May was our first month of Dave Ramsey-style budgeting. We did a rough budget in April, but it wasn’t as accurate as it could have been, not to mention the trip to Ireland throwing some things off–no grocery expenses, but more spending money.
I receive my paycheck on the 15th and the 30th. Prior to participating in FPU, I had a spreadsheet of known expenses– things like rent, bills, cable, etc. Whatever was left after those deductions was for spending, groceries, eating out, entertainment…you get the idea.
Well, one of the things that Dave Ramsey really advocates is a “Zero Balance Budget.” In his worksheets, you take the exact amount of your paycheck and allocate EVERY SINGLE dollar. He argues that any money that isn’t allocated–like my “leftover” money after my bills– will spend itself. You won’t know where it goes until it’s gone. When you budget each and very dollar, you’re changing the narrative; you’re telling your money where to go.
Now that we’re wrapping up May, how did I do? All in all, not too shabby. There were a few expenses I didn’t quite account for, and I ended up using some of my spending money on groceries
My tips for the first month of budgeting:
1. Budget for more “Spending Money” than you normally would. While the goal is to eventually have all your expenses mapped out, chances are you will forget something and that money will have to come from somewhere.
Case in point, I take a daily medication. In the beginning of 2018, I changed my primary insurance. I used to spend about $25 every 3 months for my medication and get a 90 day supply. My new insurance only allows monthly refills. Now, I’m spending about $35 each month (*insert subtle commentary on the sad American insurance system here*). But that $35 is now something I budget for each and every month.
2. Be honest with yourself. Like, brutally honest. I’d love to say I only spend $100 per month eating out, but that’s just patently false. That’s $25 per week. There’s just no way.
3. Actually work with cash. So much of finance is emotional and, let me tell you, it is a HELL of a lot harder to break a $50 bill than to swipe a debit card. Using cash forces you to think before you spend. It forces you to look in your wallet, see what you have to spend, and make a very deliberate decision to fork over the cash.
4. Decide what you’re going to do with any cash left. If you allocate $200 for spending money and only spend $175, where is that $25 going to go? For now, any excess in my bank account is going toward credit cards. Any excess cash is being saved for car expenses (that inspection is coming up in August)!