Financial Peace: Budgeting
Let’s just be honest right out of the gate - I would rather sit in a tub full of scissors than work on a budget. Budgeting takes time, keeps me from buying things I want/when I want, and well, it just cramps my style. While all of this may be (but definitely is) true, I will never experience financial peace without one - and neither will you.
I knew that having a budget was something that needed to happen for us, but I honestly drug my feet during the first half of the process. I had been studying Financial Peace by Dave Ramsey, and in it, he listed four steps to establish a budget:
Write down your total income
List all your expenses
Subtract expenses from income to equal zero
Track your expenses throughout the month
The eye opener for us (and it may be for you as well) was when we started to look at hard numbers for our expenses. It was interesting to truly see where our hard-earned money was going. There are obviously some expenses that are fixed (mortgage, insurance, daycare, cable, phone, etc.) but there were others that are not (food, clothing, date nights, diapers, etc).
At this point in the budgeting process, this is where my hatred for budgets turned to frustration towards myself. When I finally put real numbers in front of me to see where our money was going, I realized that there could be margin between what we need to live on and money that we could have been using to pay off debt, save for retirement, give, and invest - disposable income - that we literally disposed of.
Step 3, for me, was maybe the most helpful. It was encouragement to find a home for every dollar that was coming in. So, once expenses, allowances, and other budget items were set, if there is margin (money left over), where was it going? For us, we decided that paying off school loans was something that we wanted to aim for. We did the math, and paying on the life of the 20 year loans would have cost us almost double what the original loan amount was. We decided that we were willing to pay the cost now, instead of paying the cost later. The cost now was not getting to buy that new truck I wanted, cutting back on clothes purchases, and going home or packing a lunch instead of eating out every day.
When we started, the cost seemed like it might not be worth it. But now looking back after having just paid off our student loans, there are no regrets.
I realized that I had been mastered by my money - not the other way around. Maybe you feel the same way today? Maybe for you, your #1 cause of stress in life is in regards to money. Now, I am not saying that a budget will solve all of life’s problems. Nothing in regards to money will. And please don’t be misled by the title “Financial Peace” as meaning that once your finances are in order you will find the peace you have been searching for in life. That peace can only come through a relationship with Jesus Christ. God’s desire for us is that we would serve Him, not our money.
“No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.”
Here are some practical Budgeting Benefits from Dave Ramsey’s website:
Added Control
Budgeting will show you how much you have to work with each month, and where to cut your spending back.
Better Focus
You tend to focus on your money goals and avoid spending on the unnecessary stuff when you know where your money is.
Clear Communication
For married couples, budgeting opens the door to talk about your money together. It promotes teamwork and cuts down on money fights.
Discipline
Showing discipline in the area of your finances will spill over into other areas of your life. It’s also an awesome example to your kids if you have them!
Enjoy Peace of Mind
Knowing where your money goes. Instead of wondering where it went, brings a powerful level of security.
Freedom in Spending
Knowing what you have to spend in a certain category frees you up to enjoy a date night. You won’t wonder in the back of your mind if it was a mistake.
Here are some tools that my family has used in the past and would highly recommend, especially if you are going to be pursuing budgeting for the first time.
EveryDollar
This is a free budgeting tool that Dave Ramsey’s group has created. It is easy to use and will be incredibly helpful to you starting out. Click here to get started!
There are also some very helpful resources on RightNow Media@Work that I would recommend:
Creating a Spending Plan (Crown Financial Ministries)
What you will learn:
Why a plan can be your best offensive strategy
The best way to get started
Practical tips and techniques for success
How to live and achieve your goals
The Great Recovery (Dave Ramsey)