Money: Dave Ramsey's Monthly Cash Flow Plan
Every single dollar of your income should be allocated to some category on this form. When
you're done, your total income minus expenses should equal zero. If it doesn't, then you need
to adjust some categories (such as debt reduction, giving, or saving) so that it does equal
zero. Use some common sense here, too. Do not leave things like clothes, car repairs, or home
improvements off this list. If you don't plan for these things, then you're only setting yourself up
for failure later.
Yes, this budget form is long. It's really long. We do that so that we can list practically every
expense imaginable on this form to prevent you from forgetting something. Don't expect to put
something on every line item. Just use the ones that are relevant to your specific situation.
Every main category on this form has subcategories. Fill in the monthly expense for each
subcategory, and then write down the grand total for that category. Later, as you actually pay
the bills and work through the month, use the "Actually Spent" column to record what you really
spent in each area. If there is a substantial difference between what you budgeted and what
you spent, then you'll need to readjust the budget to make up for the difference. If one category
continually comes up over or short for two or three months, then you need to adjust the budgeted
Use the "% Take Home Pay" column to record what percentage of your income actually goes
to each category. Then, use the "Recommended Percentages" sheet (Form 6) to see if your
percentages are in line with what we recommend.
- An asterisk ( * ) beside an item indicates an area for which you should use the envelope system.
- The emergency fund should get all the savings until you've completed your full emergency fund of three to six months of expenses (Baby Step 3).
Taken with permission from Financial Peace by Dave Ramsey.
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