Common Cents Part Three: Managing Dollars with Sense
Rob and Cora: A couple whose debt nearly caused the demise of their marriage before discovering Dave Ramsey’s program. They’ve dedicated themselves as teachers of Ramsey’s Financial Peace University (FPU) and head up this ministry at LifePoint.
Dave and Shelba: Completed FPU after raising their three grown daughters and wish they had done it sooner. Their current future finance goals include preparing for retirement and visits to North Carolina to watch their grandchildren grow. Shelba is the Outreach Coordinator here at LifePoint.
Scott and Casey: Casey is the middle of Dave and Shelba’s grown daughters, and currently resides in North Carolina with her husband Scott and their seven-month-old son. They completed FPU as newlyweds in preparation for growing their family and have seen the budgeting process in action through the merging of accounts and the addition of children.
Mike and Andrea: Members of LifePoint with three young children, two mortgages, and only one full-time working spouse, they are no strangers to stretching a dollar in order to meet the needs and wants of a bigger family
Welcome to Common Cents: Money Questions & Answers! These articles are companion pieces to our sermon series, Financial Peace, and will offer a unique, practical perspective on the spiritual truths unpacked by our teaching team.
This week, the focus is on budgeting and better money management.
Part Three: Managing Dollars with Sense
Money is an active medium. It’s constantly moving, coming in, going out, changing hands. It’s hard earned and quickly spent. It can be challenging to keep track of, hence the common expression “I have no idea where all of my money goes.”
A budget functions as a way of always knowing the answer to that question. When every dollar has a place to be, it puts you in charge and in control of where every cent ends up.
What are important things to consider when setting up a household budget?
Rob and Cora: Your household budget must be a team effort. While one person may be responsible for setting up the budget, it must be agreed on by all parties. In our house, Rob sets up the monthly budget before reviewing it with Cora for her input. You can’t expect people to stick to your budget just because it’s there – it should be treated as a contractual agreement between all involved parties. Not sticking to the budget is breaking the contract.
Dave and Shelba: Expect it to take a minimum of three months to have a budget that is fully inclusive. It’s common to forget or overlook things in the first few months of keeping a budget. Most people have no issue thinking of monthly or even annual expenses like Christmas or income tax, but the bi-weekly or irregularly scheduled payments aren’t as easily recalled. Things like 90 day supplies of daily medications, oil changes, adding to your children’s school credit accounts, and trash removal are intermittent expenses that are often overlooked at first.
Scott and Casey: Be prepared to revisit your budget at least monthly. We personally sit down with ours about every two weeks to make adjustments in areas like groceries. With an infant in the first year, needs are always changing and while it’s okay to be flexible within your budget, every dollar must have an assignment, even if it’s a “Miscellaneous” category.
What are some of the ways you stretch your dollars?
Rob and Cora: We meal plan using an e-meal service and use Instacart for grocery shopping. Both of these things have small membership fees, but it still saves us money in the long run. E-meals streamlines our grocery lists and provides daily recipes and Instacart keeps us from making impulse purchases. We are less tempted to eat out if we have a plan in place for dinner each day.
Dave and Shelba: Prepare ahead what you need to spend. Just as I try not to enter a grocery store without a firm list of what we need to stay on track, it’s wise to do this with any shopping experience. Before going clothes shopping, take an inventory of what currently still works and what doesn’t from your existing wardrobe. And stay on top of minor expenses that can cost more in the long run. For example, regular car maintenance will keep you from needing more costly repairs down the line.
Additionally, the squeaky wheel gets the grease. If you aren’t ready to get rid of cable completely, call the company and see if there are any current deals running or if they are willing to lower your bill to keep you as a customer. We recently saved $5 per line on our family’s cell phone bill just for setting up automatic bill pay with the company.
Scott and Casey: Look at where most of your nonessential spending is going and make a plan to reduce it. We spent a lot of money on lunches out (more Scott’s habit than Casey’s) and so meal prep was critical in cutting this area back. Getting into the habit of packing lunches the night before gave us no reason to eat out during the day, however tempting, and it encouraged us to cook more since leftovers made for easy lunches.
Mike and Andrea: Our biggest “extra” expense is definitely our children. There is nothing we enjoy more than giving them experiences. We do our research before visiting kid-friendly places – they often offer a discount for entry after a certain time of day or lowered prices on apps like Groupon. Because the Baltimore Zoo offers a teacher discount for memberships but not regular entry, it was actually less expensive for us to get a year-long family membership for five instead of simply paying for five one day passes. The membership also gave us discounted entry to other zoos and aquariums across the country.
We ask relatives for Visa gift cards for our children’s birthdays and Christmas. The last thing they need are more toys, but a few hundred dollars to spend each year on extras and experiences that don’t come out of our budget is a great gift for the entire family.
What are some ways to resist temptation and stay on track when sticking to your budget?
Dave and Shelba: We call this being aware of your WHY – why are you budgeting? What will being debt free allow you? We find it helpful to have a visual reminder of our progress. I know couples that use a white board to track progress, coloring in areas as they get closer to their debt free goals. We have play money ($100 bills) hanging from a ring in our kitchen. Each time another debt is paid off, we celebrate by taking a play money bill off the ring while enjoying a cup of M&Ms. It’s a small inexpensive ritual that we’ve come to truly look forward to.
Scott and Casey: We have a $30 weekly allotment of “fun money” in our budget so that we don’t have to deny ourselves completely. If Scott wants to skip packing his lunch one evening, he can still choose to eat out, but the limit for that expense is set and once the monthly fun money is gone, it’s gone.
Mike and Andrea: We have deleted apps like Amazon and Door Dash from our devices so the ease to make unnecessary purchases isn’t as available. We also decline giving our email address when making purchases in person and unsubscribe from mass retail emails advertising deals and specials – out of sight, out of mind.
As much as I (Andrea) love Target, I found I never left Target with only the item I had gone there for. The store is designed to catch your eye and encourage impulse purchasing. Going to Walmart, while certainly not my favorite place to shop, for the same item rarely results in additional purchases. If the item I need is only available at Target, I tend to use curbside pick up rather than go into the store.
What are the best ways to handle an irregular income or unexpected expense when budgeting?
Rob and Cora: We use Dave Ramsey’s EveryDollar budgeting app that ties directly to our bank accounts and this is only one of the many tools offered by Ramsey+ to help with your budget*.
On the Ramsey website, under ‘Tools and Resources’, and ‘Budgeting’, you’ll find a collection of forms designed to help you create a budget that works best with your unique income. The Lump Sum Payment Form can be used to help calculate and save for expenses that happen on a non-monthly basis. The Irregular Income Planning form is great for those who are self-employed or work on commission. There are also forms to help with college and retirement planning as well as insurance coverage and equity amounts, just to name a few.
* Editor’s note: Ramsey+ is FREE for our LifePoint family! Follow the links at the bottom of this article.
What is a piece of advice or encouragement you would offer to those looking to properly manage their finances?
Rob and Cora: Having an assignment for every dollar is critical as it’s the only way to make sure your money ends up where it needs to be. Early on in our budgeting journey, we actually had a line item titled “Trash Can” – our current trash can had a crack and knowing it wouldn’t last much longer, or how much we would need to replace it, we started planning ahead to have a trash can fund for when the time came. That’s how committed we were to tracking and planning for every possible expense.
Scott and Casey: Where there is a will to earn, there is a way to earn. When I was little, my mom used to take the three of us girls along with her to clean homes for extra income – my parents called this ‘pizza money.’ As a mother now myself, I can’t imagine that was easy or fun for her to do that kind of work with us underfoot, but she did it without complaint so that we never had to go without even simple pleasures. It showed us that working to provide for your family is possible in many forms.
Mike and Andrea: Shortly after we married, a friend gave us the advice that it’s not what you can afford, it’s what you are willing to sacrifice. His wife woke up extra early every morning so that she could drive him to work and have the family’s lone car for the day. Only having one car was part of the way they realized her dream of being a stay home mom. We remember this when we feel discouraged by unexpected expenses or a need to cut back. There’s always something that can be sacrificed to make something else more affordable.
Did you find this information useful? Please check back for next week’s article on Giving It All To God.
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