We're continuing in our Money Management Series. If you missed the previous entry, then you can find it here:Money Management: Part 1. Reminder: at the end of the month, The Lampo Group, inc. (Dave Ramey’s company) has kindly offered the book The Total Money Makeover and Deluxe Envelope System to be shared through a giveaway* here at Reviving Homemaking!
The Budget
“Budget.” It’s a nasty little word that
likely causes a feeling of suffocation. I’ve seen the budget-less philosophy on
money time and time again. It’s called- “broke.” It’s the system that permits a
person to pay what needs to be paid and then just not worry about spending.
Before the next paycheck comes in, their activities come to a full halt as
their bank account has dwindled too low to continue. These are also the
individuals who in times of unexpected events or emergencies must panic because
their accounts are too low and days to payday too high. This, my friends, is
not just a very insecure way to live your life but also to orchestrate the life
of your family. The wise counsel available (my favorites are Crown Financial
and Dave Ramsey) all advise preparation as means of money management. In other
words, be prepared for all life’s expenses by setting money aside. Furthermore,
save!
Tracking
You can’t do either of these, however, if
you don’t know where you’re money is going. You will likely be surprise by the
“extra” income you’ll find by simply tracking your spending down to the dollar.
This is precisely where I recommend starting. If you’re coming up low or short
before the next paycheck then you’re in need of finding where you’re money is
going. Don’t be surprised in a little spend here and a little spent there adds
up to a larger than expected amount. Initially, it’s sufficient to simply track
the location and amounts of spending. Later, you can begin tracking item by
item which will not only give you an idea as to how often you purchase an item
(reveal bulk purchase opportunities) but also where the best value can be
found. For more
itemized tracking I recommend printing a price book sheet for each category and
recording there. (For example, I have one price book sheet for household, one
for personal, one for groceries etc). Below are several forms that are helpful in tracking and then will be helpful in creating your spending plan.
1) Spending Record - This is a good starting place. Simply record every transaction like you would in a checkbook register. If you'd like, you can categorize the entries on the right of the chart.
2) Price Tracking Sheet - Record location of purchase, price and item size on this sheet to determine if you're getting the best value (ie unit price). In addition, having this information recorded allows you to better estimate the required costs for the time period. In other words, no more total shock when a cashier give you your total.
*Note: I’m not an affiliate of any kind with The Lampo Group, Inc. or Thomas Nelson publishing. These materials were given to me by The Lampo Group,Inc. and it was agreed upon that they may be offered as a giveaway.
Up next we'll discuss Allocating Income and Scheduling Bills (with even more handy forms)
Please feel free to leave any tips you may have in the comment section below. This is simply how I've come to work with finances, but I'd be interested to know of other ways as well. :)
Linked up at: Growing Home, Thankful Homemaker, Time Warp Wife, Lessons from Ivy, Far Above Rubies, Women Living Well, Raising Homemakers, Raising Mighty Arrows, Raising Arrows, Our Simple Country Life, A Wise Woman Builds Her Home, Deep Roots at Home, Homemaker By Choice, Passionate and Creative Homemaking
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Love this! I always love reading about how other families do budgeting :) Can't wait to read more!! :D
ReplyDelete@Jami Leight: I am an avid consumer of wise financial advice. It's such a sensitive subject, but one that we need to be discussing to educate ourselves into better practices. Glad to have you following along with the series! :)
DeleteMoney management is so important. My husband and I within the past month have had a major car repair, frig repair, and furnace repair. Praise God for our emergency fund! I love reading posts like this they encourage me to behave :)
ReplyDeleteI'd love for you to link up with my blog, http://www.lessonsfromivy.com/2012/04/being-content-in-mothering.html
@KM Logan: That's so encouraging! Thank you for sharing about how an emergency fund can help when major expenses hit. Thanks for sharing the link up as well! :)
DeleteLove your post! This is something that is not being taught to us younger generations. I, for one, was not taught to budget and balance my money. So what I have learned has been self-taught. A lot of it through trial and error. Dave Ramsey is a great source. It's been a life saver and literally money saver for my husband and I. Thanks for sharing this information! Have a blessed day!
ReplyDelete