Thursday, 11 August 2011

Zen and the Art of Zero Budgeting

One of the reasons I started this blog was because one of the most frequently asked questions I would get was "how do you afford all those kids?"

The answer is pretty simple. Actually so simple that sometimes I think that people have a hard time believing me when I tell them. Especially since the pace of life tends to make us think that every thing has to be so complicated....seriously, have you seen the way some kids toys are packaged these days? You almost need a degree in engineering just to get the box open!

So what is the super simple secret to never ending bliss and happiness? Still working on that...but I can tell you that the secret to making sure that all the bills are paid each month and still having enough to buy the odd treat or two is budgeting.

With the amount of debt so many people are in it these days it makes me wonder if budgeting is becoming a dying art. Debt is one of the most aggressively marketed product these days... I can't tell you how many credit cards I have been offered in the last month!

Not only that, but now a days there are twenty somethings who have never experienced the joy of baking home made cookies, let alone the joy of balancing a cheque book! Yet these same non-foodies feel that they are entitled to the same lifestyle their parents worked for years to achieve.

Think about it this way, a household runs like a is a real economy with income and expenses, assets and liabilities, production and waste. Like any business, household should also be concerned with watching the bottom line...which is where the magical mystical zero comes in to the equation.

Anyone with a math background, and really who doesn't absolutely LOVE anything to do with math, would know that in fact zero, while being the smallest non-negative integer, is a rational and therefore real number even though it is neither a prime number nor a composite number. (those of you who know how I really feel about math are laughing at me right about now)

But on an even deeper level, numerically speaking, it can be said that zero represents a state of balance. It is the point where the positive and negative integers cancel each other out. It is the centre point of a number line. It begins the positive, and ends the negative. Just as being still and doing nothing are two very different things, having zero and having nothing are two very different things. Perhaps the reason people who worry about having money at the end of each month are always stressed out, is because they are always seeking to be out of balance!

I have mentioned before that I am not a big fan of reinventing the wheel so I should point out that I learned the process of zero budgeting from the book, "Total Money Makeover" by Dave Ramsey, not to be confused with Gordon...who has a very fine line of stainless steel cookware by Royal Doulton. Although I think he spells his name with two As.

(BTW, you can check out Total Money Makeover in my recommended books widget)

Here is the math:

Basically this is done via simple spreadsheet, but I haven't figured out how to html a graph on to the blog yet....

In one column, let's call it column A, write down all sources of income eg, pay cheques, tax returns, money from pop bottle returns, whatever.

Next in another column, call it column B, or Beta or Centauri even, whatever you want, just watch out for the Zando-Zan.... I digress. Anyway, write down all of your monthly expenses eg, mortgage, utilities, cell phone etc. in the second column.

BE SURE TO TREAT SAVINGS AS AN EXPENSE!!!!! This is the key to staying out of debt and still getting the things you want in life.

Total each column.

Column A - Column B should equal Zero.

If you have a negative number, you need to figure out what to cut back.

***** REALITY CHECK***** if you are getting negative numbers on a regular basis, you are living beyond your means.

If you have a positive number it means that you can either allocate more for savings or perhaps you can get yourself that (insert frivolous treat here) you were looking at.

The comfort of a zero budget is that every penny gets in its place and is accounted for. It gives each dollar a sense of purpose. It can be argued that when a person does not feel a sense of purpose, they feel like they are a without purpose can easily go to waste as well. It will also put into perspective what you need versus what you want. Buying what you want is not a bad thing....if that is what you have purposed your money for. We (TiPSI Mom and I) wanted something that easy to use and could replace most of the functionality of our lap top, so we purposed our money and now we write our blogs using our brand new Ipad2s!

Right about now some of you (if you haven't already) are saying that there is just not enough time to do all this. The funny thing is, like a good friend said to me once, I only get 24 hours a day, just like everybody else, and I still manage to find half an hour every two weeks to set a budget. Ahem, AND I have seven kids.....

Taking care of our finances has scriptural roots too, The Parable of the Talents (Mt 25: 14-30) is ...not just about using our God given talents...but it also gives us insight of the importance of treating or money with respect.... How many times have you walked by a penny in the gutter? It will also make you aware of the abundance you have in your life!

One of the useful tidbits that I got from one of the countless self help books I read before I started reading Chesterton was that no body will care for your money as much as you. But even more importantly, if you subscribe to the notion that God provides, it stands to reason that anything we have has actually been given to us by God that we might be the faithful stewards of His creation.

Zero budgeting is a way to accountable to the last penny and therefore to be faithful in little things. (Lk 16:10)

It also allows us to provide the best for our little ones.


Next week: odds and ends.....

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