Our third week of Financial Peace University was about a cash flow plan. It’s about doing a zero budget. That means that you budget all of your money. All. Of. Your. Money. You plan where everything goes, down to the last penny.
The general budget was easy. Like I’ve said, we’ve done that before. We spend X on the mortgage, Y on utilities, and Z on groceries. When we had that homework, we just had to fill in the sheet from our information on the computer. Easy as that.
A cash flow plan. A zero budget. What? You want me to decide where EVERYTHING is going, at the beginning of the month? Ok, I guess I can do that. Except that meant we didn’t so much budget, but entered in how much we’d spent this month. You see, the general budget was done at the beginning of the month. But the zero budget was done after a few weeks, when we realized our budget might not hold out. So, we tweaked until we had zero money left at the end of the month.
The zero budget wasn’t hard to do. We had tweaked the general budget some to include all of our recurring monthly costs. But, we had never thought to plan out ALL of the money.
What we learned:
- You really can figure out where your money is going if you do a zero budget.
- You can budget for double payments on things instead of just talking about doing it.
- You can decide each month how much money you want to save.
- You get to change your budget each month. We had wondered about that before. We had talked about if we didn’t have any gifts to buy one month. What would we do with that money at the end of the month? The answer, you plan each month!
- You get to change your budget every month!
I’m excited to see how this month pans out. We’ve already realized that we don’t always know about impending costs. Or, maybe we need to think a little harder. For instance, there’s a bachelor party at the end of the month. It’s not in our budget, but we do have blow money* that is there for that specific thing. We’ll know when we sit down to discuss April, that we really need to look at our schedule for the month to see if anything is going on.
What we’ve done to change our financial lives:
- Double our car payments! After months of talking about it, we’ve been motivated to DO it! Looking at our zero budget showed us that we have the money to do it. We just needed to find motivation.
*Blow money – money that has been set aside to blow. Whether it covers an area that goes over, or is used for fun.