One of the main questions that we get all the time is, "how do I budget." Budgeting is simply a blueprint for your financial life. If you want your financial house to look anything like you dreamed, you need a blueprint.
And honestly, people intrinsically know that they should budget, but usually they just don't know where to get started or are terrified of what might happen if they actually do write out where their money should go.
We actually like to call our budget a "Cash Flow Plan." The word "budget" makes me feel like a failure automatically, so we call it a Cash Flow Plan, or a CFP for short. Your cash is constantly flowing, like an assembly line, so we need a plan for it.
5 Simple Rules To Budgeting:
1. Keep it Simple!
o For your first go around, try and stay away from the excel spreadsheets and 6-month pie charts
2. Do One Every Month
o You only really start feeling the momentum pick-up after three months of doing a cash flow plan
3. Be Realistic
o $10 probably won't cut it on groceries
4. There is no "Lone Ranger" when it come to budgeting
o In order to save your marriage, you need your spouses input into the planning... even if they aren't good with money.
5. Actually Follow What You Write Out!
o It doesn't usually help to just write it out and put it in the top drawer of your desk. You actually have to stick to it!
And now for the real fun...
10 Steps to Making a Budget:
1. Cash Flow Meeting #1
a. If Married, meet with your spouse to discuss cash flow plan & pray together
b. If single, meet with accountability partner
2. Rear View Mirror
a. Look back to your past 3 months worth of expenses
3. List all of your current expenses:
a. Bills, Debts, Necessities - gas, groceries, etc.
4. List all of your future expenses:
a. Christmas, birthdays, car registrations,
5. Fill out 1st Cash Flow Plan
a. Put Total Income at the top and then all of your expenses below
b. It won't be perfect this time around, but at least you have everything on paper
6. Cash Flow Meeting #2
a. Discuss with your spouse or accountability partner what needs to be cut or what you want to do with any extra money
7. Zero Cash Flow Plan Out
a. You always want to end with zero at the bottom.
b. It doesn't mean your'e broke, it means that your money actually has a purpose.
8. Live it Out!
a. One great tool to help you actually stick to what you wrote down is the envelope system.
b. If you have $100 for groceries, put $100 cash in an envelope and that's all you have to spend.
9. Cash Flow Meeting #3
a. This might be scary for some of you, but you need to meet back-up with your spouse and ask how the past month went and what all needs to change
10.Repeat as Needed
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