Dave Ramsey Budgeting Tips to Save On Every Dollar
I think it is fairly safe to assume that if you are reading this article, you already know who Dave Ramsey is. However, just in case you do not know, I am going to enlighten you a little.
Dave Ramsey is an author, radio show host, and businessman that focuses on, you guessed it, budgeting and money management.
He is a household name and most people think of him as a budgeting guru. If you want to know how to save money and do more with the money you have, then Dave is your guy. If you are considering Dave Ramsey budgeting tips, then you have made the first step to working towards your budget. Continue reading to find out more tips to save more money.
Why do I Need a Budget?
It is probably a fairly safe assumption that you did not grow up learning about budgets. I certainly did not. We live in a different kind of world today, but I grew up in a world where money and bills were adult things and they were not discussed with children. While I see value in letting children be children and not burdening them with adult matters, the downside is they may never learn how to handle money. I had to teach myself everything I know and it took me a little while to learn.
I was well into my adulthood before I understood that I needed a budget. Unfortunately, I did not learn about Dave Ramsey budgeting tips early enough and I had to figure some things out for myself. Plain and simple, having a budget allows you to take control of your money and your life. If you do not have a budget, you have no idea what is happening with your money. Most likely, you are not making the best financial decisions because it is really hard to when you do not have a budget. When you are in control, all the choices really become your choices.
Dave Ramesey's Top Tips
There are many Dave Ramsey budgeting tips you should consider when you want to begin living on a budget. One of the major points that you can consider is that budgeting fluctuates. Something is always going to come up. There are summer vacations and school supplies in September. You may even have back to school clothes shopping. There are birthdays and holidays. Many of these special moments happen on a regular basis. You should prepare for these events, especially the ones that you know are coming. You need to be ready to adjust your budget for these items. You should create a fund where you can put money for these events as they pop up. You cannot be rigid in your budget or you will not be able to be prepared for these events when they appear.
Budgeting From Zero
One of Dave Ramsey budgeting tips is to budget from zero every month. What this means is that you take your income every month and mark every dollar for something. It does not mean that you have no money in the bank. It just means that you spend all of your money somewhere. What it really means is that you have a plan for all of your money and it is all working for you.
Let me give you an example with numbers to highlight my point:
You earn $5,000 per month. That means you need to do something with every single dollar of that $5,000. You can spend it, save it, donate it or invest it. When you add up all of those numbers, it should all equal $5,000. You need to mark it as such in your budget. You know you have $3,000 in bills each month, so $3,000 are marked for those bills. You send $1,000 to your savings accounts, so that money is marked for that. You have another $1,000 that you need to mark.
Looking at your budget, you can decide where that money is going. This is how you know what is happening to every dollar you make. There is not one that is not accounted for. When you have any money that is not marked that is when your spending can get out of control and you begin spending money on items that of which you are not aware.
Savings First, Then Debt
Another one of Dave Ramsey budgeting tips is to save money first. Even if you are interested in paying off your debt, you should first create an emergency fund. This allows you to have money to dip into when there is an emergency. Then you will not have to use your credit cards, or take on another loan. If you have to take on more debt while you are trying to work your way out of debt, it kind of defeats what you are attempting to do. You should put $1,000 in your savings account as quickly as you can. This helps you when all of those unexpected events pop up. You should not stop at just $1,000 but once you have that much in your emergency account, you can begin to focus on other items like paying off debt.
Now, once you shift your focus on debt, you should consider the snowball method. This helps you pay down debt in a way that makes you feel like you have accomplished something. You write down all of your debts and list them from least amount to highest. You pay the minimum balance on all your cards with the exception of the lowest one. You pay off all of the money you can towards the lowest balance. Take every dollar you can and put it towards that debt. Once you pay off the first debt, then you focus on the next one on the list, which moves to the top of the list. You take the same approach towards all of your debt until it is paid off.
Decrease Grocery Spending
Dave Ramsey budgeting tips give you many ways to cut spending so that you can save more money. When you are interested in budget management, you have to make difficult choices to save money. Groceries are one of the biggest and unexpected drains on your budget. You probably do not even realize how much money you spend at the grocery store. If you have ever stopped to look at the prices of items, you know why. Groceries are expensive and seem to grow each day. When you do not have a plan, it is easy to walk down the aisles and just pick up random items, even if you do not need them. Those last minute purchases add up quickly and quickly blow your budget out of the water.
One of the ways you can save is to create a list of items that you want to purchase while at the store. When you are there, you must stick to your list. Do not buy anything that is not on your list, no matter how tempted you might be. Before you create your list, make sure you look at the items you have in your kitchen right now and do not shop for items that you do not need. If possible, you should go shopping alone because if you take kids and spouse with you, they are more likely to make unnecessary purchases. Another tip is to do grocery pickup. This way, you only purchase the items that you need and you are not tempted to purchase other items by walking down random aisles.
Cut the Cable
Another one of Dave Ramsey budgeting tips is to decrease the amount of money you are currently paying for your cable bill. You can get rid of your cable all together and find alternate means of watching tv.
There are many online options available that you can utilize instead of traditional cable. Traditional cable is costing you more than $100 per month, which is over $1,200 per year. Think what would happen if you can save that and put it towards your debt.
If you are not interested in getting rid of cable for other means, then you can try to lower your current price for cable. There is a lot of competition out there for cable companies and they are usually willing to give you a good deal to stay with their company because they know how easily they can lose you. It does not hurt for you to call them and ask for a better deal. You do not have anything to lose except maybe a lower monthly bill.
Lower Energy Consumption
Dave Ramsey budgeting tips also gives you points on how to lower your energy bill. This means that you are consuming less energy. That is good for the environment and good for your pocket. Some of the simple ways to lower your energy bill is to adjust your thermostat by a few degrees. If you lower the temperature in the winter and increase it in the summer, it will save you hundreds of dollars in your energy costs. The change in temperature in your home is not that noticeable and makes a huge difference in your bill.
You can also unplug appliances when you are not using them. While you are not using a lot of energy, you are still using some energy and you are paying for it. This includes anything that has a plug should be unplugged when not in use. You can also switch out all of your light bulbs for energy saving light bulbs. This simple change can save you hundred of dollars a year and makes little difference in the lighting in your home.
Are There Different Types Of Budgets?
There are three major types of budgets that you should be familiar with before you jump into creating one. There is the planning budget, the comprehensive budget, and the problem solving budget. Here are some information about the three basic types of budgeting. This will help you actually apply the tips Dave Ramsey gives.
The planning budget is the one you use to save up for something specific, such as a house, or a wedding, or even a car. There is an end point to this type of budget when you have all needed funds saved. You are focusing your efforts and money towards saving for this one item, or event. Please keep in mind, if you are drowning in debt, that should be the thing on which you are focused, but for now we are talking about saving money.
The problem solving budget does just that, solves a problem. First you need to understand that there is a problem. This is a simple kind of budget because it tends to be singularly focused and easy to achieve. These types of budgets come in handy for addressing areas where perhaps you are spending too much money, eating out is a possibility. Maybe you cannot afford to eat out as much as you do, or you just want to cut back. This type of budget put limits on specific activities and how much money you spend on them in a given period of time. You may have several of these areas. Pick one area where you want to focus and start there. Once you have a handle on it, you then pick another area. The hope is that when you begin to see how much money you can save, you are more willing to cut down spending in more areas.
The mother of all budgets is the comprehensive budget. This one is a bigger beast and it takes more work and disciple, but it gives you the maximum results. It is a combination of everything above and then some. It will be a total overhaul of your finances. You will set limits on every single spending area that you have. This includes listing all of your income and expenses and seeing how they compare. Then you begin to make cuts on expenses.
Where Do I Start?
One of Dave Ramsey budgeting tips is that budgeting never stops. Budgets should remain flexible and they are something you should always control. Keeping in mind that this is something that you are going to constantly work on, it is important to start it properly. The simplest way to start is gather all of your information. That means all of your income and all of your expenses. I mean all of it. You are doing this for you, no one else will see it so now is not the time to hide things. You may need to grab a couple of months worth of bank statements to make sure you capture all your expenses.
Then you list your income in one column and all your expenses in another. Add the columns up and see how they compare. It may surprise you to learn how much money you spend each month. It may also surprises you when you see how much money you are spending compared to how much money you earn. It often surprises most of us the first time we look at it. When you see the amount of expenses is more than the amount of income, or even if they are close, you realize it is time to make changes. You begin with the easy stuff, such as items you buy that you do not use. Gym memberships and subscriptions fall into this category. You may still be paying for items and have no clue. Cancel all of them. Then you can start looking at other areas where you can cut spending. This is when Dave Ramsey budgeting tips really come in handy.
Conclusion
There are a lot of Dave Ramsey budgeting tips in this article. He has many more tips available for you. It is important for you to create a budget so that you can have a clearer understand of the money you bring into your house. It also helps you understand how you spend money by giving you a clear understanding of how and where you are spending money. When you create a budget, you are able to take control of your spending and your saving. No matter what your goals are, creating a budget can help your achieve those goals. A budget can help you understand your goals and your desires and then help you plan to get there.
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