Finance Friday: (Guest Post) How to Budget For An Emergency

Source: Arvind Balaraman, freedigitalphotos.net

EMERGENCY BUDGETING

So many of us have struggled during the current economic crisis and our family has been no exception. About 3 years ago my husband and I found ourselves with no jobs and a daughter to feed.

Thank God my husband was at least receiving the GI bill for school, but the majority of that money was required for books and tuition. At the end of each month the only money we were “bringing” home was about $1400.

We did not know how to budget (which was part of the reason we found ourselves in a mess in the first place), but with the help of some very dear friends of ours we created a budget plan that I’m convinced is the reason we survived that entire year.

The Checkbook Method

The very first thing our friends did was introduce us to what I like to call the “checkbook method.”

For those of you who actually use your register in your checkbook then you are already ahead of everyone else. For those of you who don’t even know what a register is here is what it looks like and an idea of what we did:

Basically I wrote ALL of our bills down ahead of time, with the exact date it was due on, the money we could spend on miscellaneous things such as eating out, what money we had coming in, and I color coded it (basically I just had it purple to let me know what I actually spent my money on and the rest of it was green to tell me what bills were coming up next).

I know this seems like a ton of work but I’m telling you that it saved our lives because it allowed us to see exactly what we had coming in and what we were spending our money on. It also gave us a plan we could focus on and boundaries we needed to stay within. Without those boundaries we would’ve spent more money than we had which would’ve ruined us in the end.

The Envelope System

If you haven’t already heard this then you’re probably spending way more money than you need to.

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Start NOW!!!

If you’re in an emergency situation and are not budgeting then you can’t afford not to do this. It’s absolutely crucial that you START NOW so you can create boundaries for yourself and prevent your family from falling apart (literally).

It’s very hard at first and a lot of work, but in the long run you’ll be much further ahead than you ever expected. I know we are!