Good morning explorers,

The last couple of weeks have focused on advanced investing methods.

This week we’ll keep it lighter—and more immediate to the life-change it can deliver!

Quick membership update: we’re 99% ready—just a few final touches, and we’ll be live!

If you haven’t joined the Founding Member Waitlist yet, now’s your chance to secure early access with perks. This is going to be unlike anything else. Either you’ll discover it now, or hear about it later. I’d be thrilled to have you along for the journey—this is just the beginning.

In the meantime, have a wonderful weekend. And enjoy the read!

Onward together,

Daniel

The Budgeting Method To Overcome Financial Stress (Without Cutting the Fun)

Stage 1 of The Wealth Expedition is to overcome financial stress.

It involves spending in a way that preserves (and improves) life satisfaction in the here and now, while building a future that keeps getting better as you go.

As part of the budgeting phase, here is the truth most financial books never tell you:

Besides your checking account, two additional accounts can completely change your financial life within months.

Two accounts that:

• Reduce stress

• Prevent credit card balances

• Make emergencies a shoulder shrug instead of traumatic

• Allow you to enjoy life today with peace of mind without sacrificing your future

Those accounts are:

1. The Emergency Fund
2. The Preparation Fund

The Emergency Fund is familiar. The Preparation Fund is not. Yet when you combine them, your entire experience of money changes radically and rapidly.

Today, we’re going to talk about the Preparation Fund, the strategy behind it, and why it may be the missing link in your financial life.

Stage 1 of The Wealth Expedition: Budgeting That Actually Works

In The Wealth Expedition framework, budgeting is Stage 1.

Budgeting is not about restriction. It is not about eliminating small pleasures or gritting your teeth until someday when everything changes.

Budgeting is:

It has one goal:

Before investing, before tax strategies, before wealth acceleration, most families need one thing:

A budgeting system that stops life from blowing up their finances every few months.

Because for most households, the problem isn’t the monthly bills.

It’s the stuff that:

• Doesn’t happen every month

• Feels unpredictable

• Blows up the budget

• Forces them to use debt to survive

Enter:

The Preparation Fund.

Emergency Fund vs. Preparation Fund (Yes, They Are Different)

Most people are taught to have an Emergency Fund. And yes, you need one.

The Emergency Fund is for:

• Job loss

• Sudden medical emergencies

• Sudden travel emergencies

• Truly unpredictable life disruptions

An Emergency Fund should be touched very rarely.

But here’s the real problem:

Most people, if they even have an Emergency Fund, use it for things that aren’t emergencies at all.

Because here’s what life actually looks like:

• The air conditioner fails

• The car needs brakes

• You need new tires

• The water heater dies

• The dentist becomes unavoidable

• Christmas rolls around again

• Your kid’s sports need equipment

• The house needs repairs

• You finally need a new washing machine

None of these are emergencies.

They are normal life expenses…just not monthly ones.

That’s where the Preparation Fund comes in.

The Preparation Fund: The Key to Ending Financial Stress

The Preparation Fund is for expenses that:

• You don’t know exactly when they’ll happen

• But you know with high probability that they will happen

These are not unpredictable.

They are:

Predictable expenses with uncertain timing.

Which means:

• You can plan for them

• You can save for them

• You can stop letting them destroy your budget or push you into debt

Unlike the Emergency Fund, you will spend from the Preparation Fund regularly.

Most might normally put a $700 car repair on a credit card. Instead, for you, it comes from the Preparation Fund—no stress, no interest, no shame. In fact, you pay it with a healthy pride that everything works together like clockwork.

Properly built, the Preparation Fund becomes a financial shock absorber—one that makes “unexpected” expenses irrelevant.

Examples of What Goes Into a Preparation Fund

Here’s a common list many families share:

Home

• Repairs

• Maintenance

• Renovations

• Furniture or appliances

• Outdoor equipment replacement

Transportation

• Oil changes

• Tire replacement

• Routine repairs

• License renewal

• Property taxes

• Eventual vehicle replacement

Medical & Health

• Doctor visits

• Dentist

• Optometrist

• Chiropractor

• Therapist

• Medicine

Life & Family

• Back-to-school costs

• Sports or activities

• Birthday gifts

• Christmas

• Other gifts

Lifestyle

• Vacations

• Clothing

• Household upgrades

None of these are emergencies.

They are simply life.

But most households pretend many of these don’t exist when budgeting.

Calculate How Much to Save Into a Preparation Fund

Here’s how I suggest you think about this. I love math (I think it’s beautiful). But I’ll keep it simple and straightforward with this practical approach.

The money goes into a simple savings account—not investments—and you draw from it regularly.

You assign:

1. A realistic estimated cost for each category
   Preferably with an 80% confidence that the amount covers the expense.

2. A probability that expense will occur this year
   Based on how often it typically happens.

For example:

Multiply cost × probability:

Example:

• Car repairs: $3,000 × 35% = $1,050 expected annual cost

• Tire replacement: $300 × 30% = $90 expected annual cost

• Christmas: $1,500 × 100% = $1,500 expected annual cost

Do that for every line item, and sum the totals.

In this example, it came to:

Which means:

Divide by 12:

This is the amount that—mathematically—should prevent 90%+ of “unexpected” financial stress.

Now, before you start thinking, “That’s a lot of money!” Remember, you are going to be transferring portions of this fund back to your checking account with fair regularity in order to pay for specific expenses: oil change, dental visit, clothing purchase, a new appliance replacement.

This money isn’t disappearing into oblivion — it’s intentionally being simply stored separately because it is meant for a different type of expense.

Now Here’s Where It Gets Smarter

Life changes.

Probabilities change.

Expenses for certain things (like roof replacements) get more likely as time passes.

For example:

Your tires are three years old.

Originally, you estimated:

But now two signs emerge:

• The tread is getting low

• The car is starting to handle differently

New information means revised likelihood.

Maybe now:

Your expected annual cost updates:

Compared to the original:

Your Preparation Fund automatically adjusts. And you typically only need to adjust once a year. It takes literally five minutes.

No panic. No emergency. Just math.

This applies to other things such as:

• HVAC units aging

• Cars entering the “repair years”

• Kids entering braces age

• Roof approaching replacement

• Time for a car replacement approaches

When probability rises, you simply adjust.

You become proactive instead of surprised.

What Happens When the Preparation Fund Reaches Its Target?

This is where you get a special bonus.

Once your Preparation Fund balance reaches its target:

• You can stop fully contributing

• You only “top up” when probabilities or cost estimates change

• Spending from the fund becomes normal and stress-free

Every time a Preparation Fund expense occurs, three things happen:

1. Your normal budget is unaffected

2. Your Emergency Fund stays untouched

3. You feel in control

If the account drops, you simply refill it gradually based on updated expectations

This means:

Investing Comes Later — But This Comes First

The Preparation Fund is part of Stage 1: Budgeting.

Before investing, before tax planning, before wealth acceleration, you need a system that makes your financial life predictable.

Because even an above-average stock return means little if every few months…

• your AC breaks

• your car needs repairs

• Christmas wipes your bank account

…and you have to cash out investments suddenly or borrow at high interest rates to cover it.

This system prevents that. It sets you up for perpetual success and the ability to take on calculated risk for future wealth acceleration.

If You Want Help Building a Financial Life That Works

If you want guidance implementing this system—and learning the other stages that build on it—then I’d like to invite you to the Founding Members Waitlist for The Citadel.

The Citadel is my private coaching and wealth-building community for people who want:

• A proven roadmap

• Accountability

• Strategy rooted in math, research, wisdom, and practical experience

• A supportive environment of like-minded achievers

Founding members will receive special pricing and early access when doors open.

This is not get-rich-quick. It’s better. It’s get rich actually! And do so far faster than the vast majority, all while transforming everything about life, from the internal to the external.

👉 Join the Founding Members Waitlist for The Citadel
No commitment. Just first access when enrollment begins.

Daniel Lancaster, CFA

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