If you’re anything like me, keeping a monthly budget can be really difficult. I start off the month well-intentioned but end up completely off-track once expenses and social events start rolling in. Plus, If I’m honest, I like to spend money far more than I enjoy saving it. Both of these tendencies combine to create a sizable and intimidating issue for me when it comes to covering my monthly expenses and meeting my financial goals.
Over the years my income has steadily increased but my debt and savings either stay the same or go in the wrong direction. And that’s not entirely due to my emotional habits around spending. It also has a lot to do with being confused about how EXACTLY do I tackle this monster of a problem and it what order? How do I get out of debt? Do I save my nine month emergency fund before I start paying it off? Or should I put 10% of my income toward both at the same time? And if so, how do I live without 20% of my income when I’m having a hard time meeting my expenses with 100%? Plus, what EXACTLY constitutes an “emergency” and should I continue to save and pay off my debt when I’m in an “emergency” scenario?
To help navigate through all of the advice scattered out there in books and personal finance websites, I have compiled some quick and really simple budgeting tips from Dave Ramsey’s Guide to Budgeting. These are all low-tech and low-fluff to help focus on the KEY strategies to get in better control of personal finances without getting overwhelmed or confused.
Quick Tip #1: Follow DAVE Ramsey’s 7 Baby Steps
Instead of making a crazy, technical budget and thinking off all the financial decisions that need to be handled, Dave suggests starting with these 7 Baby Steps. Start at 1 and then work your way down the list:
Quick Tip #2: Start Early
Dave recommends making your budget a few days BEFORE the month starts, even if you haven’t been paid yet or aren’t sure what your income will be. Need a place to create a FREE online budget? Click here.
Quick Tip #3: Write it Down
Whenever you make any purchases make sure you write it down and add it to your budget that day. Don’t rely on memory, account balances, or weekly receipt round-ups.
Quick Tip #4: Cash Flow Emergencies
If an emergency comes up try to cash flow it before tapping into your emergency fund. Ramsey says:
“If you can cut up to 10% off items in your budget to pay for something that comes up, then cash flow it. Otherwise, go for the savings.”
For example: If you need $200 for an emergency dentist appointment, go line-by-line through your budget [groceries, entertainment, gas, clothing, etc.] to see where and if you can take 10% of what you have already budgeted to cover the expense. If you can’t cover it all without using 10% or less, cover what you can from the cash flow and then use your emergency fund to cover the rest.