When my husband and I have money in limbo, it always disappears. By money in limbo, I mean money without a purpose that we aren’t sure what to do with. Not that it’s just extra money. There will always be something that is grabbing in urgency at our money, like debt, or repairs, or dentist visits, or groceries. Something always wants that money, and unless we have a plan in place for that money, we rarely accomplish something that we really want to accomplish. It feels more like it just disappears.
So in answer to this limbo disappearing act, we came up with the “Plan for Extra Money.” If you look at my sample budget plan, or download my budget plan here, you will see a section entitled “Plan for Extra Money.” It is based on the plan for percentages that I outlined in my blog on Self-employment. While it is an excellent plan for self-employment, it is also very powerful in stopping the disappearing act of extra money.
For many people debt seems to eat up every spare dollar. When they get any extra money, they feel so guilty about spending it because they feel like it should be going towards their debt. However, most people rarely put that money towards their debt, because their debt feels so overwhelming that they feel like why bother. So they don’t actually pay their debt down, or get to enjoy their free money, and in that place of limbo, that money disappears into groceries, or diapers, or eating out, or some “urgent” expense. This is why having a plan in so critical.
So how does it work? Well, the first thing you need to do is sit down and decide on your percentages. Your percentages will be based on your unique financial situation and on what is the priority in your life right now. Sometimes those priorities can shift from year to year, but some of the percentages should remain the same no matter what. You always save some of all of the money that comes through your hands. You keep some of it for “change in your pocket” so that you are motivated to make more. Give some of it, if it is outside money that is new to you. Not because you have to, but because giving is critical in keeping you from hoarding and keeping money moving through your hands. There are so many promises in the scriptures about giving, but mostly give because God loves it. He smiles on it and He gives you more as you give. That is His promise. If the Lord tells you to give the $20 you saved in utility bills this month, then give with joy. There will be a harvest, but otherwise, save with joy, because there is blessing on that too.
So where does “extra” money come from? For my husband and I our entire budget comes out of our salary, and if your income is based on salary or hourly wages (in other words you receive a steady paycheck) and you are following my plan, then yours will too. Therefore, any money that comes in above what we have set our monthly budgetable income at, would be extra money and thus subject to our set percentages. This keeps our money purposeful and working towards our dreams, no matter where it is coming from. An example of those percentages might be 10% to savings, 10% to giving, 5% free money, 5% to Christmas fund, 10% to a Dream fund, and 60% to debt reduction. Now, Matt and I don’t have any debt, so we are able to put a lot more into savings and a lot more into our dreams, but that is the beauty of paying down your debt. Getting out of debt means that you will have more of your money available towards your dreams and your future.
If you are paid on commission or self-employed, then percentages will play a part in your budget already. However “extra money” will be harder to determine, especially from outside sources, since all of your income is already coming irregularly. (Please see my blog on The Power of Percentages) However, it is still so important to have a plan for extra money in place so that you can accomplish your dreams outside of your budget. Extra money for you may come in the form of tax return refunds, your bonus, money that you have budgeted for an expense that turns out being cheaper, or extra money may just be the money you make at your garage sale.
Right now I have my garage sale money sitting on my countertop, waiting to be deposited in my bank. However, if Matt and I hadn’t already worked out a plan for that money, I guarantee you that it would be disappearing already. It is only as you give it purpose, that your money is going to work for you. Without a purpose, it feels like money just works to disappear. So get a plan for “extra money” in place. If you are debt free with your bills covered by your regular income, it might be as simple as 50% savings, 10% free money, 40% dream, but whatever the plan is that you come up with, stick to it, no matter how small the amount. Even if you just save $10 each week by not buying bottled water and drinking tap water instead, then put $5 towards your debt and $5 towards savings… you will be amazed at the impact. That $5 a week is $20 a month and $260 a year. My point is, that is money towards you getting out of debt that you could have just turned around and spent. Without purpose, that is exactly what you would have done, but with a plan in place, that money is going to help to bring you towards your dreams
So that is why I have this section on your budgeting plan. Matt and I refer to our percentages all of the time. It reminds us what we are working for, what we are saving for, and why we are not going to let our garage sale money disappear! Our money has purpose, and that purpose is enabling our dreams. And the dream for my garage sale money? Well, that just happens to be a well-earned vacation. Only you and the Lord know the dreams that are in your heart, but don’t let your money just disappear. Let it have purpose and you will get to do, and see, and finally be in the debt-free place of your dreams.