Are you currently in debt? A recent study shows that 80% of Americans are in debt. Whether it’s credit card debt, student or car loans, debt can suffocate us and keep us from living the life we want.
For years, my Husband & I were just like so many Americans and in a mountain of debt. We’d do the “normal” things, like put purchases on a credit card in between paychecks or swipe that credit card to “earn” airline miles. We thought we had everything under control, but it became clear we didn’t. We had no idea how much we were spending each month or what we were even spending it on. That’s when we discovered Dave Ramsey. His approach on budgeting and money will change your mindset and your life.
The first step towards financial freedom is creating a budget. First, let’s talk about what a budget really is. A budget is permission to spend. I’d like you to read that again. A budget is permission to spend. We’ve been conditioned to think that budgeting means we have to cut back and restrict our lifestyles. That is simply not true. The truth is, budgeting brings freedom by giving you your financial power back.
In my opinion the best day-to-day budgeting app is The EveryDollar App. It’s FREE and easy to use. This app allows you to create a monthly budget where literally every single dollar has a purpose. It’s super simple to set up and use. The best part is once you have your budget outlined, the app will copy over month over month, allowing you to modify buckets as you go. The app will also show you in real time how much you have left to budget and when you are at risk of going over your budget. Once you download the app, there are just a few steps to get you going. Yes, it requires data entry on your part, but once you get going, you will wonder how you ever lived without this app and more importantly, without a budget. So let’s get started!
First Step: Download the Free EveryDollar App
Second Step: Add your Income
A budget starts with what you make each month (after taxes). That means your take home pay PLUS any additional income you make. That can be in the form of a side hustle, income property or simply selling things you no longer need or use.
Third Step: List your Expenses
Next, you will add in all of your monthly expenses. You will start with what Dave Ramsey calls, “The Four Walls.” These are life’s essentials: food, utilities, shelter and transportation. Then, you will add in all the non-essential items. These are the “extras.” Things like cable, going out to eat, personal spending and vacations.
Fourth Step: Budget to Zero
Budgeting to zero does not mean you drain your bank account down to its last dollar each month, but it does mean you give all of your money a JOB! It means there is a spot in the budget for every single dollar you make and how you spend it or save it. It also means you will start your budget from scratch each month. Don’t worry, you can budget for fun things like Christmas, going on vacation or buying clothes. You just need to plan for those things in your budget.
Fifth Step: Track Every Single Dollar
This last step is the most important. You must track every single dollar you spend. I promise, once you go all in with your budget, this becomes fun! When you spend money, you will log that purchase into the correct budget category.
Moral of the Budgeting Story!
Setting a budget is the first step in opening your eyes and gaining control over YOUR money. A budget works for you, not against you and is a way of being intentional about the way you spend and save your money. When you have a budget, you are in charge of your money and that means you can even budget in fun! How cool is that? Budgeting is the first step on your journey towards financial freedom. What are you waiting for? You got this!