Money & Budgeting - part 2

Let's Talk About Money:

Zig Ziglar said "Money isn't the most important thing in life, but it's reasonably close to oxygen on the 'gotta have it' scale." We need money to live and survive in today's world. We cannot walk into Kroger with some homegrown tomatoes and expect to trade it for some eggs, bread, cereal and icecream. It's just not going to happen.

Q: How many times have you heard people say "money is the root of all evil" or have referred to "those evil rich people?"

People who say that do not know what they’re talking about. Money is not evil, nor can it make people bad. Money is amoral, meaning that it is incapable of possessing morals. A brick, for example, if given to someone who has a low moral character, could be thrown through a window so that the burglar could enter the home and rob it. This same brick, if given to someone with high moral character, could be used to build a hospital, a church, a school. Same brick – different uses. The brick itself didn’t change – only the people controlling it. That is how money is. It is the same – only the people who control it differ.

Money is active. It moves, thus the reason it is called currency. It flows in and out like the current. The Lord, in his infinite wisdom, will give us only what we can handle. That is true for all things – including money. How can we expect the Lord to bless us with abundance when we cannot manage what we have been given? You are going to be blessed when you become a blessing. When you become a good steward with the money you are blessed with, He will give you more money to manage. It will be like a high tide. When we manage money, it flows to us. Likewise, when do do not handle our money well, it flows away from us.

Q: How do we keep the money from flowing away from us?
A: We tell it what to do by creating a budget.

Dave Ramsey has said, "When you see that a budget is just spending your money with intention, you'll actually experience more freedom than before. Many people say they've found even more money when they created a realistic budget and stuck with it. When you are spending your money on purpose, you will be on your way to a Total Money Makeover. You will be changing your family tree forever!"

Another pearl of wisdom from Zig Ziglar is "If you aim at nothing, you'll hit it every time." Without a budget, you are simply aiming for nothing with your money. You are certainly going to hit nothing when you’re aiming for nothing.

Q: By show of hands, how many of you have had a V8 moment at tax time, when you look at your W2’s and say “We made $43,000 this year. Where did it all go?” I know I have.
Q: By show of hands, how many times did you know a bonus, windfall, or inheritance was coming and you spent the thing 100 times over before you even got the check?” I know I have.

Those are just a couple examples of times when we aim at nothing and hit nothing.

John Maxwell said "A budget is simply people telling there money what to do, instead of them wondering where it went." This is very profound. I can’t even count how many times we’ve had money in our bank account just sitting there, and before we knew it, the termites carried it away or something because it just wasn’t there anymore. When we reviewed our bank statements we saw that we nickel and dimed our way through that money without even realizing it. If I could go back in time, I’d probably be rich if I had just given that money a purpose instead of letting it get frittered away into nothing.

In the book The Seven Habits of Highly Effective People, Stephen Covey says the #1 habit is to be PROACTIVE. Being proactive is one thing I learned about in Public Relations. It was the first and most basic principle of PR – act before you are acted upon. People who are proactive happen to things, things do not happen to them. They choose to be in attack mode, instead of being in victim mode. When you are proactive, you control the situation. You have the reigns, so to speak. If we are proactive and make a budget then we will know exactly where our money goes, and we will be in control of it.

You wouldn't build a house without having a blueprint, right? Before that first shovel of dirt was turned over, you would know exactly where every single wall was going to go. You'd know where the electricity, plumbing, and central heat & air would run. And for us ladies, we'd even know what color the walls were going to be, what kind of carpet we'd have, and how we were going to decorate it. We'd do all that before even thinking of starting the project. Why should dealing with our finances be any different? The only way to make sure we don't screw it up somewhere, is to have a budget.

Let's imagine if you will, that you work for a company called U Incorporated, and you are in charge of the finances. If you did the finances for U Incorporated like you did for your own money, how long would it take you to be fired? Everyone in business knows that a business' success or failure depends on a budget. If they screw up on the budget, it can mean the end of the business. Well, you are the CFO of U Incorporated. You are the one who controls what you do with the money you are given. In order to not get "fired", you need to do a budget and control that money so that you can have profits!

Yes, I mentioned the B word - Budget

What is a budget?
A budget is where you spend every penny on paper on purpose before the month begins. Yep, every penny, on paper, on purpose, before the month begins. What you spend your money on is up to you. If you want to have a $100 a month budget for spandex, then that’s your call – as long as you can afford it and as long as you’re spending your money on purpose.

Budget is not a 4 letter word. A budget is not a straight jacket, it is not constricting. A budget is what you make it. You are in control of your finances, so you control what your budget looks like. Some of you may not believe me because budgets have gotten a bum rap, but you really do experience more freedom living on a budget. Sometimes it’s not fun to face the music – to own up to the stupid choices we’ve made, but we all have to do it at some point, so why not start now.

Some of you may never have done a budget, and if that’s the case, you’re normal. You’re just like millions of Americans wandering around like Gomer Pyle on valium going “gaaawlie, I sure am broke” and you’re perfectly normal – like the rest of America. That’s why you’re going to snap out of it and decide that you’re going to start caring about where your money goes, what your money does, and what it doesn’t do. You can’t afford NOT to do a budget. Millionaires are millionaires because they budget their money and give it a name and a job.

Now keep in mind, that this is a process. You aren’t going to go from Gomer Pyle to Dave Ramsey in one day. You will make mistakes, but you just have to keep going on. I make mistakes, Dave Ramsey makes mistakes – we all make mistakes. The key is to do it and keep doing it until you get it right

One great way to keep yourself on check is to keep your checkbook balanced. Yes, the checkbook. I realize with debit cards, the checkbook is a bit outdated; however, the principles still remain the same. You MUST wake up and pay attention to what you’re doing with your money.

I bet almost everyone in this room has gotten an NSF (insufficient funds) charge on their bank account at least once in their life. It’s not pretty, and it costs you money ($30). It’s easy to keep that from happening. Never write a check until you have the money in your account to cover it. That sounds basic, but almost no adults follow that basic tenet. Millions of people mail that check on Tuesday knowing that payday is Friday, never thinking that they go in on Friday only to find out that their company has filed chapter 7 bankruptcy and they’re not issuing payroll today. Or what happens if there’s a problem with direct deposit? You’re going to hear a lovely little sound “Bounce” – that’s the sound of your rubber check from Ricochet Savings & Loan. Check before you write a check. Dave Ramsey said, "Bounced checks are a sign of crisis living; sloppy, lazy money habits." So check before you write a check.

I have come across a lot of women who say that they don't need to handle the finances or even balance the checkbook because "my husband does it." My husband does it is not good enough! If you say your husband does it, then it’s time for you to learn how to do it. If something were to happen to him, then you’d be like a golf ball in tall weeds – LOST! You need to learn how to manage the finances, learn where the accounts are, have access to the accounts, and know where all of the important papers are. Divorce, death, and hospitalization – these things happen and many times the wife is left floundering and trying to figure out how to manage money for the first time in her adult life. If you do it, make sure your husband knows how to handle the finances. Husbands if your wife handles the finances, learn how to do it! You do not want to have this stuff come smacking you in the face if something were to happen to her! You both need to know how to do this stuff!

How Do You Make a Budget?

Track Your Spending: Every month is unique. There will never be a perfect month from Heaven. So, make sure that each month’s specific needs are taken care of in your budget. I like to use a calendar. This calendar charts everything going on in our lives. Dr. appointments, birthdays, anniversaries, holidays, oil changes, vacations, etc. When it comes time to do the budget for that month, I can easily see what is coming up, and I can work those expenses into the budget. Another great way to track your spending is look at your bank statement. Take different colored highlighters and go to town. One color for bills, one color for necessary spending (groceries, gas), one color for entertainment, and one color for the junk you just blew money on. It will give you a good idea of what things you need to work on.

Begin with your Income: When doing a budget, we work with take-home pay. The other pay is just theoretical. As far as we’re concerned it doesn’t exist. If you get paid every 2 weeks, then divide your budget up into 2 parts – one for each paycheck. If you and your husband both work and get paid on the same days, then you would combine both incomes for one large starting point. If you get paid on different days, then you would have 4 columns (or however many you need).

Subtraction: Always take care of tithing, shelter, food, utilities, and transportation first. Do not starve to pay Visa. Do not risk losing your home to be current with Master Card.