The Best Way to Win With Money

Chris HoganBy: Chris Hogan, Ramsey Solutions

Back when I played college football, I remember one of the most important keys to winning was preparation.
We practiced every day, and we closely studied the game plan before every game. The game plan prepared us for what might happen. We went into each game knowing what we needed to do and how to react to our opponents.
Your monthly budget is a lot like a football team’s game plan. You prepare the budget every month before the month begins. It’s a game plan for your money because you’re telling your money where to go and how you’re going to spend it.
Why does it matter?
Well, let me ask you this: Have you ever reached the end of the month and wondered where all your money went? You almost feel like those hard-earned dollars just disappeared from your bank account.
But you probably spent them on a daily coffee, eating out, a movie or two, and who knows what else. All those small purchases add up quickly and, eventually, you’ve got hundreds of dollars unaccounted for.
With a budget, you simply take your monthly income and then subtract every single one of your expenses. That number should equal zero.
So if your monthly take-home pay is $3,000, I want you to write that down at the top of a blank sheet of paper. Or, better yet, input it into a budgeting tool like EveryDollar. It’s one of the newest online budgeting tools on the market, and it’s free and easy to use.
Then, input all your expenses for the month. Every single dollar should “have a name.” Think about your bills, your savings, your charitable donations, and the money you just want to have fun with. All your income should be assigned to a category.
Once your income minus your outgo equals zero, then you’ve completed your first zero-based budget. Congratulations!
Now, don’t expect this to go perfectly right away. It will take a little time, usually around three months, to get the budget the way you want it. You’ll have to adjust some categories here and there, but you’ll eventually get the hang of it.
Here’s the best part: When you start budgeting, you’ll feel like you’ve been given a raise. That’s because you’ve suddenly discovered where all that lost money was going.
So, this month, I want you to start budgeting your money. That’s your game plan, and it’s the best and quickest way to begin winning with money.