MSG Presents: "Eric On Money": The Path To Healthy Budgeting

In this episode of MSG Presents "Eric On Money", Eric breaks down what it really means to create a healthy budget—one that goes beyond just numbers to foster overall well-being, reduce guilt, and meet your goals. 

Eric explains the essential elements of a healthy budget, including prioritizing needs over wants, building emergency savings, setting clear and emotional goals, and creating systems for reducing debt. 

Drawing from his experiences working with high-income earners who often feel stuck despite impressive paychecks, Eric shares how to reframe budgeting as a tool for freedom and peace of mind. Plus, he reveals the biggest mindset shift that can make your budget stick.

Whether you’re just getting started or looking to take your budgeting game to the next level, this episode offers practical, no-nonsense strategies to help you thrive—without feeling deprived.

Transcript

[00:00:00] Good afternoon, my name is Eric mlo, financial coach. I'm here today to have a conversation about the healthy Pac to budgeting, and I can't wait to dive into this with you. If you're out there and you're like, you know what? I am trying to do better with this budgeting situation, but it's just not healthy.

You know, I'm beating myself up when I'm not hitting my goals or I'm getting frustrated 'cause I really don't even know how to approach the process. Or, here's another question. What is budgeting in the first place? You're in the right place. You're in the right place. So we're gonna have this conversation this afternoon.

Let's dive in.

So a lot of you all know me from LinkedIn already, but if you don't, you know again, Eric mlo. I'm a husband, father of three [00:01:00] financial coach, keynote speaker. Financial literacy is definitely one of my passions for sure. I enjoy teaching these concepts and, and I even enjoy even more seeing people take these financial concepts and use them in their everyday lives.

And I do focus primarily on high income earners. You know, a lot of high income earners have to spend a lot of time pretending and, you know, it's it's assumed that because you're a high income earner, you already understand a lot of concepts when we know that that's just not the case. A lot of us did not grow up talking about financial literacy and other topics.

So, you know, that's why I decided to focus on high income earners and, and you know, there's a lot of guilt that's built in. So if you got a person making 250,000 or 300,000 a year and they're not really making any progress and they're actually struggling, there's a lot of guilt there because, you know, you're making quite a bit of [00:02:00] money and you know that you could be doing better.

So that group of people really struggles a lot of times, you know, in silence. And then the last thing about me, I love to wear hats. I'm not wearing a hat today, but you usually catch me with some kind of hat on, or trucker hat, some kind of brim hat, whatever. But that's just something that I definitely enjoy doing.

So that is me. So what I wanna get into today is one. We're going to define what budgeting is and, and what healthy budgeting is. Then we're going to get into the elements of the healthy budget.

And then I'm gonna give you some action steps that you can use as you are implementing this information. Here's a quote that I love. It's, it's the ability to eliminate the unnecessary so that the necessary may speak.

I really feel like that's what budgeting is all [00:03:00] about. A lot of times we are, we have so many unnecessary things that we're spending money on, and what I like about budgeting, and we're about to define what budgeting is in a second, but what I like about budgeting, when you get deep into it, it really is just figuring out, you know, what, what's needed and what's not.

You know, what's necessary and what's unnecessary. It, and it really doesn't mean that you don't have to ever have a chance to do things that are spontaneous or fun or maybe things that you just like to do that are not necessarily necessary. It just means that you focus the majority of your resources on the things that are necessary and you build out from there.

So what is healthy budgeting? What is it really? My definition is, is it's the practice of managing your finances to main O maintain overall [00:04:00] wellbeing, achieve financial stability, and meet your financial goals. So number one, it's gotta be a process where you feel well, you're not feeling irritated, upset, sick as you're going through this process.

It is a way to be stable. So you want to get to a point where you're not always dealing with unexpected expenses and emergencies and trying to play catch up and things of that nature. And then, yeah, we need some goals. So what are we doing this for? It's much easier to budget when there's an actual goal, because you always wanna be asking yourself, what am I budgeting for?

And when you have something that's emotional, I think we're gonna talk about this a little bit later, but when you have something emotional. You can become attached to. It's just such a easier process. So for example, you might be like, Hey, I want to go to Hawaii. If you're saving and [00:05:00] budgeting and all this stuff, and your ultimate goal, one of your goals is to go to Hawaii, it is so much easier, easier to accomplish it from a mental mindset perspective when you've got some kind of clear goal or reason why you're saving and budgeting.

Now we gotta talk about the elements of a healthy budget, because I never wanna have these conversations and have people say, okay, well you define what a healthy budget is, but what does it really look like, like on a daily basis? And so that's what this list is here. So it's. The elements are prioritizing needs over once we just talked about that, but really figuring out what's essential versus what's discretionary.

Discretionary is just a fancy word for something that's not necessary extra. Okay, so when we think about essentials, we're talking about [00:06:00] paying your mortgage. You know childcare for the children, food, paying your utilities, things of that nature where a vacation may be discretionary. A new car may be discretionary if you already have a new car or if you already have a car and don't need a car, but you just want.

So it's really about needs versus wants, needs versus wants, and being able to prioritize and look at your existing, existing spending. Going through everything and saying, okay, is this a need or a want? Living within your means? So really understanding, okay, hey, I bring in $10,000 per month, but I'm spending 11,000.

So one of your first jobs would be in having a healthy budget is figuring out how do I get to 10,000 because that's what I bring in every month. And then once you get to 10,000. How can I maybe bring this down to 8,500 by [00:07:00] really going back through my essentials versus my discretionary? The next thing, when we talk about being healthy versus being unhealthy, we definitely, and you all have heard this, we want to have an emergency savings, and I know I don't have to spend a lot of time on this, but you wanna have money for unexpected expenses.

Bottom line, definitely essential. The next element is planning for the future. So what are your long-term goals? We talked a little bit about that, but hey, what if you, everybody wants to retire at some point. You know, we want to send our children to college, you know you might want to start a business.

So maybe you're an employee right now and you want to start a business. One of the elements of having a healthy budget is understanding what are my long term goals. Again, what am I setting aside these funds for? What's the real reason? And the more emotional of an attachment you can [00:08:00] make between these two things, the easier it is, and here's how you make it emotional.

So instead of saying, I want to save for retirement, you might say something like this. I don't want to be, and there's nothing wrong with this, but I'm just using this as an example. I don't want to be 75 years old having to work at Walmart. Okay? Or here's another example. I don't want my child to turn 18 and graduate high school, and I don't have the funds for them to go to college.

Whether it's the funds to pay the tuition outright, or I don't want to be in a situation where my credit score is not good and I can't get a parent loan, for example. That's very emotional, right? You don't want your child looking at you like, where's the money for me to go to school? You know? Or you know, you don't want to be standing filling out applications at 70 years old, right?

That just might be something that you don't want to do. [00:09:00] So that's how we make it more emotional. All right. Reducing debt is also part of elements of a healthy budget. We all know this, but I'm gonna go over it. So it's all about being systematic. So you want to, we, the thing that we're trying to fight here is paying interest unnecessarily.

So you're making system systematic payments in your budget to get rid of debt. By you doing that, you're increasing your net worth. Okay? So reducing debt is definitely an element of a healthy budget. It's kind of like if you think about having a bunch of debt, it's like eating a bunch of food with cholesterol in it, or sodium or sugar.

You're going to create a problem at some point, and the problem here with debt is the problem is interest. Owing a bunch of money to different parties. So we wanna avoid that. And then the [00:10:00] last element here that I have about monitor having a healthy budget, we're talking about monitoring and adjusting as you go along.

So, you know, a lot of people have budgets already and that's part of the internal conflict that they have because they have a budget, but they're not really tracking it. And. They're not necessarily going back at the end of the month and saying, how did I do on my budget? So it's all about tracking and then making the necessary adjustments as time goes on.

You might figure out that you estimated your income to be $11,000 this month, but you, for whatever reason, you find out it's actually gonna be 10,500. So that will be a necessary adjustment. I'm gonna make $500,000 less per month than I thought, so I need to go back and make sure my budget reflects that.

So these are the [00:11:00] elements from my perspective of a healthy budget versus an unhealthy budget.

Now I wanna get deeper into these so we, we kind of know what these categories are. Let's get deeper. So prioritizing needs over once essential versus discretionary. So your question might be, well, Eric, this all sounds good, but how do I go throughout that process? Number one, as we kind of talked about before, identify what you need to actually live.

What do you need to live? You need food, you need clothing. You know, to a certain extent, you know there's utilities that have to be paid. Expenses for the children. And then again, part of being a healthy budgeter is not putting yourself in a situation where you can't do anything fun or anything that's stimulating.

It's really about finding [00:12:00] cheaper ways to do things, and I'll give you an example of that. I like to travel and I could easily just go on and book a flight. Regardless of what the cost is, book a hotel room. But in thinking about trying to have a healthy budget, many times, what you want to do and this using this example is, Hey, is there a way for me to get a package deal?

Is there a way for me to get a membership with the airlines so that the bags are cheaper? Is there a way for me to catch a little bit earlier or later flight so that my cost for the flight ticket is a little bit cheaper? So it's about you're going on a trip, but maybe you're finding a way to go on it in a way where it's cheaper and costing you less money.

So again, here, needs versus wants. And then when you get to your wants, finding cheaper ways to accomplish those wants. It's not about never having fun or [00:13:00] doing things that you're passionate about,

living within your means. And this is a big deal. So. The goal here is spending less than you earn. Less than you earn. Now, how many times have we been in a situation where we're spending more than we earn? This is talking about figuring out what is it that you're bringing in monthly after taxes, calculating your monthly expenses.

And here, and don't overthink this, right? If you don't have the stuff written out already, just use a spreadsheet. All you have to do, excuse me, allergies kicking in. But all you have to do is get a simple spreadsheet, put the amounts in, and put the cost, sum it up. If you're not familiar with how to use the sum function, ask one of your children or somebody around you, somebody knows how to do it.

Just get your number [00:14:00] so you could throw in your, once you get your number, you can put in the next sale underneath it, your income, and you do a simple calculation sale, A one minus cell B two, and then you figure out are you under or over for the month. And then you build your budget around those numbers.

So if you find out you're over, you got some work to do to bring it down. If you find out that you're under. Now you can take more of that money that you're under and use it to fund some of your goals. 'cause here's what I've found with working with a lot of people, there's people I've worked with that have had, for example, $4,000 in discretionary income every month, meaning they have $4,000 that they didn't need to do anything with.

All their other needs were taken care of, but they didn't realize it. They didn't realize that they had $4,000 that they could be doing something else with, and [00:15:00] so that's a huge loss over time, right? So $4,000 times 12, that's almost $50,000 that they could have taken and used to do something with in relation to their goals.

So that's why that discretionary and understanding needs versus wants is so crucial because what ends up happening is if you don't know you have $4,000 worth of extra every month. That money usually just gets spent on eating out, buying clothes, entertainment, going on trips. And again, that's stuff is fun in the moment, but we're not able to accomplish our goals.

So figure out what is it that you need to live and where am I in that process? How much over or under am I of my monthly income? All right, let's keep moving. Building emergency savings. This one I know you all know a lot about. We hear it all the time. [00:16:00] This is more about thinking, Hey, you know, I, I need to get.

Commit here. How can I commit? Either it's gonna be three months worth of expenses. Expenses in cash or liquid, or six. And if you're out there and you're watching this and you're like, I don't have any emergency funds at all, Eric, I'm gonna tell you to start with three. Start with three months. Matter of fact, start with one month.

If you're, if you're out there and you're at ground zero and you have no emergency savings, start with getting one month worth of expenses saved. One. You will feel so much better. And once you get that one month saved, then go for three. Then once you get to three, go to six. And then once you get to six, go to 12.

We live in a time right now, you all, where emergencies happen so much more often than they used [00:17:00] to. People are losing their jobs, jobs at record rates, you know, people have businesses that aren't performing the way that they had expected. And so you need emergency funds to keep yourself above board. Okay?

Now you might be looking at this and saying, look, man, I don't have. Money for an emergency fund. I all that sounds cool. I've heard it all before, but I'm gonna push you a little bit on that. I think you do have it. Look at your tax refund. If you get one, you give $5,000 back or a thousand dollars, whatever it is, take a piece of that and use it to start your emergency fund.

Okay, now, right now the interest rates are still pretty high, so you could put the money in a savings account and get a pretty decent return. So take a piece of it. Cash back rewards. Now, be careful with this, with these credit cards because they definitely offer rewards, [00:18:00] but you gotta be careful that you're not overspending.

So what some people will do, and again, I caution this, but if you're disciplined enough to do it, some people pay all their bills on their credit card. The ones that have the rewards, they take the rewards points and they use it to do other things with either reduce their cost of things that are in their budget or they get a refund in cash and they take that cash and put it into their emergency fund.

Great strategy. If you are disciplined enough to. Get the to charge everything on your credit card, pay it all off at the end of the month, get the points, and then apply to your emergency fund account. And the last one is, most people, many people get a bonus from their job. Take a piece of that bonus and put it into your emergency fund.

Now if you follow me on LinkedIn, you know, I [00:19:00] tell a lot of stories about when I didn't do well with money, but one of the things I did end up doing well before I left corporate was I take those bonuses and put most of it either directly into my 401k or I take the, the payout, you know, the after-tax payout and put it into an emergency fund.

So I'm talking to you as somebody who has had every financial issue under the sun, but even I got to a point where I'm like, I'm not gonna waste this bonus and there, and there's really nothing that I need to buy that's that important. I'm gonna take this money and put it into either my retirement fund, my emergency fund, and some years I did both, half into retirement, half into my emergency fund.

Something to think about. So instead of us thinking, well, I don't have the ability to have an emergency fund, just think of ways, get creative and think of ways that you can generate money [00:20:00] somehow, or use money that's already coming in to create an emergency fund. All right, let's keep moving.

This is the big one too. So it is easier to budget when you have. Goals, especially if those goals are tied to an emotion. Write out your goals. Prioritize the ones with emotion attached to them because you're more likely to accomplish those. Again, it's gotta be something that you feel really strongly about and only you know what that is.

But write all your goals out and again, prioritize the ones that are emotionally attached to you. Then go with that. So if your goal is, Hey, I don't want to spend another year not taking my family on vacation, we haven't gone in the last three years, that might be the one that's at the top of your [00:21:00] list.

Go back to your budget. Address the things that we've already talked about, and then figure out how to take your discretionary income or the money that you don't need for bills and other responsibilities and start saving that. For the trip, whatever it is for you. Write out those goals. Prioritize. Here's another thing.

I know we've all heard this and you get tired of hearing this stuff. That sounds cliche, but it really is true. Write out your goals because when you're trying to just have the goals in your head, it's just not strong enough. It's something about writing the goal out and keeping it somewhere where you can see it on a regular basis psychologically.

It just helps us to stay present and remember what our goals are. But also, and this might sound a little whatever, but the universe will begin to attract what it is you say you want. When you're clear, when you're clear, the [00:22:00] universe will start to attract whatever you say it is you want. Now you might be like, I don't believe that.

That sounds like some, some crazy stuff. Just try it. Just try it. Write out your goals, keep 'em present. You might keep 'em on your phone, you might do a vision board and just see what happens. See if I'm wrong or right. All right. We talked about the debt. You know, I'm big on the systematic payments, and when we say systematic payments, we're really talking about not just paying the debt, but how are you gonna pay it.

So we're talking about, for example, you might, and I'm really big on this, so, and I have a spreadsheet if you're interested in it, but I got a template where you can write out all your debt and kind of look at the interest rates and prioritize it. So if you want that DME, I'll get it to you, but definitely pay the debt with the highest interest rates first, and prioritize debt [00:23:00] with the smallest balance.

These two are kind of interchangeable because I'll say it like this. Say you've got five different pieces of debt. Your highest interest rate is 45%, but then you also have one of those debts that's just like $150, even though the, you got a high, super high interest rate on one of those credit cards. I would say it'd be better to just knock out the one for $150 because it's so, it's low hanging fruit.

Psychologically. You'll get a boost, it's done. You take care of that one, and then you go back and start prioritizing by the ones with the highest interest rates. So if you've got any low hanging fruit, knock that out and then go back and prioritize by interest rate. Those are my strategies for success that I've used.

I've used them for myself and also financial coaching clients and all of that stuff. So it works. But the [00:24:00] thing is, you gotta be clear about what the debt is and what the interest rates are, and then here's something that becomes more fun over time. So if you're not doing well financially, it could be kind of hard to start thinking about, well, what's my net worth?

And all this stuff. But I would say if you start to track it. As things improve, it gets, becomes more of a fun process. It becomes more fun over time. So try it. Monitor your net worth. As you knock out those debts, you'll see your net worth begin to change, and it, it, it becomes more and more exciting over time because your net worth will go up.

Now we've talked about this too, so monitoring and adjusting, regularly tracking expenses and spending and making necessary changes. Now, I got a, I have a app or software that I'm gonna recommend. I'm not attached to the company, I'm not [00:25:00] guaranteeing anything, but I really like this app. It's called Monarch Money.

Monarch Money. Let me make sure I'm saying the full name of the app, right? Yeah. Monarch Money. And it looks like this if you're looking at it on your phone, I don't know if you all can see this, but it's like a, or you all can see that, but it's a per, it's like a orange logo of like a butterfly. Monarch money is something that I would recommend that you use to track what's going on with your money, and here is why.

Some of us are visual. So being able to have a way to say, yeah, I spent $500 on food so far. Here's a chart to show that, or I have a goal of this. Where do I stand currently? And being able to have a visual representation of that is [00:26:00] really good. And, and then one thing about Monarch money, it's kind of like mint.

I don't know if any of you all ever used mint.com. I think they folded it into credit Karma or something, but it just doesn't work the way that they used to. But

being able to prior categorize your transactions is also a big deal because as things are coming in, the software will automatically categorize it for you. You might have to make a few adjustments here and there. It gives you a quicker understanding of what's going on, what's going on with my money. So you're taking a lot of the manual work out of it and you're able to see, okay, I budgeted $800 this month for business expenses, for example, but right now I'm at 7 92 and there's a week left.

So there's an example where you might have to make some adjustments because you only have $8 left in your budget. [00:27:00] It's easier to make those decisions and do that sort of adjustment when you know where you stand at any given time. And then my other strategy would be set a day and time to monitor each week each day or each week.

I do it daily and I encourage my financial coaching clients to do it daily. But for you, you might not be able to do that every day, or you might feel like you can't. So you might say Monday, Wednesday and Friday I'm gonna monitor, or I'm gonna monitor on the weekends, whatever it is. But just get a regular cadence going of when you're gonna monitor what's going on with your finances, using that, it's gonna speed everything up.

You'll get the net worth and all these different numbers. And the other cool thing about this Monarch money and a lot of these softwares like is you can pull in as many accounts as you want. So you could use your credit card to, to track your credit card spending, your savings account, your checking, whatever it is.

You can also add business accounts. You can set this thing up however you want. But the key is [00:28:00] to track, this is part of healthy, so it's no different from tracking our blood pressure or our blood sugar, you know, different metrics that we have in our bodies that we, we use to make sure we're healthy. It's the same thing with our money.

We, we have the metrics, we just have to track them. All right. I don't know. I kind of did this at a, a weird time, so I don't know how many people are out there on the live, but if you're out there, even on a replay drop hashtag replay and ask me whatever questions you have. I'll be happy to answer them.

I did this presentation for a corporate client recently, and the main question that a lot of people had was like, what was my recommendation? Recommendation for a software to use? So I've given you all that, and so if any other questions come up, definitely let me know. All right, so here's the, here's the part where I want you to really be thinking.

Okay. So I want you to review your goals. If you [00:29:00] don't have any goals, I want you to create some financial goals, right? And remember we talked about prioritizing the ones that have emotion attached to them. Then determine if your current budget matches your goals, does your current budget match your goals?

And it may not, and that's okay. But you might need to make some changes and adjustments as we talked about, and then start to internalize those goals through meditation, affirmations, and saying them aloud. So they're emotional, you're internalizing them. The more you internalize 'em, the more likely you are to accomplish them.

Now, I told you all at the beginning of this, and we're wrapping this up, but I told you all at the beginning, my focus is on high income earners. That group of people needs a lot of support and they often don't get it. If you're out there and you need some more support, I'm [00:30:00] definitely gonna encourage you to get it.

I'm in the process of launching something that's very new. I'd like for you to consider if you're looking for a way to get more support. Right. Guidance, really big on guidance, accountability, and support over the years, the decade of me doing this, that's the three main things that people really are looking for.

Guidance, accountability, and support. Because they get a lot of information already. We all go on YouTube and we got some person that's trying to sell us this and sell us that, but it really is about, I need help on a daily basis. I need to be able to talk to other people. And so I created this accelerator based on that.

So, well, here's what I'm offering. A one-time, , one-on-one financial coaching session for anybody who becomes a member of the accelerator, creating a financial, , Facebook group where you can ask unlimited questions, learn, network, and share with other high income earners. I've got two really good [00:31:00] courses, online courses that you'll have access to.

A financial literacy course called Control Your Finances, and then a course called Stocks 1 0 1. These are great. You can do them whenever you have time. Modules are short. The lessons are really short, , to the point, but giving you the critical information you need to take action. I got templates that you can use for budgeting, calculating your net worth, all this stuff.

Got have webinars that you can go back and watch and other learning materials. And here's something cool that I'm gonna do. I'm gonna have live monthly live monthly coaching sessions. I got the word live in there twice. But these are good because you might be going through the courses and you might be going through the month and you just need to have more of a conversation about what it is you're learning.

Or you might have questions about, Hey, I just watched the budgeting module. I just got a few more questions, and so you'll have an opportunity to connect with me live and get some of those questions answered. [00:32:00] Over time. I'm gonna be bringing in some guests presenters, so like I got a lot of people who sell insurance and people who are CFOs and accountants and all these people.

I'll be bringing them in at different points. To give presentations that we find valuable. You know, they might come in for 30, 45 minutes, give a presentation, and you get a chance to ask them questions and do business with them as well if they're able to help solve some of your other challenges and problems.

I'm gonna have a referral list, like if you're looking for accountants, CFOs, and some of these people we just named, you'll have contact information for them. Discounts on financial coaching. So I'm offering a one hour free session for anybody who joins as a member. But you might be in the community and say, you know what?

I need this weekly or biweekly. You'll have the opportunity and you might want it one-on-one. I, I'm gonna provide discounts if you're already a member of the [00:33:00] accelerator so that you can get that type of coaching and other services that are available. Now, here's the kicker. This thing is only $50 per month right now, so this is a lot of value for $50.

You can cancel at any time. But here's the thing, the membership is going up to $97 next week. Alright, so you had a few days to jump into this now. So what'll happen is if you're interested, DM me on LinkedIn or Facebook or just drop it in the chat. Interested? I'll get you the link. For you to sign up.

Once you make your $50 payment, you'll be added to the Facebook group, and then you will receive an email with access to the courses. All right. Financial Freedom Accelerator, again, if , you're looking for guidance, accountability, support, this is a great tool. The price is going to continue to go up.

I'm just letting a lot of people in for a [00:34:00] very low commitment right now. Take advantage of it now. Get in there now before the price goes up. All right, so this is Eric mlo signing Off Path to Healthy Budgeting. Send me any questions that you have, share this out if you think it'll be helpful to other people, and I'm looking forward to seeing you in the Financial Freedom Accelerator.

Alright, until next time. Peace.