I just made my first “Big Girl” purchase: a couch! I have received all my other furniture for free (thanks Mom + Anna), so I’ve been spared 27.5 years from buying my own furniture (excluding my $40 mat in Africa). Since I made my first major purchase today, I wanted to blog about what has helped me financially!
It’s been about two years since I was peer pressured (by my Aunt, Uncle and Cousin mind you) to take Dave Ramsey’s Financial Peace class. I couldn’t really say no because, well… My Aunt, Uncle and Cousin led the class. I’d be shamed at our weekly family dinners if I didn’t say yes, so I just agreed to go. I don’t like shame.
Growing up, I experienced two extremes financially. I was raised in a single-parent home in Memphis, and we hit some hard times along the way. When my mom moved us to Chicago and got remarried, we settled into more financial security. From living at both extremes, lack and surplus, I grew up having a dysfunctional relationship with money. I was horribly fearful of it, honestly. [Ironic that God called me into missions where I have to depend on Him to provide for my daily bread… It’s been quite hilarious actually.] Especially with all my “baggage” in regards to money, Dave Ramsey’s course was SO helpful for me.
Little did I know, it would be THE BEST class I’ve ever taken. I’m not quite sure why I ever learned about Media Law and Ethics (come on, the US media is not ethical.) when I could have been learning about THIS in college. Being support-based, financial responsibility is high on the list of priorities for me. People give to my ministry, and not only do I want to be responsible with those resources, but I want to be responsibly for my personal finances as well. Those two are related. Fortunately, or unfortunately.
STARTING POINT: The most important thing I learned in the class was how to create a Zero-Based Budget and how to stick to it. The Zero-Based Budget’s core rule is to take every cent and find it a home in your budget. You take your paychecks and divide them up into your tithes, savings, debts, and then expenses. You don’t leave one cent unassigned. (IE: If I get a $500 a paycheck… $50 goes to tithes, $50 goes to savings, $200 goes to rent, $100 food, $30 to this, and $70 to that.) (all these numbers are theoretical).
I don’t know if you’re like me, but if I’m like, “Oh, I have like $35 bucks leftover from X.” I forget that I don’t have $35 leftover because I spent $6 here and $9 there. I end up overspending. A zero dollar budget helps prevent that, if you stick to it.
STEP TWO: I was using the Zero Dollar Budget sheet for about a year and a half and then finally committed to the Cash Budget life about 8 months ago. A Cash Budget is where you use only cash for your expenses.
Once I’ve figured out my budget and have seen what I want to use cash for, I begin to organize my “envelope system.” I use a coupon organizer and divide up my sections into the different categories of my budget. This does require a little bit of planning ahead and a trip into the bank (for example: my Summer Mission budget on the 10th is $35. ATMs don’t give 10s or 5s, so I have to calculate how many 20s, 10s and 5s I need for all categories to sort it correctly). Once I’ve figured the denominations for for the 10th and the 25th, I write it on a post it and stick it in the front pocket of my new wallet. That way I don’t have to remember, “How much do I take out on the 25th and the 10th? That goes where? And how much?”
My notecard/post it looks like this (obviously not real numbers…)
Food: $130 (need 6- 20s, 1- 10)
Fun: $20 (need 1- 20)
Clothes: $30 (need 1-20 and 1- 10)
At the end of my notecard, I calculate how many of what I’ll need. So with the examples Ive listed, I’d need 8 twenties and 2 ten’s. I do this for the withdraws on the 10th and the 25th.This saves time, frustration and your teller won’t totally hate you.
Here’s what I DON’T use cash for:
- Rent (check)
- Savings (EFT)
- Household Utility Bills (Check)
- Car Insurance
- Car Gas (Credit Card*)
- Giving to Missionaries + Charities (Credit Card*)
Here’s what I do use the cash budget for:
- Food (grocery and eating out budget)
- Entertainment (movies, girls outings, etc)
- Beauty (toiletries, makeup, etc)
- Gifts (wedding presents, birthday gifts, etc)
- Church Tithes
- Money for students to go on Summer Mission/other conferences (HINT: students, send me a support letter!!!)
This method has helped me save for life’s necessary expenses, and it helped me to not overspend with that pesky easy-to-forget-swipe. It’s easy to remember you spent money when you’re looking into your envelope system and you see that there is no money in there! 🙂
The Financial Peace class is something I will encourage most of my graduating students to attend. It’s so incredibly helpful. I really feel like I am experiencing financial freedom and a greater joy and capacity to give. I can see sacrificial giving when I’ve “maxxed out” my giving budget and take it from another budget. And that’s super cool. I love that.
Here’s some great resources I would HIGHLY recommend.