Our challenge the first week was to save $1,000 in a baby emergency fund and, as you can see in the picture below, I’ve hit that goal and even earned a little interest.
The next challenge I tackled was creating a zero-balance budget in which every dollar I make has a name. After three or four nights working in spreadsheet, I was able to create my budget and I now know where every dollar I make will go.
Tied in with the zero-balance budget was beginning to use a cash envelope system for my expenses. This system involves looking at how much I have budgeted for things like groceries, gas and restaurants, pulling out that much cash from the bank, placing that cash in an envelope, and only spending money for those categories with that cash. And, once the cash is gone, I stop spending money. The idea behind this step is that it hurts to spend cash way more than it hurts to use a debit card and people generally spend 12-18% less when using cash. So, now I’m on a straight cash system, pulling dollars out of envelopes whenever I want a latte or whenever I need something at the grocery store.
I know that it’s only been four weeks of me trying to get a handle on my finances and put them at peace, but I feel really good about the direction I’m heading. At this point I miss having my Monday nights free to hang out with my fiancée or read comics, but learning sound financial principles has been more than worth the time. It really is my hope and prayer, though, that these changes become a pattern in my life, not just some blip on the screen.
