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Debt & Money Smarts
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Dave Ramsey: Don’t Be Afraid of Budgeting!
Even if you’ve never written a money plan, you should. We show you how
Dave Ramsey
See More: money, budget, finances, dave ramsey
Sometimes I hear, “Well, I kinda sorta know where my money is, ya know. I know where it’s going, ya know. I do my planning in my mind, ya know.” Having a written plan is absolutely necessary. Kinda sorta knowing what’s going on with your money isn’t going to get you to your goals. Everyone needs a written budget. When we fail to plan, we plan to fail, and then there is always too much month left at the end of the money.
Developing a written plan will help you gather, organize, categorize and analyze information about your money. As you create your written plan, you will be amazed to find that answers to financial problems appear much more easily.
Set up a new written budget every month. At first it may take a while, but the process will get faster. My wife, Sharon, and I used to spend hours on our budget each month; now we spend only a few minutes. Don’t wait for the perfect month to start budgeting, because you’ll never have it.
Spend every dollar on paper before the beginning of the month. Give every dollar of your income a name before the month starts — rent, food, car payments. Look at this month’s income and this month’s bills, savings and debts, and match them up until you have given every income dollar an outgo name.
There are forms on my Web site, DaveRamsey.com, and in my books to help you create a cash-flow plan, otherwise known as a budget. The forms list categories, and every dollar of your money should fit into one of the categories, even if you need to make up new ones. The basic categories include saving, housing, utilities, food, transportation, medical, personal, recreation and debt. And don’t forget to include categories for saving for things that aren’t monthly, such as Christmas, birthdays, taxes and insurance premiums.
If you have an irregular income due to commissions, self-employment or bonuses, you still must do a written budget before each month begins. In your case, adding up what your outgo is each month is a form of goal-setting. It tells you how much money you have to earn in order to cover all the outgo you will have. Prioritize your bills, savings and debts in order of urgency. Ask yourself, “If I only had enough money to pay one thing I owe this month, what would that be?” Move this way through the entire list. Stick to it! As the income comes in, work your way down the list.
It may take two to three months before your budget is correct, but keep trying. Getting your budget right is key to your financial success.
__________________
Dave Ramsey’s financial advice appears every week in Quick & Simple. He is the host of the nationally syndicated radio program The Dave Ramsey Show and best-selling author of The Total Money Makeover and Financial Peace Revisited.
Developing a written plan will help you gather, organize, categorize and analyze information about your money. As you create your written plan, you will be amazed to find that answers to financial problems appear much more easily.
Set up a new written budget every month. At first it may take a while, but the process will get faster. My wife, Sharon, and I used to spend hours on our budget each month; now we spend only a few minutes. Don’t wait for the perfect month to start budgeting, because you’ll never have it.
Spend every dollar on paper before the beginning of the month. Give every dollar of your income a name before the month starts — rent, food, car payments. Look at this month’s income and this month’s bills, savings and debts, and match them up until you have given every income dollar an outgo name.
There are forms on my Web site, DaveRamsey.com, and in my books to help you create a cash-flow plan, otherwise known as a budget. The forms list categories, and every dollar of your money should fit into one of the categories, even if you need to make up new ones. The basic categories include saving, housing, utilities, food, transportation, medical, personal, recreation and debt. And don’t forget to include categories for saving for things that aren’t monthly, such as Christmas, birthdays, taxes and insurance premiums.
If you have an irregular income due to commissions, self-employment or bonuses, you still must do a written budget before each month begins. In your case, adding up what your outgo is each month is a form of goal-setting. It tells you how much money you have to earn in order to cover all the outgo you will have. Prioritize your bills, savings and debts in order of urgency. Ask yourself, “If I only had enough money to pay one thing I owe this month, what would that be?” Move this way through the entire list. Stick to it! As the income comes in, work your way down the list.
It may take two to three months before your budget is correct, but keep trying. Getting your budget right is key to your financial success.
__________________
Dave Ramsey’s financial advice appears every week in Quick & Simple. He is the host of the nationally syndicated radio program The Dave Ramsey Show and best-selling author of The Total Money Makeover and Financial Peace Revisited.
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