Step One...Create A Budget

Our first step to take is to make a budget that we will live by. This way we can see where our money is going every month.

My personal favorite is is Dave Rasmey's "zero-based cash-flow" plan.

Here are some instructions for using this plan from Dave Rasmey:

• Every dollars of your income should be allocated to some category on the sheet. 
• Money "left over" should be put back into a category even if you have to make a new category. 
• You are making the spending decisions ahead of time here. 
• Fill in the amount of each category and at the end of month fill in the "actually spent" column to see if you have areas for opportunity. 
• Create a new sheet for each month. 

You can find a template from Dave Rasmey here:

http://a248.e.akamai.net/f/1611/26335/9h/dramsey.download.akamai.com/23572/daveramsey.com/media/pdf/forms/fpu_monthly_cash_flow_plan_forms.pdf

Each month our dollar amount in each category might change due to what is going on in our lives. But the important thing is to try to plan for as much as you can. Yes, there are many things we cannot predict that can happen (hence why we have savings - which we will get to in another post later) but we need to plan for as much as we can. Also, you might want to put money aside a head of time for big spending times like birthday and holidays. This way we don't use credit cards - we use money we have! 

Here are the steps I take each month when building my budget:

1. List my monthly take home pay for the month. 
2. List residual bills and amounts (mortgage/rent, car payment, car insurance, utilities, and cell phone).
3. List variable bills and amounts (food, gasoline, personal care, home care, pet care, entertainment, clothing, and miscellaneous). You will use the cash envelope system for these items which we will get to in another post. 
4. List credit cards and amounts. You will use the debt snowball on this which we will get to in another post. 
5. List transfer to savings. 
6. As Dave states I make sure that I plan every penny into a category. 
7. I keep track of my spending of each category though the month and look to see where I have opportunities for improvements. 

Here's to having a budget and taking the first step to getting financially fit!!

Rustie J