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Welcome to The Financial Foundation, hosted by friend of TFD, attorney, and all-around financial mastermind Cindy Zuniga-Sanchez from Zero-Based Budget! In today's video, Cindy will be talking about the reverse budget, a foolproof tactic for those of us who are too lazy or busy to think too hard about how to create a budget.

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[Intro] Hey guys it's Chelsea, I wanted to quickly jump in to introduce this little takeover we have going on with a friend of the financial diet and a friend of mine personally, Cindy Zuniga Sanchez of zero-based budget. It's called the Financial Foundation and it's a three-week series all about everything you need to set up a healthy sustainable relationship with money. It's fun to talk about pop culture, social media society, and all of these other things that affect our finances but sometimes it's really important to get back to basics and understand all the building blocks of our financial health; and Cindy is the perfect person to teach us how to do that. So enjoy the series and I'll see you in a couple of weeks. 

As someone who used to be a domestic worker for high-net-worth individuals, I've been struck by white lotus in particular as to how accurate many of the portrayals of working for these individuals was. It was especially accurate, for example to the experiences I had working at yacht and country clubs, but in the case of succession, we're talking about a level of wealth that's so far removed from day-to-day society that it's unlikely that most people would ever have encountered people like this.  
C: His everyone, I am Cindy Zuniga-Sanchez, the founder of Zero-based Budget Coaching LLC, a personal finance educational platform for millennial women. I am also the author of overcoming debt achieving financial freedom, eight pillars to build wealth. Welcome to the three-part series The Financial Foundation. Some of you may recognize from TFD: the four-week financial foundation, an interactive four-week course for those who are new to the wealth-building game. Now in case you are new to my story, I was born and raised in the Bronx, New York, My parents immigrated from Ecaudor and Honduras in the 1970s and they raised me and my two sisters in our one-bedroom apartment in the Bronx. I was raised in a very low-income community, so financial literacy honestly consisted of telling us that there simply wasn't enough money for certain things that we wanted to purchase.

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Instead, we would stick to the necessities: food, shelter, education, clothing, et cetera. Now with all of that said, I was confronted with a need to learn financial literacy and to really educate myself when I graduated law school in 2015 with over 215,000 dollars of debt. I immediately felt extremely overwhelmed, pressured, and honestly quite embarrassed about the challenges I was facing with my money.

I found myself desperately seeking personal finance resources so that I can get my money in order, and I found them. I found resources such as TFD, podcasts, blogs, books, and more.

In December 2019, I officially became debt free, having paid off 215,000 dollars of debt, which consisted of approximately 202,000 dollars of student loans and about 13,000 dollars of credit card debt. And now, I'm on a mission to help people create realistic money plans to achieve financial freedom. I'm excited to kick off the first in this series to talk about a tool that was instrumental to my personal finance journey: the budget.

You see, in my experience creating a budget is rarely the issue. Rather, sticking to the budget is. So I'm excited to share one of my favorite foolproof ways to sticking to your budget: the reverse budget. Let's dive in. Simply put, a budget analyzes your income and expenses over a designated needed period of time. Whether you are looking to save, invest, pay off your debt, a budget is the key foundation for whatever financial goal you may have.

TFD has covered many different budgeting methods from the 50-30-20 budget to the Zero-based budget and more. But in today's video we're speaking to those that honestly don't really like budgeting.

Look, the truth to the matter is that many people find budgeting restrictive, time consuming, boring, and really difficult to stick to. Look, I hear you, so the first thing that I want you to do is to do a simple swap of words. If the word "budget" makes you cringe, swap it for your money plan instead.

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Words have power, and a simple swap can help you start seeing your money plan as a tool to get you to where you want to be. Second, if the reason why you don't like budgeting is because you find it really difficult to stick to, time consuming, cumbersome, consider the reverse budget.

Reverse budgeting is a budget method where your focus is on your financial goals, such as saving, debt payoff, retirement, and other investing goals rather than focusing primarily on your expenses. The reverse budget is also known as the "pay yourself first" method because you are paying yourself first by building your budget first around your financial goals rather than building it around your expenses.

The reason why the reverse budget is such a favorite, especially in the personal finance community, is because you don't have to track every single dollar that you spend. There's a lot more flexibility rather than having to jot down every single dollar that you spend every single day. 

Okay, now let's get into how to create a reverse budget. Now the reverse budget does require some initial set up. So to help us walk through that set up, we're gonna look at Anna's budget. Anna earns a monthly net income of 4,000 dollars.

She has never been much of a budgeter and cringes at the thought of tracking every single dollar that she spends. She has tried to save what is leftover a the end of the month but finds herself making little progress on her goals. She opts for the reverse budget so that she can prioritize her financial goals while not having to track every single dollar that she spends. 

Step one: assess your monthly cash flow. You need to understand how you're managing your money, specifically what comes in and what goes out of your bank accounts every single month.

For this step, I recommend analyzing four core numbers: your monthly income, monthly savings and investments, monthly expenses, and any monthly debt payments that you may have. And if you have not already done so now would be a great time to assess your monthly spending.

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