While finally getting serious about taking better control over my finances I found some of the best budgeting advice that I’d like to share. This single tip has made the greatest impact on my finances.
I started by looking at Dave Ramsey’s material. He went from being a millionaire at 26 in the real estate business to going broke. Fighting to regain his financial footing again he developed his principles that he shares with the world.
In addition to his material I also watch his YouTube channel where he takes viewers calls and offers advice. While not attending a live conference we did buy books and audio CDs for long car drives. One piece of budgeting advice stood out to me. It changed my budgeting habits forever.
The Single Best Budgeting Advice that Saves Us Money
The Old Way of Budgeting
Looking at my budget I would enter an amount of how much I would want to spend between paychecks. This amount would cover groceries, fuel, eating out and any other misc expenses. I would frivolously swipe my debit card at the grocery store, at the gas pumps, at our favorite restaurants and for anything else.
Never being great at balancing the budget/checkbook daily I would just lay the receipts on my desk once I got home. Then when I did finally take the time to enter all the receipts I would get sick seeing how much I went over my allotted amount. This was the hardest part for me and made me go over budget so many times. So in comes the single best budgeting advice to the rescue.
Envelopes: Our New and Improved Budgeting
Dave Ramsey is notorious for pushing the envelope idea. The idea is to have an envelope for every common expense, and filling each envelope with the allotted dollar amount after every paycheck.
In my current budgeting system, examples of envelope names include:
- Car Maintenance
After getting paid I head to the ATM and withdraw the total amount of my “running money”. Doing so gave me a visual reminder of how much I had spent so far and how much I had left to spend.
Once the envelopes are filled, that is all the money we have to spend on each expense until the next paycheck. The challenge to this budgeting advice is ONLY using the money in each envelope for each expense. You should not borrow from other envelope if you run out of money for a certain expense too quickly.
For example, say you have $100 in your grocery envelope and $50 in your fuel envelope. If you spend $80 on groceries on the first day, you have $20 left until your next paycheck. You may be tempted to add an extra $20 or more from your fuel envelope so you have more money for groceries.
However, this doesn’t train you to cut back or be more mindful about your spending. Regulating yourself in this way, you will start to spend less and be more aware of where your money is going.
When I instituted that budgeting advice I was able to stick to my budget more easily. It’s just so easy to swipe and then not think about it afterwards so for me this was big money saver.