Dave Ramsey’s Financial Peace University – Week 3 Cash Flow Planning

by financialmom

in Money

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The real work begins in week 3 of Dave Ramsey’s Financial Peace University.  Cash Flow Planning (budgeting) requires time and attention, two things we seem to have the least of.

Most of us can’t be bothered to spend the time to put together a budget.  And that is exactly why most of us do not succeed with our money.

There are two basic keys to success with Cash Flow Planning:

You Have To Do It

This may sound overly simple.  You have to do it.   We can find all kinds of reasons not to.  We think it will stop us from doing the things we want to do.   We have never had a plan that actually worked.   We have never bothered to write it down (essential).

We think this is something for nerds and people overly focused on money (isn’t that a sin?).   Staying with the sin theme, doing a budget definitely feels like some sort of punishment.  We can’t be that bad with our money, can we?

Dave Ramsey says budgeting is not a method by which you make people behave.  Budgeting is a method by which you make your  money behave.  Big difference.

Dave gives you all the tools (forms)  to make the job much easier.  He starts with a detailed explanation on how to balance your checking account.  It’s kind of frightening how many of us don’t know how to balance our checking account, or ever bother to balance it.

There are many more forms to help you manage your cash flow, including a form to compute your net worth (another thing very few of us seem to know), income sources, payment planning, cash flow planning, and many more.   Everything you need to get the job done is included.

You Have To Live It

The other key to success with cash flow planning is you have to live it.    By living it I mean this:  first of all, you and your spouse have to agree on your written plan.   Then you have to actually follow it in real life.  It’s the only way you will ever know if you are successful.

Living your plan will reveal where you are leaking money.  You will find that in some areas, your plan is not realistic.  Chances are you will find you are spending way too much money on eating out and entertainment, which happens to most of us.

Finding out where you are leaking money is hugely important to meeting your financial goals.   In fact, it may be what is keeping you from reaching your financial goals.  Simply stopping these leaks could make a huge change in your financial future.

The cash flow plan also needs to be done every month.   You will need to make changes, as you will probably never be perfect with it.  It’s imperative you compare what you actually did every month to what you planned to do.  The best written plan is useless if you are not able to live it.  The more you do this, the less time it will take.

The Four Walls

When you are putting together your plan, remember the Four Walls of protection.  These are the things you must be sure to include and take care of before anything else – the true necessities of life.  The Four Walls are food, shelter (including utilities), clothing, and transportation.

Before you spend money on anything else, these things have to be taken care of  to keep your family safe.  To give you an example, your mortgage (secured debt) has to be paid before the credit card debt (unsecured debt).   If you don’t pay the mortgage, you lose your house.  The credit card debt can wait if it needs to (if this is an issue for you, start by cutting the credit cards up!).

Sharing the Wealth

If the only thing stopping you from putting together a detailed budget is not having good forms to do it, please contact me.  Dave is not trying to keep them a secret.  He encourages all Financial Peace University members to share their knowledge with as many people as possible.   I will be happy to send you the forms to start your planning process.

If you are interested in attending Financial Peace University, stay tuned for the announcement of the next class sponsored by my church, Bethany Reformed Church.  We are planning another Financial Peace University class to start in September.

New Profile Pic 2599R Dave Ramseys Financial Peace University   Week 3 Cash Flow PlanningPamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

cc smallest Dave Ramseys Financial Peace University   Week 3 Cash Flow PlanningPhoto Credit – kenteegardin

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

The opinions voiced in this material are for general information only, and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, please consult your financial advisor prior to investing.

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{ 5 comments… read them below or add one }

Paul Crowson July 19, 2011 at 3:42 pm

Thanks Pam for that…we need to look for a Financial Peace University around us!


Vicky July 19, 2011 at 6:22 pm

Thanks Pam, you always make things feel manageable!


Mindy July 19, 2011 at 8:09 pm

Great article. The four walls are a very good reminder of how to prioritize what we spend. Thanks!


Jason H July 19, 2011 at 10:41 pm

A great tool to use is Mint.com to help manage cash flow.


Robert Seth July 20, 2011 at 3:11 am

Thanks Pamela, very good article to help people get started on doing thing the right way!


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