it dictates what you can do with

your budget. It is the core foundation of your budget, so you need to be thinking about it every year. Ideally, you're increasing your income every year, but sometimes for some seasons you must take a dip in order to create a greater growth in the future, and we need to be thinking about that not constantly but annually.

involunteer efforts to be to fulfill that higher need. But where it's possible, where we can make some of these moves to experience fulfilling work from the place that pays our salaries or even be able to take on, you know, build our own business. How beautiful that could be. So Yeah, having room to be able to evaluate that and have some flexibility there can be incredibly fulfilling.

work comes in. And what that is it's not like transcended you know stuff, it's it's the ability to be creative, to innovate, to be spontaneous, to feel like you are contributing to something that you're living in, the actualization of your skills and gifts. So that's it can be in

any industry doing anything. But that's why we want you to take an inventory of this, like am I doing the things that I'm good at and that I still want to be doing, or is there a shift that I need to make this year to prepare for future change.

we want to make around this? So the general rule of thumb still exists that we want to be spending about thirty percent of our take home pay on our housing. When I was preparing for this episode, I looked at that. I'm like, okay, take home pay. I heard people talk about gross pay in the past, so maybe that's shifted. This article says thirty percent of your take home pay on housing, and they're including all housing expenses, so utilities and bill how bills related to your house are included.

I'm actually spending thirty four percent of our take home pay on housing. I don't think that I'm going to make any changes in my housing situation, but it is informative to me that. Okay, then maybe the key for me here to get that into a more comfortable percentage is earning more money. So my reevaluation of this is helping to inform what is my budgeting going to look like?

What are my next steps in that? And of course, looking at our transportation, are there shifts that we're going to be wanting to make with our vehicles with the way that we get around are is our job? Is a job change potentially going to change our need for what transportation looks like? You know, Eric and I used to go to jobs. We had two vehicles. When we switched to more remote work, our vehicle situation didn't change immediately.

We had two cars. It took us a while to actually say, wait a second, do we need all of this? And it was no, there might be some times of inconvenience, but we can work around that to save ourselves thousands of dollars annually. And that takes an inventory opportunity, a reevaluation of with these biggest expenses that I have, the things that you know take up the majority of my spending month to month, what shifts could be made here, maybe not even immediately, but what could I be moving

towards that could really help my finances? Yeah?

I'm spending forty percent on housing. It should only spend thirty. I need to lower my housing. But looking at evaluating housing and transportation expenses every year is really good. I think for a lot of us, it's gonna be figuring out how we can get a smaller car payment or maybe paying that off depending on your lures. Right, yeah, that's gonna be like most people are gonna do something with that every year.

When I was sixteen, found bills, paid bills, unpaid bills because we didn't have to pay them, not because we missed them. Were better than that. Surprise bills, reduced bills, Surprise reduced bills. Those are fun, reviewed and fixed bills. Medical bills. My friend who just had a baby named Lily, but she misstyped it in a text, so now her baby is Billy. Insurance bills, utility bills, negotiated bills using printed monopoly money instead of real cash in your envelope systems.

You don't have to have cash on you, but you can still like see the money going away. Refunded bills, baby bills, grocery bills, dollar bills, bill murray, father bills, son bills, husband bills, coworker bills, dog bills, cat bills, vet bills, pet bills. That's the bill ice cream bills.

want to have fun. You don't have to take us on a journey like the one we were just on. Anything I'll do, even if your name is Bill, especially if your name is Bill Frugal friendspodcast dot com slash Bill. We truly can't wait to hear of the goodness and gold you all come up with. And now it's time for the lightning.

versus the stock market. So if you were listening to a recent episode, I don't remember what it was, but I told the story of how a beloved coffee shop of mine was forced out of their location and given no reason, and then four months later a Starbucks showed

up in that same location. It was it was in a hospital in Orlando, and I felt, I just felt some type of way about that, And so that has made me create a goal for twenty twenty five of wanting to invest in the local community and local business, but not just purchasing and consuming, but actually investing and

seeing what that looks like at a smaller scale. Because I'm not like an angel investor or venture capitalist or anything like that, but that currently is starting that process is my twenty twenty five goal.

putting our money kind of where our values are. But also how can we further support these efforts. I don't know that we would have been able to stop Starbucks from taking over that local coffee shop, but it is important to think about how can I really dig in on the people and the community that's important to me, that's right around me. So there's so much alignment there, and I love to kind of keep having these conversations

with you. For me, it is make more money. You already heard me talk about that, and our people who have been listening for a while, you all know, like in full transparency, for Jen and I to write this book and to really see what we could do with Frugal Friends as a business, that I stepped out of my full time job and went into Frugal Friends more full time. I still dabble in the world of social work. I do still have my side h I dovel because you know, I can't let go of my side hustles.

But it did mean a decrease in pay to kind of pursue some of what I've been feeling has been I mean, a lot of what I do has felt like fulfilling work, but also wanting a little bit more of a singular focus to be less chaotic in kind of what the demands on my time and energy, and that meant choosing a lesser salary, knowing that that wasn't going to be for forever. And I think, you know, feeling the reality of having lived off of less for

a whole year, it's been okay, we are fine. Things that have actually gone like maybe even a little bit better than I expected, but also recognizing, okay, something does need to shift. We kind of need to move ourselves back up to what we were accustomed to so that we can feel a little bit more solid and stable about, you know, the percentages of our income that are going

to the various things that are just necessary. Like I'm not I don't want to have a knee jerk reaction here and say I'm spending more than the recommended amount of my housing let me go move back into a vehicle again, even though I did love living in an RV, It's just not going to be the wisest decision for us at the stage of life. Like, that's okay, But we can also look for ways to increase income where there's not any more opportunities to kind of decrease some of our expenses.

in my life with my family. Jen and Jil have really helped in giving me ideas that I can change and what I can change and improve with my financial life goals that are now lifelong habits.

this yet, it really helps us. It also gives us content for our episodes, so we can read them, hear what you have to say, make tweaks if needed, and help others find the show. So thanks for doing that.

it was so interesting. It was like kind of rock pop beginning of the year, and then March was heavy instrumental jazz coffee shop, and then April May started ramping back up again with like even some hardcore music, some again rock pop, and I'm like, oh my gosh, you can tell what was happening. March was the heaviest writing month, and I was just sitting here writing, listening, tuneing out the world, tuning out Jen never all the edits she

wanted me to make. Yeah, got my AirPods on noise cancelation mode, listen in to my instrumental jazz music, typing out this Yeah, and then when I was done, we just we we partied.

a real and he made a reel. He was like, if you're one of my top listeners, I'm putting prozac in your stocking. And I'm like, what does that mean? About I'm I'm generally a happy person, but I just listened to real sad music.