Dave Ramsey Budget: Tips & Tricks

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One of the first steps you can take towards financial freedom is creating a Dave Ramsey budget. Whether it is your first one ever or an attempt at a new one, these Dave Ramsey budget tips will guide you towards the financial success you are looking to achieve.

Part 1: Crunching the Numbers

Get ready, math experts – this will be your favorite part!  If you’re like me, and math was your least favorite subject in school, don’t worry, we’ll break the budget down for you.  Understanding the numbers of your budget builds a firm foundation for your financial success.

  • First, you add up and calculate all of the money that you will earn for the month. This should include any income that consistently comes in for the month. Whether it is your paycheck, Social Security, or extra cash from mowing a few lawns, count it! Once you have that total hold onto it, we will use it in a minute.
  • Second, you add up and calculate all of the regularly occurring bills that you will have to pay for the month. Don’t forget to take into account anything that is already set up to auto draft out of your account. Examples can include utilities, service subscriptions, transportation costs, food & entertainment.
  • Third, once you have those two calculations the goal is to subtract them and equal zero. Every dollar should be accounted for and have a place. This is called the zero-based budget. It is important to use a zero-based budget because once every dollar has a home, you can go back through each category and make cuts where you see fit.

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Part 2: Getting Out of the Hole using Dave Ramsey Budget

Once you have your Dave Ramsey budget balanced and set, your next step in obtaining financial freedom is climbing out of any debt holes you find yourself in. You can’t reach the end of a race if the finish line is constantly moving away.

  • As a disclaimer, this next part you may not like. Dave Ramsey is a strong advocate for NO CREDIT CARDS. If you are trying to pay off your current debt, why would you need to have something that only adds to that debt? While trying to stick to a strict budget, the rule of thumb is if you don’t have the cash for it, you don’t need to buy it.
  • One of the most helpful things you can do for yourself is to track your spending on a daily basis. There are two routes you can go when recording your spending. You can either go back to the good, old-fashioned receipts and paper register or use a program on your phone to track your spending.
  • Getting rid of your debt once and for all may require you making some sacrifices. Once your budget is complete, review it and determine where you can cut back on your spending. Yes, it may not be fun, and you might not be able to go out as much with your friends or order that daily coffee, but cuts are just temporary, and they are necessary when chasing financial freedom and to maintain your budget.

Part 3: Accountability is Key

Just like with most situations in life, an accountability partner can substantially increase your chances of success, whether that’s going to the gym to work out, reading a book you’ve always wanted to finish or trying to stick to a new budget.

  • What’s an accountability partner? Glad you asked. Essentially, what you will need to do is go out and find someone who will hold you to your word. This could range from a sibling, a parent, friend or colleague. It doesn’t really matter who you ask, as long as they will be firm and help hold you to your budget.
  • Get on a consistent routine. This will make sticking to your Dave Ramsey budget lot easier. If you set up all of your bills to get drawn out of your account on the same day, you will know when the money is going to be coming out every month. It’s easier to plan ahead and Make more informed decisions with your money when emergencies arise.
  • If you find yourself consistently struggling to stay on track with your budget, switch over to a cash envelope system. It may seem complicated, but I promise it’s not! If you have $100 for the month for entertainment, instead of putting that money directly in your bank account, stick it in an envelope so you can physically see it. When it runs out, you won’t be tempted to just swipe your card again.

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Part 4: Plan ahead

There will always be a wild card in life, and most the time, it’s life itself. You need to always be mindful of this because a Dave Ramsey Budget thrives with consistency.

  • There will always be that curveball that you didn’t see coming. That’s just how life is sometimes, but that’s why everyone needs to have an emergency fund. Put a little money aside every month to where eventually you have enough to cushion whatever life has to throw at you.
  • Be mindful of holidays and celebrations that will come up each month. For the most part, we are all aware of what birthdays and holidays that we will have to buy gifts or goodies for, so don’t let it sneak up on you!
  • In my opinion, this is the most important part….Give yourself some grace. Sticking to a budget isn’t an easy task. It takes discipline and hard work, and odds are, you aren’t going to be perfect every month. You might overspend here and there but that’s OK. You are still taking the steps and actions towards the Financial Freedom that you seek.

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For more information about the Dave Ramsey Budget or how your insurance can impact your budget, give us a call at 479-802-0086!  If saving money on your insurance would help you reach your goals, get a free insurance quote and analysis from G&G Independent Insurance, the agency founded by Jordan Greer, Dave’s Endorsed Local Provider for the Northwest Arkansas and Fort Smith area.