Quote of the day :

A budget is telling your money where to go instead of wondering where it went ~ Dave Ramsey

Schedule a call to create your own budgeting strategy with a Ramsey certified PFC: https://calendly.com/kennetheash/personal-finance-discovery-call

If you are interested in joining the mastermind, send an email to coach@kennetheash.com or text me at 270-681-8536 and I will send you the details.

Today we’re talking the “B” word. The big bad BUDGET!! How to win with money even in hard times.

There are many different routes to go with managing your money, and sometimes you just have to experiment to see what works for you.

Start with taking an assessment of where you are financially. Are you scraping the bottom of the barrel just to get by each week? Maybe you end up dead even after all the bills have been paid each month. Got $150 left over and not sure where it should go? Or are you rolling in cash and trying to decide how best to allocate the extra money?

Understanding where you’re at currently is key in creating a plan for moving forward.

Today I’m coming from the perspective of someone who’s at rock bottom. Who can’t afford to miss a day of work or the money will run short and the lights will get cut off. Someone who needs a mid-week paycheck so they can pay the insurance, water, or doctor bill. Or skips breakfast and lunch because there’s not enough money to buy the food.

Dire circumstances.

One poll has 78% of workers living paycheck to paycheck.

That is an insane number. 78% of households can’t miss a week of work.

If you find yourself in that category then today’s show is for you.

If that IS you, then you want to start with a zero budget.

What that means is every time you get a paycheck, sell a knick-knack, or find a dollar on the sidewalk, it gets put into one of your budget categories.

The categories you want to start with are what Dave Ramsey calls the 4 walls. 

• Food 
• Utilities
• Shelter
• Transportation

If you have those things covered you can survive to fight another day.

But even within those categories there are things we can do to stretch out our budget and make it go farther.

It might be anything from cutting the cable, getting rid of one of the cell phones, switching to a more cost effective carrier, selling one of the vehicles to minimize expenses, eating out less. 

If you’re truly in danger of getting kicked out of your house or having the lights turned off, you might consider eating rice and beans and ramon noodles and nothing else until you’re through this particular period of financial struggle. At the very least, you should completely eliminate buying premade food and soft drinks, iced tea, and coffee shop coffee. A lot of people would flip out that I pay $20-$25/lb for my coffee beans, while they turn around and buy coffee from a gas station or coffee shop for $2-$5 a CUP. Add those up and see which one is the most expensive. 

When you go shopping, make your list ahead of time, and don’t buy ANYTHING that isn’t on the list. NOTHING. Impulse buying is a budget KILLER!!

The thing you want to do for sure is to have a goal, a target you’re shooting for. That target is financial freedom, and the best tool for the first step in your journey is an effective budget.

Here’s 12 tips from Ramsey’s Everydollar budget tool:

• Budget every month before the month begins.
• Budget to zero.
• Track every expense.
•  Review your spending habits.
• Set a realistic budget.
• Make adjustments.
• Create a “Miscellaneous" category.
• Budget for annual and semi-annual expenses.
• Save for big purchases a little at a time.
• Budget for fun.
• Understand the difference between needs and wants.
• Give yourself grace.

Once you’ve got your 4 walls covered, you need to decide on a budget methodology. This often varies based on a person’s personality type. 

• Big picture
• Fun
• Helpful
• Detailed

Here are several different methods people use to create their budget:

• Zero based budget
• Hands on and very detailed
• Where every single dollar is budgeted towards an expense the very second it becomes available
• 50/30/20 method
• Big picture oriented, less categories for less detail oriented people
• 50% towards essentials (4 walls)
• 30% towards personal expenses (eating out, etc)
• 20% towards savings
• Envelope
• Each spending category gets an envelope
• Divvy out your paycheck to each category based on the amount needed weekly, monthly, yearly, etc
• Values based
• List expense values from most-least important
• Divvy up paycheck according to the amount needed for each item on the list
• The categories not funded when the money runs out don’t get funded
• Pay yourself first
• Set aside a specific amount from each paycheck no matter what
• Best for those with specific savings goals

Tune in next week for strategies to increase your income generating capabilities.

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