Dave Ramsey has been helping millions of people gain control of their finances and finally reach the financial freedom they deserve. Through seven simple baby steps, he can transform your finances, help you pay off debt, and ensure that you have a chance to live like no one else when you are done.
For those interested in following Dave Ramsey and his advice on budgeting, a Dave Ramsey budget template can be a brilliant idea.
Dave Ramsey’s budget templates will help you organize your finances on a zero-based budget while controlling how much money comes in and goes out each month. This article will help you know about the Dave Ramsey budget and its templates.
What is Dave Ramsey’s Budget?
Dave Ramsey’s budget is considered a zero-based budget. When you are done budgeting for the month, every dollar has a job. So, whether it goes to paying bills, paying down debt, or into savings or retirement, you will have all the money accounted for and nothing left without a job.
If you have anything left, even $200 after you list all of your expenses, you need to find a place to put that money, so the bottom line reads zero. This could be paying off debt faster or adding more money to your savings or retirement.
But what happens if your expenses are higher than your income. The Dave Ramsey budget template is also meant to help you with this problem. The goal is to find places where you are wasting money and cut them out of your spending.
In this situation, you will need to look at your Dave Ramsey budget to figure out what can be cut and what you can keep. For some, there may be a lot of categories to cut out, and with a bit of tightening of the belt, you will be able to get that bottom line back to zero and even have some left for savings.
Dave Ramsey’s Recommended Percentages
Following Dave Ramsey’s budget is an excellent way to reach your financial goals, whether you want to cut down on debt or have a great retirement plan. This budget works on percentages to help you fit it in, no matter how much income you bring in. Some of the percentages you should follow on the Dave Ramsey budget template include:
- Giving 10%: A big part of Ramsey’s teaching is to give to the church or other charities. Dave Ramsey’s budget recommends that you should donate 10% of your income
- Saving 10%: Ramsey recommends setting aside 10% of your income to save for your future. This can be your emergency fund, setting aside for a retirement fund, or another financial goal.
- Food 10-15%: The food budget should include eating out and groceries. This one can be hard when prices continue to rise, but meal planning and keeping an eye on the money will make a big difference. 10-15% of income should be allocated to the food category.
- Utilities 5-10%: This 5-10% of your income will cover trash service, natural gas, water, electricity bills, etc. Of course, many include their cell phone bill here too.
- Housing 25%: Your mortgage and rent (including insurance and property tax) should never take more than 25% of your income. This makes the payment manageable and allows you more money for other things. Owning a home can be a significant investment, but there are several hidden costs that you may not have realized when you first purchased the home. Some hidden costs that will come up under homeownership include emergency plumbing repairs, HVAC replacement, and landscaping needs.
- Transportation 10%: Any transportation expenses will fit here. It can include your car payment, insurance, and gas for your vehicle. This can include uber rides and subway tickets for those who live in a city.
- Health 5-10%: This 5-10% of the expenses can include visits to the doctor and any other healthcare needs. Your health is essential; you will need to set aside some of your income for your health needs that are not covered by insurance. Consider putting that amount into a savings account each month. If you do not need it for one month, you can keep that in the savings account if a big health emergency comes up later.
- Insurance 10-25%:You can choose from different insurances from health insurance, car insurance, life insurance, and others. Keep it under 25% of your income.
- Recreation 5-10%: This part of the Dave Ramsey budget includes anything you will do for fun. Of course, you can choose what goes here, but things like Netflix, gym membership, or saving for a more significant vacation are often things. Separating recreation expenses will allow you to enjoy your vacation and free time apart from a busy schedule.
- Personal spending 5-10%: Personal spending can include clothing, new shoes, home décor, haircuts, etc. Of course, these would be the items you need to get done, but you have some leeway in the spending.
- Miscellaneous 5-10%: This is a bit extra in the budget for the things you may forget to budget for. This budgeting category is suitable for extras, like money for the kids’ field trip, sports equipment, or a one-time bill during the month. There are a lot of little expenses that pop up during the month that we can forget about. Having this 5 to 10% extra available will help us be prepared when they show up.
You can always choose to keep the percentages lower than this. For example, getting your housing to 15% instead of 25% would give you more money to put into your retirement or another category where you need it. This all depends on your needs and expenses.
How Does Dave Ramsey’s Budget Work?
The Dave Ramsey budget is a successful way for anyone to get the financial freedom they are looking for. The straightforward approach makes sense for many who struggle with managing their money or wish to reach some big financial goals.
Some of the steps you can use to work on the Dave Ramsey budget include:
Write down your income
In your Dave Ramsey budget template, write down your take-home pay for you and anyone else in your home. This will be the amount you make after taxes are taken out. Include all sources of income from full-time jobs, freelance work, second jobs, or other reliable income you get consistently. Write this number down somewhere you can find it later.
List the expenses
For this step, you will need to look at your bills and list them out. This will include everything that you pay for during the month. Next, you can look at your bank statements and credit card bills to better estimate your expenses. List them all down and add up the amount, so you know what you are working with right from the beginning. Then, you can look at ways to cut down on the expenses later.
Subtract the expenses from the income
Working on a zero-based budget means that your income minus all of your pay expenses must be zero. When this is true, you will know that every dollar you make has a place in the Dave Ramsey budget. If you end up over or under, consider recalculating or consider what you would like to do here.
For those who have more expenses than income, it is time to make changes. First, consider what you can cut or whether you can earn more money. If you have more income than expenses, that extra money needs to be given a job. In addition, funding your retirement plan, saving for a home, or having an emergency fund is essential.
Track your spending
Once you create your budget by following Dave Ramsey’s rule, you must track your spending. This is the only way to see whether your actual spending aligns with your plans. There are different tools you can use to help you track your spending.
Dave Ramsey’s Budget Template
The Dave Ramsey budget template is a simple tool that can help anyone with their budget, no matter where their income or expenses are at this moment. Everyone can make some improvements, and the Dave Ramsey budget template will help you take a hard look at your finances and give every dollar a job. This website offers you free downloadable Dave Ramsey budget templates to make budgeting easier for everyone. You can easily download these Dave Ramsey’s budget templates from this site and customize them according to your needs.
Frequently Asked Questions
Are the Dave Ramsay budget percentages realistic?
Even Dave Ramsey admits that the percentages given above for each budget category are guidelines to get you started. You may need to adjust specific categories up or down to help you get started. Depending on your financial goals, you may choose to make some higher to help you out.
For example, if you are close to retirement age, you may want to up your savings while lowering your spending money. If you can get your housing below 25%, you could save some of the money to help with paying down debt or saving.
What about debt payments in Dave Ramsey’s budget?
The Dave Ramsey budget assumes that the person following it will not have any debts when they begin. If you have any debt that you make a monthly payment on, you will need to pay those off and have its category in your budget. Dave Ramsey encourages paying off debt as quickly as possible. Any extra money that does not have a job at the end of the money should go towards debt payment. You can also choose how much you would like to pay extra to your debts each month and add that into the budget.
What percentage of your income should you save?
Everyone should have a savings category in their budget. This helps prepare them in case of an emergency and can be a great way to start planning for the future. According to the Dave Ramsey budget template, you should allocate 10% of your budget to savings. This is an excellent place to start, but you can increase the amount as you pay off debts or your income grows.