Budgeting 101 for Minimalists

Editor’s Note: This is a guest post by Kara Walker.

What does a lawn mower in the kitchen, eight can openers that you don’t need, and a relative dropping off keepsakes you don’t want (but don’t know how to tell her) have in common? A waking nightmare for minimalists! There is so much freedom from stress when everything is in its proper place, and the extras aren’t crowding out space.

How much so with our money! Often modern Americans, as Dave Ramsey says, “Buy things we don’t need with money we don’t have to impress people we don’t like.” Yet minimalists desire to be more intentional with their finances, and enjoy the resulting mental peace. It is important to align our values with spending habits and limit excess in categories that don’t reflect our priorities.

Budgeting is telling our money where to go instead of wondering where it went. If we want to live an intentional life consistent with our values, we need to put our money where our heart is. Budgeting matters because our dreams and passions matter. Budgeting brings our money from chaos to order, like taking the piles of clothing on your bedroom floor, donating what you don’t need and organizing the rest!

My Story: Debt-Free with $10K in the Bank After College

As a self-proclaimed personal finance nerd, I feel strongly about the importance of an intentional budget. I first learned about budgeting in high school, through Dave Ramsey’s Financial Peace University. I became fascinated with money management, leading me to graduate from college debt-free through grants, scholarships, internships, and paying cash, with another $10,000 left in my bank upon graduation. This allowed me to start a business and begin investing for retirement immediately after finishing school.

Because I have applied my knowledge about budgeting, and have been able to invest wisely due to no debt whatsoever, I am now on track in my twenties to become a millionaire in retirement. Why am I thinking about retirement already? Dave Ramsey taught me about the 8th wonder of the world –compound interest! It goes both ways, negatively when in debt, and positively when in investments.

Starting Your Budgeting Journey

Budgeting is a stepping stone to a world of possibilities to live the life that is in alignment with what matters most to us, from having enough money for vacation and Christmas this year, to a renewed marriage because money squabbles are a thing of the past, to the potential of retiring early to travel the world.

So how should you budget? You may have heard about Dave Ramsey’s baby steps – his system of getting our heads above water, then truly finding financial peace. There are seven steps to do in order, from paying off debt and having an emergency fund, to paying off your house early and building massive wealth. For the purposes of this article, we will focus on Steps 1-3 to get you started.

Budgeting starts with looking at your income minus expenses. In high school, I began doing this in a notebook, but now I use the free app EveryDollar. At the top, I insert my income, and assign every dollar to a job, like groceries, gas, Aunt Mertle’s birthday party, Christmas fund, and so forth. Everything should be subtracted so that at the bottom of the page, you get to zero. This does not mean you don’t have any money left, as some has been saved or given, or will be used when bills come due next week! It just indicates every dollar has been delegated. Knowing where every dollar is going is the most intentional way that we can steward the resources that we have been given. 

Before you worry about budgeting being too restrictive, let me assure you that it is actually low-pressure! It’s just a calendar for your money. Imagine you had planned on doing laundry, but your best friend from high school is suddenly in town and wants to catch up after 20 years. Laundry can wait. Calendars are flexible, and so are budgets. If you don’t use all your gas money for the month, transfer it over to more groceries, or have a spontaneous date night. You also have the flexibility to cushion some parts of the budget when you’re not sure how much it’ll cost. It’s just knowing what’s going on instead of wondering where your money is.

What SHOULD you be budgeting for? Start with any tithing you’ve committed to, and your four walls of survival–food, transportation, shelter/utilities, and clothing (not luxury items but necessities). After that, I highly recommend you consider ensuring accomplishing baby step number one of a $1000 emergency fund that is only (I repeat, only) for emergencies.

Intentional Baby Steps to Focus on What Matters Most

Recent studies show that 56% of Americans could not cover a $1000 emergency. This safety net is critical for your peace of mind so that when an emergency comes, it’s just an irritating bee sting instead of a debilitating blow. That is why it’s the first baby step towards an intentional budget.

After you have that $1000 emergency fund in place,  I encourage you to head toward baby steps two and three, which is paying off all your debt, and saving 3-6 months of expenses in a fully-funded emergency fund, for maximum financial peace and security. If this seems daunting, remember that these small steps, just like compound interest, really do add up over time. Living in alignment with your values means that you have planned for things that cannot be expected or planned, so you can still show up for the things and people that are important to you. 

Next Steps: Budgeting to Support Your Values and Goals

Now that we’ve covered the essentials and the unexpected, what’s next? What goals matter to you? If you love to travel and plan vacations, create your travel budget. Will it cost $400? $800? If it’s four months away, split it into quarters and save a quarter of the total each month. Budgeting is an exercise in looking ahead to plan for the future, instead of living in the past and paying off the money (usually with interest) for an adventure you already went on. Plus, having an amount set aside beforehand can help you not overspend on your trip.

If one of your goals is to reduce excess spending in categories that don’t matter to you, start small. Plan on cooking at home more than eating out, cutting your daily coffee run down to three times a week, unsubscribing to streaming services you never watch, and so forth. There are so many ways to take small, sustainable steps to remove excess spending so you can focus on what truly matters.

Just put your values and money to paper, and tell it all where to go instead of wondering where it went!

Don’t Forget:

• Budgeting is low-pressure! If something changes mid-month, readjust it. Don’t stress, but DO write it down.
• Giving, saving, and spending are ALL important and every little bit counts! Aim to give, save, and spend on fun things a little each month, even if only $5!
• If you have kids in middle school or high school and want them to find God’s path for college and graduate loan and debt-free, check out my Top 1.5% global podcast Money and Mental Peace.

Through aligning your budget with your values, you can metaphorically get that lawnmower out of the kitchen, and maybe even pay off your house early and hire a personal chef one day. Whatever is most important to you in your life – budgeting can help you plan for it and enjoy the peace that comes from knowing where your money is going.