Today is bank day for new monthly budget for July. Since taking Financial Peace University over a year ago we have stuck with the monthly budgeting system Dave Ramsey teaches in the class. It was a little odd to get used to at first, because we never (ever) used cash.
Sixteen months after finishing the class I just returned from the bank after our budget meeting this morning. Call me crazy, but I love bank day. I also like to pay bills. Not that we like to receive bills, no one likes that, but since they are a fact of existence I do enjoy the physical task of paying them.
Our budget method
One thing that became apparent quickly during the FPU class was that a budget is a wealth building tool. It is not a bad thing. A budget can be designed around your individual household, your pay schedule and your bill due dates.
Around the end of each month we fill out our monthly budget spreadsheet for the coming month. We took the suggestions from Dave Ramsey’s budget and tweaked them into our own spreadsheet that covers everything from saving, housing expenses, fun money, retirement savings and food. Every single expense we anticipate is on the budget and usually the amounts for each category stay pretty much the same month to month. Expenses like auto and house insurance (read how we saved a ton of money on our house insurance here), utilities, mortgage etc are a set amount that usually does not change. For other expenses like groceries, we have played around with amounts until we found what monthly amount works for our family. Keep in mind that a budget can be a constantly evolving tool to your financial freedom.
Once we have the budget filled out for the coming month, including specific expenses for that month like birthdays or trips, we figure out how much cash we need and how much money needs to be in the checking account for the bills we pay online.
Bank day involves a trip to the bank to withdraw the specified amount of cash for our envelopes (read more about the envelope system here), and a deposit into the checking account. The cash comes home and I fill the various envelopes with the budgeted amount. For instance, we pay our property taxes twice a year so each month a set amount of cash goes into an envelope to remain there until the tax bill comes. When the bill arrives we go to our “property tax” envelope and take out the cash to pay that bill. We do the same for house insurance, car insurance, auto license tabs, etc. (To determine the amount to put away each month for the property taxes we took the total of the two bills and divided by 12. That gave us the monthly amount we needed to set aside.)
This budgeting system has been a true life changer for us. We are in control of our money and we are so happy about that. The budget allows us to spend freely without guilt, because we intentionally have set aside money for different things including entertainment, vacation, charity giving, etc. We would strongly recommend Financial Peace University to anyone. You can read our one year update here to find out the success steps we have been able to achieve using the tools we learned in FPU.
Do you use a budget? What are your tips or suggestions?
