Suppose one of you wants to build a tower.
Will he not first sit down and estimate the cost
to see if he has enough money to complete it?
~~Luke 14:28
In the Beginning
As I save like a miser for our daughter's college costs, I wonder how much easier we might have it now if I had discovered Zero-Based Budgeting years ago. I feel freer now than when I was flying by the seat of my pants (which sounds free, but is seriously, painfully NOT), but do have much regret at not practicing good financial stewardship from the very start of my experience with money.
After starting a 529 fund for our children several years ago, we allowed it to idle, fueled with only a few contributions. Now, I operate in scrimping and saving mode, watching our money grow in somewhat steady amounts throughout the year. That money belongs to college. Already. Predestined, if you will. We could have had a different experience.
"Live and learn" makes for some hard truth!
We have so far succeeded in funding a large portion of the first two years' college costs, covering more than I ever imagined possible, thanks to budgeting and that tottering 529 fund. While I am a saver by nature, a deal-seeker, a hawk keeping close eye on the clearance racks, ashamedly, I have fallen from my perch a few times in life. I fell prey to an "I'm saving, but I'm the only one ... and so give me my due" attitude, even helping to bring about a financial tribulation which, once in, I felt sure I could conquer alone, without God's or human help. My reasons for the cavalier, Lone Ranger thinking make sense, but they did not convert to real life -- because I had no one on my team but Me, Myself, and I.
Pride
got involved and a fall happened.
Pride acts like that, always.
Fast-forward 10 years from that point to an basic introduction of Dave Ramsey's "Financial Peace" concept of budgeting, debt snowball, saving, and giving. I am no pro, but tips from Dave transformed our budget and our bank account, and have allowed us to pay almost half of our older child's college costs without crawling along, gasping for breath, or starving.
We have a good measure of freedom (not luxury, not extravagance, no unchecked spending), and can do even better with some more denial of "want". Like the Israelites, I need to review the lessons I learned and remember where God rescued me whether it felt good or not. Some of these lessons and rescues include:
- free-wheeling in the grocery aisles, even with a list
- setting variable or no limits on purchases (never knowing how much we really spent each month)
- using a debit card and not tracking it most of the time
- tracking but not budgeting
- not offering full disclosure to my husband to protect him (from stress), and me (from his reaction)
- paying larger bills (driveway sealing, auto repairs, new appliances) without planning for them
- calculating the balance in the checking account with worry, fear, and sense of unknown
- feeling relief or upset when our checking account held, never knowing for sure
- not saving an emergency fund, or even enough for a few bills
- living in denial of the future
- using credit cards in lieu of cash
- not seeing God's guidance, provision, or grace
Surely, someone else's list will look a little different. Personally, I did not have vices in my life. I have no desire for expensive items, no spoiling of children, no habits or collections. Still, I failed to steward to the best of my ability. After years of vigilant watch over our funds, I fell asleep at my post.
Not paying attention to the flow of cash allows it to meander unchecked and trickle away aimlessly.
I Saw the Light
One important step toward bridging the gap between freeform finance and living on a budget means taking a serious look at our largest expenditures. Dave Ramsey insists that no more than 25% of our income go toward housing expenses (including utilities), and we are good on that point. My #1 expenditure -- grocery shopping. I enjoy grocery shopping. I would gleefully take on that task for others. I look forward to every Thursday, aka Grocery Day. I have never met a grocery store I didn't like in some way, even as a one-product stop. I heart grocery shopping.
I started there.
After plowing through Dave Ramsey's Total Money Makeover three years ago, I gathered 6 months of grocery receipts (I keep receipts from the past year for every purchase in case of returns, exchanges, and reality checks) and added each month's spending, then calculated an average. Without any idea how or if it would work, I took that average and cut it in half. HALF. No joke, a 50% cut in grocery spending. It felt unnerving, and it felt unworkable. It felt like I had pulled a number out of the air. I pictured our family sharing the last tablespoonful of milk.
Drastic.
That Thursday, I got face-to-screen with our bank's ATM and withdrew only that calculated amount in cash. I proceeded to stick to my written grocery list the way someone might adhere carefully to a new diet, without glancing at any other items in the store. I usually shop 3-4 stores each week, straight out of the weekly specials flyers. I completed those rounds and still had a few spare dollars!
I am not a "praise the Lord" or "hallelujah" type person, but I believe a happy dance occurred within the seat-belted confines of my driver's seat. Wha-hoooo! SUCCESS!
I put the extra dollars in a separate area of my wallet like treasure. Holding extra cash after cutting spending in half felt invigorating and encouraging. But, could it work longterm? Was this a fluke? What chance did I have at making this our new normal?
The answer? I still do this very same thing, but with one adjustment. I reduced our weekly grocery budget by $20.
Adjustments happen because life needs adjusting. When your child picks up an interest in playing the violin, the budget will need space for music lessons. When you change insurance companies for better rates, you will need to place the surplus somewhere in your budget -- such as "Savings" or "College".
Realize you will make mistakes in under or over-calculating the needs of a certain month or week. And, yes, I have gone over-budget on a handful of occasions when I don't predict an event on the horizon, or find a tremendous price on ground round and stock my freezer. It does feel easier as the months go by, and it feels comfortable now. I can breathe, I don't have the zing of worry when the bank statement arrives, and I have joy in tithing to our church, giving more generously, and planning for our family's future.
Keeping tabs on all spending makes the difference between guess-and-go and telling our money where to go with confidence.
Cash Flow to Go
With information from Dave Ramsey's "envelope system," I work my cash system to correspond to the two-week pay period of my husband's job. Every other Thursday, I withdraw cash for groceries, activities, clothing, and entertainment.
Example:
$150.00 Week One groceries
$150.00 Week Two groceries
$160.00 entertainment, take-out, miscellaneous
$30.00 lessons and school activities
$100.00 vacation savings
$25.00 "play" money
Depending on your life needs, you may have more or fewer envelopes to work with, and that's just fine. As long as you're directing your money, and not allowing it to drag you along for the wild ride, your envelope decisions grow more and more personal, and less and less awkward. The newness will wear off in a few months and you'll wonder how you handled money any other way.
Reminder: I do not promote myself as either expert or teacher on this subject, but another traveler on the multi-lane, fast-moving, and pot hole-filled financial highway. After much prayer and study on the subject, I found budgeting as the road less traveled and far, far easier to navigate. Pot holes seem smaller, and life's traffic has slowed down a great deal.
Zero-Based Budgeting really makes a difference in our life. Cash flows where we direct it, and any income level can find a way to pay off debt, save for emergencies, and spend wisely and purposefully. Good stewardship feels easier for some than for others. The following verse keeps me in check, as I focus daily on trusting the One who provides for our family.
A greedy man stirs up dissension,
but he who trusts in the LORD will prosper. ~~Proverbs 28:25
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