Last week I shared all about the 2018 Budget Binder and I for one couldn’t me more excited about this set of budgeting printables. However if you’re new around here or not familiar with Dave Ramsey, then you might be asking yourself a lot of questions! How do I use these printables? How do I set up my binder? And what in the world is a sinking fund?! I’m here to answer all of your questions!
The 2018 budget binder setup is simple and effective. Once you’ve used the monthly budgeting forms for a few months, you will find that it takes you just 15-20 minutes to complete your budget each month! Maintaining your budget shouldn’t be more than 5-10 minutes each week. It really is that simple!
Below I’ve gone through the most important budgeting forms included in the 2018 budget binder. You will see the budget binder setup, how you can utilize each form, and how you can simplify your finances to really keep track of your spending. I also talk about how I’ve setup my bank accounts to make budgeting in this method so easy!
You can purchase the entire pack of budgeting forms here. Also note that this form of budgeting is based off of Dave Ramsey’s financial principles. If you aren’t familiar with Dave Ramsey, I highly recommend reading his book The Total Money Makeover or enrolling in one of his Financial Peace University courses either online or through a local church.
2018 Budget Binder Setup
The first form in the monthly budgeting spread is a calendar overview. You can use this form in so many ways. Use it as an overview to see all of the bills you pay out each month, color code it based on income, auto paid expenses, and other expenses, or use it to track just your yearly expenses that can often be forgotten. Above you will see I just listed the bills that are due on specific dates. By doing this, I can easily flip to a month and see what’s due on any given day.
You will also notice that I’ve included a column for your monthly goals. I recommend utilizing this section to break down your yearly goals. For example, if you want to add $2400 to your emergency fund this year, then you might right down “add $200 to emergency fund” as one of your monthly goals. A goal of adding $2400 to your emergency fund might seem overwhelming. But if you break it into small chunks, then it’s much more realistic and achievable.
The next form you will find is the monthly budget form. This can seem a little confusing so let’s break it down. I like to do my monthly budget a few days before a new month starts. So if you know what income your going to have in a given month, just right it down in the income section. If you don’t know exactly what you will receive, just estimate here. (I always recommend estimating low. It’s always better to get more income than expected than less!) Write down your income and the date you expect to receive it. Then total up how much you expect to receive throughout the entire month. This number is very important.
Use the “Off the Top” section to take out your tithing, savings, investments, and college savings. These should come out of your budget first. A tithe is typically 10% of your total income that you plan to give to your church. If you aren’t Christian and don’t tithe, you can use this section to include anything you plan to donate to charity or other organizations. Savings is what you will transfer to your main savings account or emergency fund if you are working to build that up. I recommend making your investments and college savings auto drafts from your bank account.
The second section of the budgeting form is where you will include your bills and expenses. I’ve separated these out into two sections: bills due on the 1st-15th and bills due on the 16th-31st. This will help you see what paychecks need to cover what bills each month.
You will notice at the top of each of the bills columns I have pre-labeled two of the rows as “Cash Envelopes” and “Sinking Funds.” You will get your numbers for those items from other budgeting pages. We will discuss those next.
Once you’ve completed the sinking funds and cash envelopes and have totals for each column you can complete your budgeting form. You will transfer your “Off the Top” total, “Bills Due 1st-15th” total, and “Bills Due 16th-31st” total to the bottom left of the budgeting form. Calculate to get your total outgoing expenses. Then use the right section of the bottom of this form to subtract your total income minus your total expenses. This should always equal $0. This is a zero-based budgeting form which means that every dollar has a name. If you have money leftover at the end of the month, then you need to adjust your budget to include that income so that it doesn’t just seep out of your bank account without a plan. Similarly, if your expenses are greater than your income and you end with a negative number, you will need to adjust numbers in your budget.
The next form is your sinking funds form. However, I recommend starting your sinking funds by utilizing one of the notes pages. (Note: I print out a handful of these and put in the back of my budget binder for use throughout the year.)
A sinking fund is a way for you to save for large expenses you have throughout the year. Christmas is a wonderful example of a sinking fund. If you purchase gifts in December for family and friends, you will likely spend a larger chunk of money than usual throughout that month. This can be a huge hit to your budget if you aren’t prepared. However, by setting a budget at the beginning of the year and saving a little bit each month you will be ready for those expenses! A sinking fund is a great way to keep from going into debt for these large expenses.
In the above form, you will see how I created a mock “Sinking Funds” budget for the year. I included Christmas, Vacation, Car Tags (or registration fees that you pay to the state), medical, car savings, and car maintenance. Some others that you might want to include are home maintenance, pet care, kid’s activities, any yearly contracts you have (i.e. pest control, A/C maintenance, etc.), or Amazon Prime. The options are endless for things that you might want to save for!
Simply make a list of the items you want to save for on the left. Decide an amount you hope to have for that item and how long you have to save for it. In the example above, I kept it simple and used 12 months for all of them. However, you might plan to go on vacation in July this year, so you might want to divide your vacation sinking fund by 6 instead of 12. Remember, let this budgeting method work for you!
Once you’ve set your yearly goal and how long you have to save, you just divide.
Yearly Goal / Number of Months = Monthly Savings to Sinking Fund
We keep our sinking funds in separate checking and savings accounts. The bulk of our sinking funds are smaller and are kept in a separate checking account. By having a checking account, we can easily write a check or use our debit card if a sinking fund expense comes up throughout the month. If it’s a much larger sinking fund, then we utilize a savings account. For example, a car savings would probably be in a savings account. This is something that’s going to take several months or even a few years to save for. It’s going to be a large amount of money that you won’t want to touch. So a savings account is probably best.
Once I’ve set my yearly sinking funds, I then go to the monthly “Sinking Fund” form and fill it in. You will list your sinking funds down the far left column. The second column labeled “Start” will be the amount of money you are starting with before the month begins in that fund. If you are brand new to sinking funds, this number will likely be $0. That’s okay! It will grow quickly! 🙂
The third column labeled “+” will be the amount of money you plan to deposit into that fund during that month. This is also the only column you will want to total at the bottom of the page. (Note the form above.) This is the number you are going to use for your overall monthly budgeting form from before. You may need to split that up throughout the month or you can take it all out at once. Just go back to your budgeting form and input that number anyway that works in your budget. Scroll up to the image to see how I did it in the monthly budgeting form.
The fourth column labeled “-” is where you will note anything you have to spend from that account throughout the month. The fifth and final column is your ending balance in that account at the end of the month. You find this number by doing the following math:
Start + additions from the “+” column – subtractions from the “-” column = End
The ending balance will also be what you transfer to the next month’s budget as your starting balance.
Let’s look at the medical sinking fund in the form above. I had a starting balance of $250 in the medical sinking fund. I added $50 to the sinking fund. I also had to spend $75 on a medical bill. So my math would like like this:
$250 + $50 -$75 = $225
I realize this form might look complicated if you aren’t used to utilizing sinking funds. However, it’s a wonderful way for you to plan ahead, save for large expenses, and most importantly stay out of debt!
The next form is for your “Cash Envelopes.” I’ve mentioned that I’ve based all of these budgeting forms off of Dave Ramsey’s financial principles. One of the most important things he teaches is to use cash. That’s why we use this form to make a budget for what we plan to take out in cash each month. Your cash budget sections should be used for things that you spend money on regularly or tend to go over budget on.
If you don’t plan to use cash, I recommend you still use this form to create a budget for these items. You can use a debit card for these items, just make sure to keep track of your spending!
Once you’ve completed your list of categories and the amount you plan to budget, total up your budget column. This is what you will transfer back to your overall monthly budget form.
The final budgeting form in the monthly spread is for irregular income. This form is simply a way for you to plan for unexpected income before it comes in. Anything from a tax refund, overtime, a bonus, or a side hustle could be included. The possibilities of additional income are endless.
To fill out this form, you will want to make a prioritized list of items you hope to utilize your additional income for. This might be for one of the Dave Ramsey baby steps like paying down debt or increasing your savings. Or you might want to save for larger purchases like furniture or a large trip. You could even add it to a sinking fund to get to your goal sooner!
Make sure your list starts with the most important item you hope to fund and goes down to the least important. Set an amount you hope to fund for each item. Then add up the running total in the far left column.
Look at the example above. Bill and Cindy hoped to add $250 to their savings. So in the running total in the first row, it would be $250. Second, they wanted to pay for some new furniture which they set a $500 budget for. So in the running total of the second row they added the $500 to the $250 from the first row to get $750. In the third row, they wanted to add $200 to their vacation fund. So in the running total in the third column they added the $200 to the $750 from the second row running total to get $950.
At the end of the month, Bill and Cindy recorded all of their irregular income at the top of this form. They received $850 in the month of May in irregular income. So they were able to fully fund their savings, their furniture, and $100 toward their vacation. This is why it’s so important to make sure your list is prioritized. You simply go down the running total column and fund everything you possibly can with the money you receive.
Above you will see an example of what your yearly financial goals form might look like. You will need to set a S.M.A.R.T. goal. A goal should be specific, measurable, achievable, results-focused and time-bound.
Set a due date for when you hope to achieve that goal. Then list your action steps you need to take in order to achieve that goal. I recommend putting this form towards the beginning of your budget binder and look at it frequently. Use this form each month as you are setting your budget so that you are working towards these big goals.
The emergency fund form is a great way to keep track of what you have in your emergency savings. I believe sometimes we tend to dip into our savings without much thought. However, by utilizing this form you will become more accountable to what you are actually using that money for.
I recommend putting a starting balance at the top of this form along with the date. You can see how I did this in the example above. Every time you add money to this account make a note on this form. You can see how I did this above. Write “credit” in the action column and the month you made the deposit as the purpose. Include the date and the amount you added. Then add this number to your former balance.
If you have to take money out of your emergency fund, then label the action as “debit.” Make sure to include the purpose. For example, one of the “purposes” for a debit above is an E.R. visit. If you are forced to write down the purpose and, more importantly, discuss this form with your spouse or financial partner, then you will be more cautious of taking money from this account. It will probably be a true emergency if you actually debit the account!
The Outstanding Debt form is a great way to keep track of your balances if you are in Dave Ramsey’s baby step 2. I recommend listing your debts on this form from least to greatest in order to follow Dave Ramsey’s budgeting principles.
You can then just list your minimum payment each month along with any additional amount you are able to put towards that debt during the month. Then keep a balance of what is owed in the far left column of each debt.
You will notice in the example above that I only made extra payments to the smallest debt until it was completed paid in full. Then I rolled this amount plus as much additional money as I could into the second debt. This is called the debt snowball method.You can read more about this method of paying down debut quickly at Dave Ramsey’s website.
The budget binder also includes several spending trackers. These are a great way to keep a running tally of how much you are spending in certain areas of your budget throughout the year. These can give you an estimate of how much you need to save in particular sinking funds the following year. They can also be very helpful for tax purposes if you are able to write off certain expenses.
As for the budget binder setup, I prefer to categorize my binder by month. I’ve placed the important printables such as our yearly financial goals, emergency fund spreadsheet, long term financial planning page, and the Dave Ramsey baby steps at the very beginning. I’ve placed the spending trackers and any note pages at the very end. Just remember, this budget binder is meant to work for you. Set it up in a way that fits your needs and you will be on track to really taking control of your finances!
If you have any more questions, please leave them in the comments below or send me an email at firstname.lastname@example.org and I’d be happy to help!