new $avings plan

Pile of Coins

First things first... you need to know Josh and I did not come to setting up a family savings plan without a somewhat scary realization: we really didn't know where I money went. We got our bills paid (thanks to autodraft) but if someone told me I spent $1000 in Starbucks in two weeks, I probably wouldn't be able to argue. 

We just transferred money into our accounts after the bills got paid and spent it on...whatever. Literally, had no idea. One month it might be $100 at Academy Sports, the next might be $250 eating out. It never failed, a spending spree was always followed up by a real life expense like getting the car serviced or a trip to the vet and then we would transfer money out of savings to cover the cost. We've never run out of money, but I could kick myself over how many times we dipped into savings/emergency money for things that weren't emergencies. 

Another truth: Josh and I have been blessed financially since Josh has been injured. The combination of his full time job, my full time job, medical retirement from the Army, and a mortgage free home have done more than take care of us. But, God has really convicted me in the past couple of months with Luke 16:10:

"Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much."

Yes, there are worse things we could be doing with our money, but we were not stewarding our finances like we should have. It was just easier to shrug our shoulders and think oh well, the bills are getting paid than to dive in and make the most of our income. 

If you're reading this, there's a good chance you're smarter than we were. You're actually doing some research on how to do better. See, Josh and I openly admitted to the problem, then admitted that we didn't know a whole lot about personal budgeting, then thought we could just figure it out. Like, pick a number and stay under it. That doesn't work. We had to do some research, listen to podcasts, and talk to people that knew better than us. Here's what we came up with: 

1. Build an emergency fund. This is a Dave Ramsey essential. Do everything you can do put $1000 in an emergency fund that you can use when "something happens". Then put 5%-10% of your paycheck toward that fund with the goal of having a year's salary saved up. 

2. MOVE AT THE SPEED OF CASH. When I thought about the word "budget," it always had the subtitle "don't spend money ever." After the bills were paid, groceries bought, cars filled up, Josh and I put $120 in our personal checking accounts per week. This money has no limits or assignments, but the rule is the non-essential things have to be paid for with this cash. If we don't have the funds, we wait until we do. 

3. Use the Dave Ramsey percentages:

  • Giving — 10%

  • Saving — 10%

  • Food — 10 to 15%

  • Utilities — 5 to 10%

  • Housing costs — 25%

  • Transportation — 10%

  • Health — 5 to 10%

  • Insurance — 10 to 25%

  • Recreation — 5 to 10%

  • Personal spending — 5 to 10%

  • Miscellaneous — 5 to 10%

4. List your luxuries and find alternatives. Whether it's getting your nails done or expensive face products,  see if you can find things that can serve the same purpose. I recently quit a subscription to some pretty expensive skin care products. When I looked at the active ingredients in the products, I realized that brands like St. Ives and Burt's Beeswax had over the counter products with almost the same active ingredients. Products that were easily costing me $70 could be found over the counter by combining two products. Obviously nothing can replace getting your hair done or a massage by a professional, but it was really nice to know that first, my skin wasn't as dependent on these products as I thought, and second, I had $70 in my pocket. Another unmonitored area of my spending was online shopping. I learned my bad habits were not necessarily because I was spending without thinking, but I was definitely scrolling without thinking. I was pretty much an algorithm's beta tester-- browsing clothes from Loft on Facebook, then those same outfits would appear on Instagram and I would just go "okay fine". Click. Bought. My rule now is that items have to stay on a wishlist for ten days before I can buy it. Since implementing this, I've experiences a 10000% decrease in buyer's remorse.

What we've learned so far...

  • Using a budget actually makes me feel better. I told Josh after doing this for a few months that life without a budget was like smokers that high-five after a clear cancer screen even though they continue to expose themselves to cancer. When we added in a budget that we both agreed on, it was like we agreed to quit smoking. Since its implementation, we've learned that we should live under this budget even if we become millionaires. 

  • Moving at the speed of cash helps me spend money worry-free. I know that whatever I buy will not affect the purchase of anything else. I also have no guilt about spending that money which is not how I felt when I wasn't keeping track. 

  • The Dave Ramsey percentages actually opened up some opportunities for saving. Obviously these percentages don't fit perfectly, but it should make you feel better if you compare your bills to this list and see that it's expected to spend a lot in some areas, which was a large part of what we didn't know. 

  • It was very liberating to end subscriptions and memberships. I thought I would be sad about it, but once the first month without them came, it was awesome to see extra money. 

  • I've learned that stewarding something well, whether you have excess or very little, it respecting the blessings God gave you. Life on a budget has not changed much for us. In fact I would say 90% of the adjustment has just been in the awareness of where it's all going and the other 10% has been actual changes in spending. Learning something together has helped us grow as a couple. It put important questions on the table that made us understand each other financially. There's no longer a tension of who's spending too much or who's being stingy. It's a team effort to make sure that everything we're receiving has a purpose. 

Hope this helps you!