How do I budget? Part 02

In Part 1 of this series, I wrote about the negative feelings that some people have when they hear the word "Budget".

In reality, a budget is nothing more than telling your money where to go.  I have heard Dave Ramsey take the definition a humorous step further – a budget is nothing more than telling your money where to go instead of wondering where it went!


So our first step in budgeting is:

STEP ONE  Understand that budgeting is nothing more than "telling your money where to go"

Step One is the largest hurdle of any part of budgeting.  The rest of budgeting is a breeze once you understand what a true budget is.   Once you have internalized Step One, it is time for Step Two.

STEP TWO  Determine the income (take-home pay) you will receive during the NEXT month.

There is a very key word in Step Two – the word "NEXT".  I have learned that preparing a budget for money that has already been spent is not very fruitful.  It is like being a Monday-morning quarterback for your finances.  You want to get that money back.  You wish you could have that money back.  But it is GONE!

The budget must be completed BEFORE the month begins and BEFORE the money ever arrives.  You are developing a spending plan for your money BEFORE you ever get it.  The only way I have found to stop saying "I can't believe I spent my money that way" and "I wish I could have that money back" is to develop a spending plan BEFORE the money was paid to me for the month.

So think about it.  What income will you receive during the next month?

Here are some common ways that people receive money during the month.

  • Paycheck
  • Bonus
  • Side Job Income
  • Child Support
  • Alimony

Whatever your source of income is, write it down.  In fact, write it down and put the dates that you will be paid this money during the next month.  If your income is unpredictable, write down the amount of money that you can count on.

If you have at least one month's worth of expenses in the bank, download the [download#1#nohits].

Because you have at least one month's worth of expenses in the bank, you can sum up your total income and enter the total income in the Income section at the top of the budget form. 

If you are living paycheck-to-paycheck, download the [download#2#nohits]. 

Because you cannot pay all of your bills at the start of the month, you will need to develop a budget for each individual paycheck.  Make the dates at the top of the budget form match up to your income dates and enter the income in the Income section at the top of the budget form.

The series continues … tomorrow.


  1. Kim Williams on January 15, 2012 at 12:10 pm

    I just saw you at central christian church,I am all in for Gods way. I have tryed it my way for years and it doesn’t work. My problem has always been, we do’t know what we are getting payed. I have accountants tell me to look at several months aqnd get an estimate of what you make, I get that. But here is my situation today. My mortgage is due today, My second is due and we are short due to the fact that the first 3 weeks of January I have not made any where close to my normal income. I’m a hairdresser and am hit hard by the economy.So how do I start a budget to day when I am allready behind in my bills. My husband is selfemployed too. His income is pretty steady now. He teaches voice.We get payed daily by customers no pay check. Helpppppp! Im not a spender anymore, God has changed us alot. WE haven’t had any credit cards for a year we are so proud. We Have no debit to credit cards, but we have extreme pressure from an audit of the IRS in 2009 and I was suppose to pay them today also. We were not fragilant it was a accounting error. I want to be debt free and be able to give. Where do we start?

  2. Latricia on March 2, 2014 at 12:19 am

    Hello Joe

    It was a pleasure seeing you at Pilgrim Rest Baptist Church. The information you shared was such a blessing. I am working on the budget, however you mentioned the budgets are available in weekly, bi-weekly and monthly versions. Where would locate the bi-week version?

    I have downloaded the app. Do I just create a new budget each time one is needed? Is there a way to save the budgets with different names? I have two and they are both labeled budget. Thanks for being such a blessing. I can do this!

    I did not think I could at first, now I am sure I can.

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