Budgeting

Frequently Asked Budgeting Questions

What is budgeting?

Budgeting is making a plan for your money before you spend it—so you’re telling your money where to go instead of wondering where it went. At Ramsey, we use a zero-based budget, where your income minus your expenses equals zero because you’ve intentionally given every single dollar a job to do.

What should a budget include?

A budget should include every category where your money will go that month. Your exact categories will depend on your life, but here are some common ones:

• Giving: tithing or charitable giving
• Saving: emergency fund, other goals, retirement (based on your Baby Step)
• The Four Walls: food, utilities, shelter (rent/mortgage) and transportation
• Other essentials: insurance, childcare, debt payments (if applicable)
• Everything else: entertainment, dining out, subscriptions, personal spending and other nonessential expenses

How often should I make a budget?

Make a new budget every month before the month begins. Each month will look a little different, so your budget should flex with it.

If you get paid weekly, biweekly or monthly, just plan your expenses around each paycheck and adjust as needed.

What if my income changes every month?

If your income changes every month, look at what you’ve made over the past few months and use the lowest amount as your planned income. That gives you a conservative starting point for your budget. Then, if more money comes in during the month, adjust your budget and put those extra dollars to work.

How do I stick to my budget?

Stick to your budget by planning your spending before the month begins, tracking your transactions as you go, and adjusting when life happens. It’s also important to remember your why—the reason you’re budgeting in the first place—whether that’s getting out of debt, saving for a vacation, buying a house, or reaching another money goal.

How do I choose budget categories?

Before you jump into the bills and other expenses, set aside money for giving. We believe in putting 10% of your income here. And if you don’t have an emergency fund yet, make savings one of your priorities. Next is the Four Walls: food, utilities, shelter and transportation. Create a budget category for each of these. Do the same with your remaining essentials like insurance, childcare and debt (if any). Finish with nonessentials like personal spending, entertainment, dining out, subscriptions and miscellaneous.

What if I go over my budget?

If you go over budget in one line, move money from another line to cover it and keep your overall budget balanced. Don’t panic or give up on the whole budget because one number was off. Then use what you learned to plan that line more accurately when you make next month’s budget.

Do I still need to budget if I make good money?

Yes. It doesn’t matter how much you make—budgeting is about what you do with what you make. Some people making six figures a year living paycheck to paycheck because they don’t manage their money well. A budget gives you clarity, direction and peace with your money, no matter your income.

What's the easiest way to start budgeting?

The easiest way to start budgeting is to follow five simple steps: List your income, list your expenses, subtract your expenses from your income, track your transactions all month long, and make a new budget before the next month begins. Don’t worry about getting everything perfect your first month—just start.

What's the best budgeting tool or template?

The best tool is the one you’ll actually use and stick with. Look for something that makes it easy to plan your spending, track your transactions, and adjust your budget throughout the month. You can use pencil and paper, a spreadsheet, a template or a budgeting app like EveryDollar.