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Everyone Needs a Cash Flow Plan
Up until this past September, I have never created or tried to live within a budget. Sure my husband and I were financially responsible and secure and I tossed around the word budget, but for twelve years of marriage we never actually created one on paper. Early in our marriage we used Quicken to track our income and spending, but it was all pretty much a big pot o’ money and a guessing game each month to try to stay in the black. We always were in the black, if you count the fact that we consistently put a big chunk of money in our retirement plans, but our liquid savings fluctuated…a lot. And while I thought it was great that we had any savings at all, in this economy of no job security Mike felt we needed a bigger cushion. Our spending habits were becoming somewhat wasteful and our shrinking savings was starting to stress him out, which is why we signed up for Dave Ramsey’s Financial Peace University.
One of the first things the class insisted upon was creating a monthly zero-sum budget. I very much disliked the word “budget” because it felt stifling, like a prison. But I’m a numbers girl and decided to try it, and FPU sometimes called it a “cash flow plan” which I greatly prefer. Dave’s book outlines several points about having a written plan.
- a written plan removes the “crisis management” mode of handling money
- it helps your money go farther
- if you agree to it and live by it, a plan will help you avoid lots of money fights in marriage
- a plan removes the guilt and fear that you may feel when buying necessities
- a written plan prevents overdrafts and thereby removes a lot of stress
- a plan will show if you are overspending in a given area
Every Dollar Has a Name
Mike is the “nerd” in our marriage and I am more of a “free spirit”, so he did the first round of setting up the budget and then called a budget committee meeting. FPU recommends having these meetings at the start of every month, and limiting them to 17 minutes. No kidding. The nerd shows the free spirit the numbers, the free spirit is allowed to suggest a few changes, and then they make an agreement to live by it. It has been a really great exercise for us to have these budget committee meetings, and the first money when I really tried to stick to it we saved way more money than expected. Almost a whole mortgage payment’s worth, which went straight towards our emergency fund. Budgeting has been not just good for our bottom line, it has been great for our marriage as well.