The four-category budget that changed everything:
I love my budget.
I love budgeting. Not the “don’t spend money on frivolous junk” part, but the part where I work on my budget spreadsheet and make all the numbers balance. I’ve had my budget in an excel document with formulas for years and it’s worked out beautifully! I can’t say that we are able to stick to our budget each month, but in reality, who does?! Life happens and there are unplanned expenses. That’s where our emergency fund comes in handy!
I budgeted the Dave Ramsey way for many years and while it worked, to a point, but I felt like I was constantly fighting between what I felt was right for my family and what Dave Ramsey was saying in the back of my mind. As awesome is Dave Ramsey is, and he is just that, you have to ultimately do what’s best for your family! We wanted to run with “gazelle-like intensity”, but in reality, we preferred a nice jog. Our family preferred a nice jog. We were able to breathe a little more and have fun as a family without worrying if we were paying off our debt fast enough.
I recently watched a financial planning seminar on RightNowMedia. If you’re not familiar with that app I strongly suggest that you look into it! Now, I’m one of those odd people that love watching/listening to financial planning and biblical self-help seminars. I strive to always be bettering myself. You can find this seminar on youtube also.
Anyway! The seminar that really changed how I viewed my budget was called Rock Solid Finances. It was created by a gentleman at Christ’s Church of the Valley. Although this is a mega church, they have some interesting ways to setting up their budget!
Basically, they simplified the budgeting process to four main categories! Yes, I know, they only had four categories! Let’s take a look at the four categories:
- This is tithing, charitable contributions, donations etc. Being a believer this aspect is important! The Bible is pretty clear about giving 10% of our income BEFORE taxes are taken out. This is the first check that I write every month.
- This is a very “Dave Ramsey” thing is to pay God, then pay yourself. We put money in savings with a purpose each month. By purpose, I mean that we have set amounts that we want to have in our Emergency Fund. We also have an amount that we are working towards with our Long-Term Savings Account. This is an account that we want to have 6 months’ worth of expenses should our source of income ever be jeopardized.
3: Non-Changing Bills:
- This section is for our bills that don’t change each month. For example, the mortgage, the car insurance, the cell phone bill etc. If you don’t have your utilities on a budget pay, I strongly recommend that you do that! It’s helped our budgeting on a month-to-month basis.
4: Discretionary Bills:
- This section is for the changing amounts each month. For example, fuel, groceries, prepping, my husband’s blow money and my blow money.
Now, this seminar talks about is giving to God first. Next is says to put money aside into savings. I strongly recommend that you have a plan or goal for your savings so you can measure your progress and see where your money is going. Next, the gentleman suggests that you put the money that you need for your non-changing bills and get each of these bills on auto pay. The principle behind this is to transfer the needed amount to this account and forget it. The bills always get paid and there’s always just enough money. Lastly, the account that your paycheck goes into is your discretionary account. This is where the “leftover” money goes. The principle behind this account is that you only have what’s left after your non-changing bills are paid and you have to make that last until next month. So, if I overspend on my blow money (probably at Target right?!) then my husband might not have enough money to put gas in his truck to get to work! It’s all about balance here and when the money is gone, it’s gone!
I like the principle behind this concept, but we all know that we’re not going to let our vehicles run out of fuel. That’s what the emergency fund is for. However, over time I think we should be leaning on our emergency fund less and less and work on staying without the left and right lateral limits of our budget! This new way of setting up our budget has helped us see our money in a different way and work on prioritizing things together. Instead of saying “why don’t I ever have money for fun things?” I can take an honest look at my account and see exactly where that money went. It’s also helped us realize that as long as the bills are paid and there is food on the table, nothing else is really earth-shatteringly important. It’s all about priorities!
I hope you’ve found this helpful! If you need a visual check out this Mil-Spec Mom Budget Template that I use for my finances each month!