Financial expert, Dave Ramsey weighs in on when your budget needs a reset.

Planning and organizing a budget for your household is no easy feat. It requires considerable practice and some trial and error before you find a budgeting strategy that really works for you and your family. However, it’s important that you do not keep forcing an ineffective budget. Dave Ramsey points out seven signs that indicate that your budget needs a fresh start.

1) “Withdrawing cash before you budget.”

Pulling out money at the beginning of the month and promising to work it into your budget later is a risky budgeting tactic. Rather than falling into this trap, make sure you have your budget ready before the month begins.

2) “Not giving off the top (or at all).”

While it seems counter-intuitive, giving money off the top of a well-managed budget can actually make your budget more successful. According to Dave Ramsey, this is because “managed money works harder.” He advises that charitable giving be one of the first things your budget accounts for every month.

3) “Constantly worrying about ‘unexpected’ big purchases.”

You never know when an emergency will strike. This is why it’s so important to have an emergency fund set aside for major surprise expenses. Your monthly budget should allocate money for your emergency fund to offer you some peace of mind.

4) “Robbing yourself to pay yourself.”

Dave Ramsey uses this phrase to mean spending money you don’t really have. If you are making a ton of purchases simply because you have money in your accounts, you are robbing yourself of future savings. Keep track of all your purchases and determine which are non-essential. Place the money you would have spent on unnecessary purchases in your savings for some delayed financial gratification.

5) “Forgetting about annual expenses.”

Forgetting about annual expenses such as medical appointments, pet vaccinations, car payments, holidays, and so on can cause you to dip into your emergency fund. Instead of stealing from your savings, plan for annual expenditures in advance and ensure you save for these recurring costs.

6) “Spending too much in one category.”

Are you spending half of your budget on groceries? If so, you are overspending in this area of your life. According to Dave Ramsey, your budget should be broken down into the following:

  • 10–15% for food
  • 25–35% on housing
  • 10–15% in savings
  • 10–15% on charitable giving

Additional expenses, such as buying clothing or paying for insurance should also be taken into account. Remember to keep track of every aspect of your budget, so you know exactly where every bit of your money is going.

7) “Using the same budget every month.”

When it comes down to it, you will have to make a new budget every month. This is because your expenses and needs change from month to month. While you can use past budgets for reference, make sure you revise your spending plan before the start of every new month to ensure that your budgeting is continually improving.

This is some of the advice that Dave Ramsey offers in his article “7 Signs Your Budget Needs a Fresh Start.” Are you looking for the right insurance to fit your needs and your budget? If so, contact the experts at Stromsoe Insurance Agency in Murrieta, California. Our dedicated team is ready to assist you with all your coverage needs today.

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