Frugal Friday--Financial Fitness Begins with a Budget

10:04 AMHeather

In my quest to purge my home these last few weeks, I have found some interesting items.   Broken things that I intended to fix.  Baby items I was keeping for when babies come to visit (yes, I've embraced the idea of borrowing said items when needed).  Every letter of commendation my Poppy received from his consulting business.  Lots of junk.  But, also a few treasures--and some really random things.  Like the receipt for Dave Ramsey's Total Money Make-Over Live Event--that we attended in February 2006.  I decided to keep that, and here's why.

That marked the beginning of our journey toward becoming debt-free and more financially fit.  It's been a journey for sure--not just financially, but for our marriage and in our walks with the Lord.  Chris and I have walked together and worked together to become more obedient Biblically and wise about our money, and to trust the Lord to provide for us and help us.  

We are currently at a point of needing to tweak things a bit again and pull in the reigns.  There are some needs and wants coming in the next few months that require us to rearrange our budget so that we can cut some line items in order to create some savings for the upcoming needs.  

Which brings me back to the starting point of financial fitness--that dirty little word--something known as a budget.  Right now, I have several friends in the same boat.  Actually, I think probably everyone I know is in the same boat.  Don't we all need to make some changes in order to put ourselves in a better position financially?

So if aren't really sure where to start, but you know you need to do something to change your finances, let me give you some basic starting points today.  First, I present to you Dave Ramsey's recommended budget.  Take a gander.


Charity 10-15%
Savings 5-10%
Housing 25-35% (including insurance, repairs, taxes, etc)
Utilities 5-10%
Food  5-15% (all food!  Even eating out)
Transportation 10-15%
Clothing 2-7%
Medical 5-10%
Personal 5-10%
Recreation 5-10%
Debt 5-10%

So, here's what you do with this.  Take your net pay (take home pay) every month, and multiply that number by the recommended percentage in order to determine the amount you SHOULD be spending on these categories every month.  Because Dave's percentages vary per category--obviously, make sure you are totaling only 100%.  

As you do your math, you will see areas where you need to cut to make allowances.  For instance, if your mortgage, car payments, or debts go beyond the recommended percentage--you will have to cut other categories to compensate.  If you have an irregular cash flow rather than a set fixed income, check out Dave Ramsey's website for some tips on this situation of irregular income.

Now, determine together that you will live within these perimeters.  It won't be easy--but being debt free and more financially fit is oh-so-worth the efforts--which is what I tell myself all the time.  Who wants to keep up with the Joneses--who as Dave Ramsey says--are knee deep in debt?!

And if you want to REALLY attack your financial problems?  Look at these categories and determine which ones should be paid with cash.  Obviously, you pay things like mortgages and utilities from your checking account--and we pay our tithe from our checking, too.  We have also determined to pay for gas with our debit card because I am not running in to pay cash every time I fill up.  So, we allow for that set amount to stay in our checking account each pay check.  

Then, here's what happens. When pay day comes every other week, I go to online bill pay from our checking (where Chris' paycheck is direct deposited) and I pay tithe first.  Why?  I want to live within Biblical standards financially, so I pay our tithe FIRST every pay day. Then I pay all our bills and our mortgage is automatically deducted.  Next, I go to the bank and get the cash amount I need to cover all cash categories--food, clothes, personal, recreation, etc.  I slip the proper amount in a coupon accordian organizer for each category.  That, my friends, is what we have until the next pay day for each category.  That is how we stay within a budget.

Switching to using cash is not easy.  Trust me--it took us a while to adjust and to get the hang of it.  But, oh the sense of control we have now knowing that we WILL live within perimeters rather than wondering where our money went!   We are much more deliberate about how we spend our money--nothing like handing over the green to make you think twice.  Dave Ramsey says people spend less in their budgets when they pay with cash.  He did a study of this, and if I remember right, he says people will spend about 20-25% less total when they are paying with cash.  Well, I am a nerd when it comes to money--so about 6 months into our cash system, I decided to do my own calculations.  Guess what?!  We were spending 31% less total with cash!  And, honestly, I hardly felt deprived.  Quite the contrary--I felt so empowered that I was in control of my money instead of vice versa.  

INTENTIONAL challenge:  Listen, I know it's overwhelming.  It was for us when we started--and 5 years later, it is still hard.  Financial needs change constantly and we must continually tweak and work at it.  It can be hard to know where to start.  There is a wealth (pun intended) of information out there.  But, I hope that today I gave you some basic tips that you might try.  I hope they feel like practical applications.  I KNOW they will make a big difference if you'll give them a try.   So, do your math, set your budget, give it a try and tweak as needed--and I dare you to just TRY using cash.   I'll be the first one to cheer you on in the check-out line--even if you take a little longer to pay with your cash.  Cold hard cash, spent on set amounts in each category--financial fitness straight ahead!

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