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I’ve mentioned in several of my posts the importance of getting on a budget and making a plan. The budget is a very powerful tool and the KEY to winning financially and getting you and your family out of debt.
People often tell me that there is NO WAY they can get out of debt, because their current circumstances just don’t allow any extra money in their budgets to do it. I thought the same thing at one point. However, budgeting has helped us control our expenses and eliminate nearly $22,000 of debt in the first year of our debt-free journey.
Have you ever gotten to the end of the month and wondered what happened to all your money? Of course you have. We all have. If you are asking yourself this question at the end of each month then you are more than likely NOT budgeting.
A budget is people telling their money what to do instead of wondering where it went.
– John Maxwell
The budget is the foundation upon which debt freedom is built. It causes you to gain control of your finances and live on less than you make– eliminating the need for credit cards and borrowing money. Since you’re on a budget now, go ahead and cut up those cards!
The budget is a specific, written game plan in which you tell your money exactly how to behave. It’s very important that a new budget is created regularly (weekly, bi-weekly, or monthly). Every single dollar (your total monthly take-home pay) must be spent on paper before the month begins. In order for the budget to work, those who make the budget have to work— DO NOT deviate from your written game plan! It requires discipline and accountability. Be intentionally about your spending. You’ll be surprised by how much you will get out of your income.
If you are married, it is essential that your spouse and you sit down and work the budget together until you both agree on how the money will be spent. Everyone has a voice and an opinion. Dave Ramsey refers to this sit-down as the “Budget Committee Meeting.” If something comes up later in the month and requires a budget adjustment, sit down again and make the appropriate changes together. When both spouses are on the same page and understand the household finances equally, your ability to control spending and your get-out-of-debt power will be amplified.
The scriptures counsel us to care for our own households first (1 Tim 5:8), meaning the first things listed on your budget and the first bills paid should be food, shelter (rent, mortgage, utilities), transportation (car payment, gas), and necessary clothing. After the necessities are covered, use the remaining money to pay the rest of your bills (credit cards, medical bills, entertainment, etc). Getting out of debt requires sacrifice. You just might have to cut the cable TV and other non-essential expenses temporarily until you have the money in your budget to afford them. Dining out also causes major strain on the family budget. You’ll be amazed at the amount of extra money you can find in your budget by avoiding restaurants. Be creative in finding ways you can free up some room in your budget in order to gain control of your money and life.
Bring ye all the tithes into the storehouse, that there may be meat in mine house, and prove me now herewith, saith the Lord of hosts, if I will not open you the windows of heaven, and pour you out a blessing, that there shall not be room enough to receive it.
–Malachi 3:10 (Bible, King James Version)
Remember to pay an honest tithe (10% of your total take-home pay).
Successful family finances begin with the payment of an honest tithe and the giving of a generous fast offering.
See the recommended percentages and guidelines for a successful budget. These percentages will help you know where you are overspending and where cuts need to be made.
You don’t need fancy software or special forms to make a budget. It can be a made on a simple yellow pad or blank piece of print paper. The important thing is that it is put in writing. If goals aren’t written down, they are far less likely to be achieved. Put the amount of your monthly income (your take-home pay) at the top of the page and spend it accordingly line-upon-line until you reach $0.
For fixed-expenses utilize automatic checking account withdrawal programs or an envelope system. This will help you manage and keep to your written budget.
Mastering the budget takes time and practice. Be patient and keep with it. Be willing to make adjustments as your financial situation continues to change. The more you do it the better at it you will become.