I’m delighted to introduce Suzanne as a member of The Mom of the Year team! Suzanne amazes me with her incredible budgeting smarts and financial savvy. She regularly makes magic happen for her family for a song, organizing their lifestyle around a firmly established budget. Suzanne will be sharing her economic techniques and ideas with us, and I can’t wait for all of us to learn from her!
Let’s face it friends, life is expensive. Gas prices change quicker than my mood on a Monday, milk and bread are no longer cheap staples, and fruit can catapult your grocery budget into the red quicker than a rogue marker on a beige carpet. Raising a family can often leave you overwhelmed and your bank account underwhelmed.
You are left defeated and wondering if you’ll ever win the uphill money battle. But implementing a zero-dollar based budget can turn feeling overwhelmed into feeling in control. After all, it’s your money–shouldn’t you be telling it where to go?
A zero-dollar budget means you are budgeting every single dollar that comes in, right down to your Friday night pizza. Our family first began zero-dollar budgeting when a money savvy friend introduced us to Dave Ramsey and his debt reduction plan. It worked so wonderfully for them that we decided to give it a shot. Since beginning a zero-dollar budget we’ve chiseled away debt, planned several family getaways, and the holiday season was a time of joy and giving (as it should be) rather than stress. Overall our stress level is down and our bank account is up. Not because of increased income but all because of a solid working budget.
Here are 7 steps to get you on your path to smarter money management with zero dollar based budgeting:
1. Make it a date! Set a time with your spouse where it is just the two of you. No kids, no laundry piles, or dirty dishes. Okay, okay. I know that’s impossible. At least put the laundry out of sight. Your only companions should be paper, pen and your bills.
2. Write it all out. Start easy with the reliable bills that come every month. Car payments, electric, mortgage, water and so forth. Next do grocery, clothing, sports fees, babysitter, music lesson, etc. Last should be your spending money. This is the “not so necessary but sure is fun to have” money. You have to have a budget for your budget. This extra money takes commitment and will power on your part. Challenge yourself to stop less for coffee, wait one more month before buying new jeans, saying “no” to the new throw pillows. You just might find you have a bit more money when you put yourself on a money diet.
3. Keep track and communicate. Hold yourself and your dollars accountable. Write down every single dollar that is spent. There are several computer programs and apps that will assist you with this. Do some research and decide which is best one for you. We choose to use the EveryDollar app. Be sure both partners use the same program and communicate daily in regards to spending and upcoming expenses. And most importantly STAY IN BUDGET.
4. Use cash. Remember being a kid and heading to the MAC machine to “tap mac” with your mom? Well, it’s time to get nostalgic and go do that with your kids. Show them the innards of a brick and mortar bank. Plastic, whether debit or credit, makes it so easy to spend. It means we always have money with us, even if we don’t. Pocket some cold hard cash and leave the plastic home. Cash holds us accountable.
5. Which leads us to step 5, how to use cash. Cash makes using your zero-dollar budget easier. Head to the dollar store and buy a coupon portfolio. Figure out how much cash you need for the week, or two weeks if you prefer, and label each section of the portfolio. When you head out for errands you have your organizer divided by groceries, dry cleaning, birthday presents, coffee, etc. Anything you can use cash for you should. Using cash helps you keep expenses on track and makes budgeting easier. If you allot $10 for two weeks of coffee you will find yourself saying, “hmm, do I really need that cup?”
6. Make a new budget each month and talk about the future. Some things, mortgage for example, will remain consistent by the month. But other expenses change monthly. Are soccer sign ups this month? Do we want to visit the zoo next weekend and is that in the budget? Car inspection is up next month. Who needs new shoes and what is our budget for that? Hold a monthly budget meeting and soon your household expenses will be running like a well-oiled machine.
7. And lastly, but perhaps most important, is get the kids involved. One of the most important things a parent can do is raise a financially fit child. Children need to learn early on that life isn’t free. You don’t want them heading off to college and saying “wow, groceries are really, really expensive!” Include your children in your budget meetings and show them how a budget works. Make it simple and age appropriate. Grade school age children can comprehend numbers, so showing them the $275 January heating bill will help them understand why pizza night can’t happen every Friday. They may even start to turn off the light when they leave the room! Does your child need new soccer cleats? Discuss a good budget with them and if they decide they need to have the fancier, more expensive pair have them contribute the difference with their own allowance.
A zero dollar budget can be daunting at first, especially if you haven’t operated on a budget before. But with time, patience and commitment you will soon see the rewards. It will feel like you got a raise as you challenge one another to come in under budget. And with a little extra cash the possibilities are endless. Stash away for a vacation, pay the car off early, or take the family out for ice cream. The choice is yours. Before long you and your partner will be fist bumping and high fiving your way through the month as you celebrate your zero-dollar budget finesse.
More financial scoop you should know? As a home owner you have an asset available that you can tap into when you need extra cash after you retire. Your home has a value which increases or decreases based on changing local markets, home improvements and other factors. When you talk to a reverse-loan lending agency you can determine what the current value of the home is and how much of that value you can take out as spendable money. Reverse mortgage funds will most likely be allocated to you in small monthly doses or can be given to you in a single payment if you choose. What makes a reverse loan of this type unique, other than the fact that it is only available for retirees, is that you don’t have to pay back the money quickly as you would with a normal loan. However, if you ever leave your home before you have repaid the balance then the loan balance will be owed almost right away. Look into it, friends!
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