Tuesday, April 13, 2010

I promise this is not a financial blog for newlyweds, but...

... I was talking to someone the other day and she looked at me like I was crazy when I said Mr. Smith and I did "zero-based budgeting" for our newlywed "DINK" home.  (DINK means "Dual Income No Kids; I just found this out the other day on one of my daily blog readings and loved it.  Although, I might start calling us DINKY... Dual Income No Kids Yet). 

Anyway, after I explained to her my devotion to all things Dave Ramsey and his zero-based budgeting system, she inquired how I even keep up with everything.  Hence, a blog post on how the Smith's do their monthly budget...

First, zero-based budgeting is the practice of knowing where every single dollar goes in your budget.  There's absolutely no.. "Let's hope we've got some moola left in the bank at the end of the month." OR "Fingers crossed that check doesn't bounce!"  The thought of that literally gives me a panic attack.  Do not say that kind of stuff around me, because I will have heart palpitations. 

I can honestly pull up my spreadsheet (or by memory, sometimes I'm just that good nerdy) and tell you where every single dollar as gone in our budget.  Really, in my budget since November 2007.  Sometimes it's not pretty, I'll admit it, but it keeps us goal-oriented and on track to meet our financial goals.  To sum it up, every dollar as a purpose and a plan. 

Our budget is kind of like my homework assignment at the end of every month.  And yes, I actually look forward to doing it.  Sometimes I can hear "Eye of the Tiger" from Rocky as the background music while I'm crunching those numbers... but maybe that's just me.  Anyway, here's a snapshot of the kind of budget we use.  It's basically what Dave Ramsey says to do, but I've adapted it to fit us the best way I can.  Plus, I do it in Excel, where it updates for me (as if by magic) when I put in our the weekly spending updates.  But, you can easily do it on paper. 

Basically what I do is have 3 columns:
1.  Expenses - where I list everything I think we'll be spending money on; this column really doesn't change ever.  It stays the same every month, because it's based on our priorities. 

Yes, Giving is first because we try to be obedient and tithe our 10 percent every month to our Church.  I'm going to give kudos here to Mr. Smith, because sometimes my financial ambition takes over, and I tend to make excuses about this area.  However, Mr. Smith in all his wonderful goodness reminds me that we are blessed by God, that everything we own is really His anyway (not just that 10 percent), and that the Smith's will be obedient in this act.  This is why we are a good balance, right?    My Mother once told me that if you do this at the very beginning of your Budget, then the rest of it will take care of itself.  To just trust God, and He will provide.  And... they're both right!  That check is the first thing to leave at the beginning of the month. Now I don't even think twice about it. Usually.

2.  Budgeted Amounts - my original Battle Plan (sometimes quite lofty)

3.  Actually Spent Amounts - Reality hits

The main challenges are staying within your original Battle Plan goals, sneak attacks like emergencies, or I'll admit it...  having too much fun like going out to eat more than I had thought we would, a pair of shoes, or even Mr. Smith's Mark's Outdoors visit that pops up on the bank statement.  (Hey, I'm being honest here.)

Put your Total Household Income (green boxes) in both columns at the very beginning of the month. 

After you make your Battle Plan Budget (first column), add up everything and put it in the Grand Total Spending (yellow box).  Subtract that number from your Total Household Income, and the Difference (red box) should be Zero.  If you have money leftover, you have to put it somewhere, preferably Savings or Debt (if you have any).  Hence the goal of literally knowing where every single dollars goes. 

The Goal?  To make your Actually Spending column match your Budgeted Column.  I'll admit it... sometimes it's really hard.  When I first started doing this (way back in Nov. 2007), I bombed my first few months.  Badly.  Like a grade of "C" if I were lucky.  And I'm not a "C" student.  So, I had gotten pretty good at this.  And then we got married and combined our incomes, which was another lesson to learn.  Now we've been married over 9 months (where does the time go?) and I would say I'm back to my "A" student status. 

Our excel spreadsheet is a bit more elaborate than this, since sometimes we just charge everything on our credit cards, and then pay it off for the reward points (which yes, I actively use!).  I know Dave and others say not to do this, but if you can keep up with what you're putting on your credit card on your budget like it is "real dollars spent" than it might work for you. 

Sorry for the boring Tuesday post, but I hope it helps if anyone is looking for a Spring Cleaning of their finances! 


  1. I budget a lot like this too. My set up is slightly different but I obsess over tracking every dollar we spend! It's a little extra work, but, as you know, it's sooo worth it!

  2. I found your blog through the Kelly's Korner post. This wasn't boring at all. I love it! I saw the zero balance budget on a few blogs but had no idea what that meant. Thanks for the detailed breakdown.

    Be well!