If you want to be rich, you need to act like rich people. (If you want to be poor, act like poor people.)
Poor people spend everything that they earn. Some even spend more than they earn, going into debt with credit cards or loans. Living paycheck to paycheck is not fun (ask anyone who has done it).
Rich people spend less than what they earn. Sarah Damon reports that, “80 percent of America’s millionaires are first-generation rich, and they got that way by living below their means and saving the difference.” She then goes on to say, “To live below their means, the majority of millionaires (62.4 percent) track their spending. They know how much their family spends each year on groceries, dining out, gifts, clothing, child care, charity, financial advice, bills, tuition and vacations.
Fortunately for you, you can find a FREE Spending Plan on this blog for your use. Part of that spending plan is a section for savings. Some saving will be for short term use like vacations, furniture, or real estate taxes. Some savings will be for long term like appliance replacement, children’s college, or retirement.
But don’t exclude a special savings accounts for those unexpected expenses. My family use to call it a Rainy Day fund. Mary Hunt calls it a Contingency Fund. Suze Orman calles it Save Yourself Account. Many others call it an Emergency Fund. But whatever you call it, you need to do it.
What is preventing you from starting today?
Dave Ramsey, as part of his Financial Peace University, offers several budgeting forms. The real meat of his budgeting system is what her refers to as Form 7, his Allocated Spending Plan. Dave covers this in his third lesson Cash Flow Planning.
Chris last updated it in January 2010, and it appears as if he has abandoned his blog based on the vile comments posted and their age. Well, I have taken it upon myself to update the spreadsheet. Chris mentioned in his FAQ that he was trying to keep as close to the paper form as possible. He did add a few things to his spreadsheet to make it easier for him that I think would be confusing to the general public (and people who are not nerds). As a result, I took out his modifications making them even more like the paper versions.
He also had a Budget Savings tab on his spreadsheet which looked an awful lot like Dave’s Form 9 (Breakdown of Savings). I modified that tab to essentially recreate the paper form. I also added a new tab called Lump Sum to mimic Form 4 (Lump Sum Payment Planning) and incorporated both of those with the original Allocated Spending Plan. Finally, I cleaned up some stray formatting marks and some misspellings (the OCD in me couldn’t leave it alone).
In the comments, be sure to let me know what features you like about it. If you have any suggestions about future versions, please comment those as well.