TGIM – Why Should I Make a Budget?
As you may know, I recently bought a 2.5+ acre property in Brooksville, FL where Elizabeth, the girls and I plan on expanding our farm.
Working a reduced schedule from home, I was asked how I am able to “do so much with so little?” Consider the fact I no longer work 60 hour weeks, instead I limit my professional time investment to 30 hours a week and use that significantly truncated income wisely, humbly.
Trust me, an $85,000 pay cut is felt, but God willing, it’s eventually forgotten. The resulting day-to-day time investment, more in celestial life than terrestrial life is spawned by faith in Jesus, the risen Christ and and the fulfillment of my life’s mission.
My method is simple: I run my life the way I would a business, according to a tight budget. And I follow Dave Ramsey’s The Total Money Makeover: A Proven Plan for Financial Fitness
Of course you know where your money goes and you don’t need it all written down to keep up with it huh? I dare you to give it a shot. For starters, keep track of every penny you spend for one month. Yes, every penny!
You will be shocked at the amount the “little things” add up to. Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.
That is how much you could have saved AND drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.
If we can get control of the small pleasures that really don’t impact the overall scheme of our lives, we will enjoy a more fruitful financial harvest.
The little things really do add up. Cutting what you spend on lunch from five to ten dollars a day to three dollars a day on every work day in a five day work week saves as much as $35 a week… $150 a month… $1,800 a year… $9,000 in five years….plus interest!
See what I mean? It really IS the little things and guess what? You still ate lunch everyday and now you’re sitting on an extra $9,000.00. That’s only one place to save money in your daily life without significantly impacting the quality of lif.. There are a lot of areas to cut expenses if you look for them.
Ultimately my formula is biblical, simple and in tune with the teachings of my financial advisers. In order, each month pay the following items in the order they are listed:
- Housing
Pay the rent, mortgage or lease and ensure a roof over your head for 1 more month. - Transportation
Because you need to go from A to B, often B being work, unless you work from home transportation is a big deal. - Food
Because everyone’s gotta eat, so shall you. Groceries should not surpass $200.00/month per person. - Utilities
Because everyone’s gotta take a shower and sleep. Keep the lights and power on by paying these bills. - Debt
You’ll have transportation and food to eat, and the lights are on. It’s time to reduce debt. Pay back what you can, for God’s glory. - Personal Expenses
If you must indulge to remain sane throughout this process, knock yourself out! You made it this far down the list, congratulations! - Savings
If there’s anything left over at the end of the month, you’ve done well! You should now invest in your future and that of the people around you.
Set some specific long term and short term goals. There are no wrong answers here. If it’s important to you, than it’s important period.
If you want to be able to make a down payment on a house, start a college fund for your kids, go on a journey to the promise land… anything… then set this as your goal and your reason to get a handle on your financial situation sooner rather than later.
