About a year ago, when we were so close to ending our engagement and beginning our marriage, Bryan and I took a class with our connection group called Financial Peace University. If you’ve heard of Dave Ramsey, you’ve likely heard most of what I’m about to go through as it’s similarly modeled after his class.
Over the next few weeks, I’ll use terms that Dave (we’re on a first name basis) would also use.
We have a something of a zero-based budget (actually I’m not sure that name is correct, but trust me, I got all of this from Dave). This basically means, in Dave’s words, we “spend all of our money on paper before the month starts.”
Here’s how we did it:
Step 1: We tried to account for every expense we could possibly think of. Literally anything that could come up over the course of the year, not to mention those trusty bills that happen to come every month.
Step 2: We came up with a monthly budget to account for all of those expenses.
Step 3: At least for us, our ideal amount to spend each was more than we wanted it to be. It wasn’t more than we made, but we wanted to pay off our debts and start saving up for school so we shaved everything off we could. This relates quite a bit to the whole saying no thing. We didn’t add dates to our budget until we were debt free, for instance.
Step 4: So then we had our bottom number, our budget. It was less than our income each month, so the last step was to make a plan for all of the extra income we brought in. That’s where the goals come in, we funnel all of our extra money towards our goals.
So, in essence we have our income, which we tithe from first and foremost. Then we have our expenses, which are as little as they can possibly be right now. Then we have our goals, which we fuel with all of our extra income each month.
Here’s an example:
(please note this is not our actual budget, but if you want to know what I spend on whatever, just ask!)
Sub-Total #1: +$2,400.00
Car Repair: -$100.00
Car Insurance: -$250.00
Medical Expenses: -$50.00
Sub-Total #2: +350.00