Sunday, September 5, 2010

Financial Preparedness, Part III

In the previous installments of this series, I've covered Dave Ramsey's Baby Steps One and Two. Today I'll discuss budgeting.

Budgeting. The dreaded "b word". Few words can cause simultaneous consternation and boredom like the word "budget" can.

Budgeting causes wailing and gnashing of teeth, but it's the only way you can take control of your money. And it's definitely the only way you're going to accomplish Baby Step One (saving $1,000) and Two (paying off your debt).

Hubby Dear, being the sexy geek that he is, put our finances into Quicken for years. He'd categorize all of our expenses and enjoyed shocking me with some of the facts of our excessive lifestyle.

"Hey honey, did you know that we've spent $2,500 on dining so far this year?", he'd say. My hair would stand on end, we'd promise to do better next month, and then promptly forget all about it.

Then I started listening to Dave Ramsey. We've been following a budget for 16 months now and seen the power of writing out a budget ahead of time and sticking to it. Budgeting has allowed us to make sure we have extra money each month that we can put towards savings or debt.

So how do you make a budget? It's one of those things that can be intimidating to approach, but it's not really that hard. Sit down with your honey and decide how much money you will spend on each category of life during the next month.  Look back at what you have been spending, think of anything you can do to economize, and then write the resulting number down. Don't forget to keep some money in your budget for prepping. It's not officially part of the Dave Ramsey plan, but as I heard directly from the man himself, he's OK with that.

Here is a link to Dave's online budgeting forms:

This is a great place to start. Dave's book, The Total Money Makeover, also has a bunch of these forms and much more information on budgeting.

You might wonder what is a reasonable amount to be spending in each budget category. You can plug your monthly income into this calculator and get an idea of what your food allowance should look like, for example.

When Hubby Dear and I were first married, our goal was to spend about $75 dollars or less on food and toiletries per week. That was OK for a couple of childless twenty-somethings in the 90s, but that would definitely not work for us today! Sometimes people (usually men) think you can feed and clothe a family for pennies. If you can manage that, more power to you, but try to be reasonable in what you allow for each category in your budget.

The first month you try budgeting is going to be tough. You'll want to meet with your spouse frequently and review how things are going. It does get easier as you go along, I promise!

If you're not already budgeting, take the time to learn how. Then tighten up your spending and put your plan into action. It's the key to getting debt free and moving on down the road towards financial preparedness.

Read much more about the Baby Steps in The Total Money Makeover. You can buy it on or You may also be able to listen to Dave on his syndicated radio show. I love me some Dave Ramsey!

Coming Soon: Financial Preparedness, Part IV: I'm debt free, so now what?


  1. Thanks so much for this post! In your opinion, does the book provide enough useful information that I would want to purchase a copy ... or is it something that just borrowing a library copy would be enough? As you know, we're already familiar with the big picture, we have a budget that we stick to, and we're using cash envelopes to keep those credit card demons away :-)

  2. My in-laws went through Financial Peace University and so had the book and a bunch of related materials. We borrowed it from them. Since you're already familiar with a lot of DR's stuff, I'd borrow it from the library first.