The Basics: Budget for Financial Independence Retire Early (FIRE)

A budget is a basic foundation that financial independence is built upon. Without it, the path to financial independence, and the ability to retire early is less clear. How can you expect to forecast your future savings and investment strategy if you don’t have clear data?

One of my favorite quotes is, “You can’t hit a target you cannot see, and you cannot see a target your don’t have.” - Zig Ziglar

It’s like trying to lose weight without understanding how many calories you’re consuming. By improperly tracking your spending you’re creating an environment where it becomes easy to lie to yourself and make excuses.

The Basics of a Budget

If you want to save money, you must spend less than you earn on a daily, weekly, monthly, yearly basis. If you want to drastically increase the speed at which you build wealth, you will then need to put this money to work for you.

Zero-Based Budget

I recommend a zero-based budget also commonly called an every dollar budget. The premise is simple, every dollar of income needs to have a purpose. The purpose may be savings, paying down debt, groceries, etc…

I recommend finding your absolute zero budget. This is the point where you’ve cut so much from your budget that it pains you to cut any more. No restaurants, no entertainment, no haircuts. I’m serious, cut it all. It’s at this point where you can begin to live a life of meaning rather than material.

Only when you remove all the unnecessary wants and desires are you able to identify what it is you actually need. This isn’t forever. I recommend living like this for one budget cycle (1-month).

Once you live at this absolute zero budget for at least a month, you can begin to add line items back to the budget ensuring you’re remaining well below your total income. Each budget item you add to the budget will cause you to make a decision.

Budgeting Tools

There are many apps and software products that exist to help you stick to a budget. Kayla and I have used several of them and the only product we’ve consistently used and recommend is Dave Ramsey’s EveryDollar Budget.

If you want to do it the old-fashioned way, here’s a simple tutorial for creating a budget in Excel.

Learn to Spend Less

For every basic human need, there is a free alternative to spending money. Learn to love these free versions as they will typically be more rewarding in the end.

There’s so much free information available today. You simply have to want to do it. Consider this website, I have 200,000+ words of free, helpful content, and hours of free podcast episodes. It’s all here for the taking.

Here are just two examples of where we’ve been able to cut spending:


“Food is fuel” is something I’ve said since I was a teenager. To me, it’s necessary to only eat what you need for fuel. Do I overeat? Sure, do I like ice cream, yes! I’m not indulging or overspending on these things on a daily basis.

Instead of eating out every single day or several times per week. Learn how to cook. While food isn’t free, preparing it can be. Cooking at home is a fraction of the price of eating out and is typically much healthier.

Physical Health

You have the option to pay for a monthly gym membership or workout for free. For example, a 1-mile run around the neighborhood while stopping every 1/4 mile to do push-ups and sit-ups is free.

Fancy Crossfit gyms can cost upwards of $100+ per month. You can buy an entire home gym setup for under $1,500 and in 1-2 years it would have paid for itself.

Planet Fitness offers memberships for as low as $10 per month. That’s insane and definitely worth considering as 30lbs is 30lbs no matter how many mirrors there are.


Prior to purchasing anything, ask yourself, “does it fit your budget?” If it’s something you’ve planned ahead for, then it probably does fit your budget. If not, it may require a closer look.

Consider utilizing a free DIFYB Card Sleeve that I created specifically to remind you to check your budget prior to spending. If you use it, please tag @FIREtheFamily on Instagram with the #DIFYB so I can share it with our readers!

Kayla and I have found that when we buy things outside of our budget a few things may be true:

  • We don’t actually need it

  • It’s an unforeseen expense

  • We’re being impulsive

  • It’s an emergency

Many times it’s something that can wait until the next budget cycle (next month) we can plan for it and ensure it gets tracked.

Our savings rate is sacred and we do everything we can to keep it intact. Putting today’s purchase off a few days or weeks is a great exercise in financial stoicism.

Budget for the Future

A budget isn’t just for the month, you can budget for the next 3, 6, or 12 months if you want. Sinking funds are a powerful way to save for planned future expenses.

Sit down and consider how much you want to spend on Summer vacation, birthdays, and Christmas. These are common sinking funds and can really help your finances stay on track.


At the very least, a budget is as simple as money in > money out. If you can implement that and stick to it, you can make huge gains with your finances.

Once you get the basics down and your spending is under control, you can start to fine-tune it by adding in sinking funds, experimenting how far you can reduce your spending, and prioritize your future spending.