After I graduated from college I took Financial Peace University by Dave Ramsey. This 13 week course is offered at hundreds of churches across the country. This was one of the best decisions I’ve ever made. Dave knows his stuff!
Keep in mind, I am NOT a financial expert nor do I claim to be. These are just my thoughts. Here are the top 5 things that I learned from this course:
1. Create a budget! Even if Judd and I were millionaires our family would still have a budget. It’s important to see where money is being spent. Below is a sample budget that is a great starting point.
You first enter your monthly income and then subtract all of the different spending categories. Every dollar that you make should be accounted for.
Adjust your budget to how your family spends money. For example, we have a travel fund on our budget because we travel a lot. It is important for us that we put a set amount aside every month so that we can pay for our vacations and not have to touch our savings. Don’t forget to leave a little (or a lot) of wiggle room in the miscellaneous category because unexpected things tend to come up. I track every month to make sure we keep within our budget and that a certain amount is moved into our savings.
It might take some time to initially establish a budget and track all of your spending but within a few months it will be easy and very helpful to your family!
2. Stay out of debt! Pay CASH upfront for everything- car, vacations, hobbies, etc. Don’t take a loan out for anything except a house.
3. When buying a house (or even renting) make sure the monthly payment is less than 25% (even less is better) of your take home pay and put at LEAST 20% down when buying the home (to avoid PMI). Having a home you love is important but you also should be able to enjoy your life and not have your entire paycheck going towards your home.
5. When it comes to mutual funds and your retirement accounts use diversification. This means you shouldn’t put all of your money in one place. This will lower the risk of losing money.
If you don’t have time to take the 13 week course, I recommend reading Total Money Makeover by Dave Ramsey. It’s a great book.
I don’t practice everything that Dave teaches…I don’t use the envelope system (I’m not patient enough for this) and I also don’t think that credit cards are bad IF you pay them off every month.
Again, I am not a financial expert…this is just what works for our family, this might not work for you but I hope it helps!