There are two primary reasons we should proactively keep track of how we are spending our money:

“Imagine a father who decided to give his 21-year-old son some responsibility to manage a part of the family business. The father sits the son down and explains that $6,000 will be given to him every month. The father did not give much guidance about how to spend the money, and the son did not ask. 

Six months pass, and the father calls the son into his office and asks him what he has done with the family money. The son is surprised by the question, and sulks a bit. Without raising his eyes, the son quietly says, “I don’t know.” The father is shocked, “how can this be?” But the son shrugs and says, “I haven’t been paying attention.”

“One who is faithful in a very little is also faithful in much, and one who is dishonest in a very little is also dishonest in much. If then you have not been faithful in the unrighteous wealth, who will entrust to you the true riches? And if you have not been faithful in that which is another’s, who will give you that which is your own?” Luke 16:10-13, ESV.

• If God asked you today how you have been spending His money, could you quickly provide an accurate account?

“But everything exposed by the light becomes visible—and everything that is illuminated becomes a light.” Ephesians 5:13, NIV

• Bad habits fester in the darkness. The more we make our spending habits visible to the light, the more likely we will make better spendings where we are not spending more than we earn.

STEPS:

1. Determine the monthly expense of everything. For example, if you only get running shoes once-a-year for $120, the monthly expense would be $10. If you tend to replace your computer every four years for roughly $1,500, then your monthly expense for having a computer would be $1,500/(48 months) = $31.25
2. After every monthly paycheck, allocate these monthly expenses to each relevant bucket.
3. Only pay for things out of your buckets. If your bucket is empty, then don’t buy it.
4. Make your budget names as specific as possible. The more you personalize the bucket, the less likely you will raid it (e.g., “Kindle” instead of “electronics” or “Florence trip 2023” instead of “vacation”).
5. Here is an example from my YNAB budget:

Notes:

• The middle column are actual expenses this month where I have drawn out of my bucket for costs incurred this month (or budget/envelope).
• I allocate $22 every month of my monthly income to ‘Apple Watches’ in order to replace my apple watch every 3 years, as well as my wife’s watch. This bucket has grown to $280, and is big enough now to replace my wife’s Apple watch. Since her watch still is working, I will let the bucket continue to grow.
• I plan on replacing my iPad every 5 years ($400/60 months) so I contribute $7 per month of my monthly income to my iPad bucket.

Steps for a cash flow budget:

1. Determine how much money goes out each week for bills and expenses.
2. Determine how much you receive each week.
3. Make sure your ending weekly checking balance is never expected to go negative.

OPTIONS IF YOU ARE NEGATIVE:

1. I’ll negotiate a new due date for my bills with the company so they’re due after I receive income. First contact companies where you have a good payment history and long-standing relationship. They are more likely to be open to adjustments.
2. I’ll negotiate splitting a large monthly payment into two smaller ones due at different times. For example, if you can cover your $700 rent with a $350 payment on the first and fifteenth of the month, it might free up more money at the beginning of the month to cover other bills.
3. I’ll change large lump-sum payments into smaller monthly payments on things like car insurance. There may be a small fee to pay monthly, but it can still make handling these payments more manageable by breaking them into smaller chunks.
4. I’ll check to see if I qualify for an energy assistance program in my area (https://liheapch.acf.hhs.gov/help).
5. I’ll explore level payment plans for utility bills. This averages your annual use over a 12-month period, so that you pay the same each month and avoid seasonal spikes in cost. This is especially helpful for budgeting in extreme climates where you have high bills in the summer and winter months. Check with your utility providers to see if you qualify.

OTHER WAYS TO CUT COSTS:

Food

• Stick to a shopping list. Use coupons, but only for products you normally buy. 
• I will join with other family or friends to buy groceries and supplies in bulk (if the cost per serving saves money).
• Bring your lunch and snacks to school and work instead of eating out.
• Avoid buying snacks at the gas station, corner store, and vending machines. Plan ahead and buy at the grocery store. Buy in bulk when cost is cheaper.

Clothing/Fashion

• Buy clothes at thrift shops – especially for children who grow quickly.
• Don’t buy clothes because they are on sale if you don’t need them.
• Have clothing swaps with friends and family.
• Buy clothes in the off-season – good winter clothes during summer.

Utilities

• In winter/summer, set the thermostat cooler/warmer.
• Install weather strips around and under doors and windows to prevent air leaks.
• Dry your clothes on a clothesline outside.
• Get subsidized internet for free (https://www.internetessentials.com).

Other

• Buy high quality items and take care of them well.
• Exercise regularly and eat right to avoid future medical expenses.
• Use the library to borrow books, magazines, movies.
• Use OfferUp and other resale services to replace furniture.
• I will request a new due date for some of my bills to make them better align with my

STEPS:

1. Fill out the lifestyle worksheet to see how much it costs you to sustain your life over a long period of time.
   1. Find out how much it costs for you to live given what you are responsible paying for.
   2. Find out how much it costs for you to live if you were completely on your own.

STEPS:

1. Fill out the cash flow budget worksheet below for your next month.
2. Make sure your ending weekly checking balance is never expected to go negative.

• Watch YNAB’s instructional videos.
• College student spending habits.
• 11 Simple Ways to Boost Your Monthly Income, No Matter Your Age.
• 18 Easy Ways to Boost Your Income and Make More Money.
• 40 Ways to Save Money on Monthly Expenses.
• How to Save Money on All Your Monthly Expenses and Bills.