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May 15, 2025 15 mins

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In this episode of the Debt-Free Dad podcast, host Chris Hawkins discusses the common challenges of starting and maintaining a budget. Chris introduces the concept of a cash flow plan as a companion tool to budgeting that can significantly improve financial management. By breaking down monthly expenses by paycheck and planning ahead, listeners can gain better control over their finances, reduce debt, and ultimately achieve financial freedom. Chris shares practical steps and personal anecdotes to guide beginners and experienced budgeters alike through the process of effective cash flow planning. Join us to learn how to take control of your money and plan for a more secure financial future. 

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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Chris Hawkins (00:00):
One of the most dreaded words in the English
language is the B word.
That's right.
We all hate talking about doinga budget.
A budget doesn't work.
A budget means that I can't dowhat I want to do.
We come up with all kinds ofexcuses to not do a budget and

(00:24):
then, when we try to do a budget, it seems to be the most
complicated thing in the world.
In fact, it seems to be.
How do I do a budget, or how doI start doing a budget seems to
be the top question that I'veever been asked as a financial
coach, and I see it on a lot ofthe Facebook forums how do I

(00:47):
start a budget?
How do I get going with abudget?
And then, of course, oncepeople start budgeting, they
talk about how it doesn't workor how they leave things out and
how frustrating it is, andwe've talked about on this
podcast how there's no right wayto do a budget.
The only wrong way to do abudget is to not do one.

(01:10):
And then it takes you severalmonths, sometimes up to six
months, to really begin to getthe hang of it.
Well, today I want to talk aboutthe partnering crime for lack
of a better term of the budget,another tool that doesn't get
talked about near as often thatif you will do in conjunction

(01:32):
with your budget, it just mighthelp you improve your budgeting
skills, help you plan your moneyand where it goes, and help you
win a lot more often with yourfinances.
So let's talk about the partnerin crime of the budget in
today's podcast episode.
This is the Debt-Free Dadpodcast, where we help normal,

(01:55):
everyday people like you takecontrol of your finances so you
can live a happier, lessstressful life.
So you can live a happier, lessstressful life.
My name is Chris Hawkins and Iwill be your host for today's
episode, and from 2005 to 2008,my wife and I we paid off just

(02:17):
under $100,000 in debt and we'vebeen debt-free except for our
house now for over 15 years.
So before I tell you about thepartner in crime, so to speak,
the kissing cousin of the budget, let's just real quickly recap
what a budget is sotheoretically.
A budget is where you plan outall of the income that you're

(02:41):
going to earn or receive fromall the variety of different
sources that you might getincome, and you're going to
write that down or do it in aspreadsheet or an app.
Again, there's no wrong way todo it, as long as you do it.
And then you're going to listout all of your expenses for the
month.
So typically a budget's doneper month, and the reason is
because your mortgage paymentonce a month, your electric bill

(03:03):
once a month, you have otherexpenses, maybe a car payment,
credit card payments they're alldone once a month, and so a
budget is designed to be amonthly tool to help you make
sure that you pay your bills andthen accomplish whatever other
goals that you want to do.
Now I don't want to get tootechnical here and I want to

(03:25):
keep this fairly brief, but whenI first started budgeting, I
had an envelope a manilaenvelope folder, I guess, is a
better term for it and as I gotbills, I would put them in the
folder.
And then I had a yellow pieceof paper just an old, you know
legal pad and I would write downthe name of the bill, the
amount and when it was due, andthen, of course, I would do a

(03:47):
budget, and I also used a yellowpiece of paper to do my budget,
and so at the top there was ourmonthly income, and then I
listed out all the expenses as Iwent through the budget and, of
course, if I got to the bottomand there was any money left
over, I went back and appliedwhat was left over to the next

(04:09):
debt on our debt snowball, suchthat every dollar of income
equaled the amount of expenses.
So, for example, let's say Ihad $5,000 worth of income for
the month between my wife and I,we would show $5,000 worth of
income and then $5,000 worth ofexpenses, such that income minus

(04:30):
expenses is zero.
That's a zero-based budget andI recommend that you do that.
Well then, the trick was I'vegot this piece of paper with all
of my bills listed by whenthey're due and all the income
doesn't come in at the same timeevery month.
All the income doesn't come inat the same time every month.
All the income doesn't come inat the same time every month.
So my wife she was getting paidevery two weeks and I got paid

(04:54):
twice a month.
So, for example, just to picksome random dates, let's say my
wife got paid on the 13th and Igot paid on the 15th.
Well, two weeks later, she getspaid on the 27th, and then I
get paid on the 30th or the 31st, or if it happened to be
February 28th, because I gotpaid in the middle and the last
of the month and so not all themoney hit the checking account

(05:18):
income wise at the same time.
And so then the question baggedokay, I've got a budget.
This is my list of all mymonthly income and all my
monthly expenses, but it doesn'tall come in at the same time.
So I found myself takinganother piece of yellow legal
paper, and on the left in thisexample, I would write down the

(05:42):
13th and the 15th, and I wouldwrite down my name and how much
my income was, my wife Helen andhow much her income was, and
add that together to come upwith how much money are we going
to get combined in the 13th andthe 15th.
And then, on the right side ofthe pad, I would write down the
27th and 30th and then for mehow much income I was going to

(06:04):
get on the 30th and how much mywife was going to get on the
27th, and add that together.
Now, theoretically, those twototals should equal the total
income in the budget.
I hope this is making sense.
And then what I would do is Iwould look at my list of bills
that were due and I would startplugging them in.
So, for example, if I had abill that was due on the 20th, I

(06:30):
knew that I had to pay that outof the income that came on the
13th and the 15th.
Now if I had a bill that wasdue on the second of the next
month, I knew that I had to paythat out of the 27th and the
30th.
So I would then go down all ofmy expenses and, on the left
side of the paper, everythingthat was due on or after the

(06:50):
13th and the 15th again, this isan example and then on the
right side, everything that wasdue after the 27th and the 30th.
So in essence, I took my budgetand split it in half and had to
make a determination whichbills am I going to pay out of
the 13th and the 15th?
Which bills am I going to payout of the 27th and 30th?

(07:13):
And, by the way, I'd have to dothis the next month.
So if we go 14 days from the27th, that would put it at the
11th and the 15th the next month, and the 25th and the 31st on
the right side of the paper.
So every month I found myselfhaving to split the budget into

(07:33):
half, not necessarily themortgage in half, but meaning
half the income on the left,half the income on the right.
What bills am I going to payout of those two payche the
right?
What bills am I going to payout of those two paychecks?
What two bills am I going topay out of the next two
paychecks?
And that is what is called acash flow plan, where you take
your budget and you split it upand you get more detailed.

(07:55):
You decide okay, which bills amI going to pay when and out of
what paychecks, to make surethat they get paid on time and
to make sure that you stick toyour budget.
Now there were some things likefood that I would split in half
, and half of it would go onthese two paychecks and the
other half would go on the othertwo paychecks.

(08:16):
But then something like themortgage that had to get written
, in this example, on the 27thand the 30th, because that was
due on the first of the nextmonth, and so it helped me just
kind of get more fine, detailedin terms of how I was going to
break the budget down.

(08:44):
I found myself in a uniquesituation where, because my wife
got paid every two weeks, twicea year.
She ended up with threepaychecks per month and I still
had two, and so there would betwo months out of the year where
we would have five paychecks,not four.
So I found myself okay, havingto write my paycheck and her
paycheck on the left, her extrapaycheck in the middle of that

(09:06):
yellow pad and then our othertwo combined paychecks on the
right.
So in those two months I had totake my budget and break it
down into three columns so thatI could be more detailed in
terms of what was going to getpaid with each paycheck.
I hope this is making sense.
So eventually I thought well,why stop at two paychecks and

(09:34):
two paychecks If I find myselfevery month having to redo this
form?
Why can't I every two weeks?
I still have my monthly budget,but redo this cash flow plan.
So let's go back to my initialexample 13th and 15th on the

(09:54):
left, 13th, 27th and 30th on theright.
Once the 27th and 30th came, Iwould redo that cash flow plan.
The 27th and 30th would berewritten on the left side of a
new piece of paper and the 11thand 15th would be written on the
right side.
And so I found myself breakingmy monthly budget down every two

(10:21):
weeks, because that's how mywife got paid was every two
weeks, and so I began to do arolling cashflow plan, which
helped me even better start toproject for the next paycheck.
Maybe I might fall short forsome reason.
So I've got to carry money overfrom these two paychecks to the
next two to make sure that Ihave enough money and then

(10:44):
eventually got to where.
Well, okay, now, if I've gotthree paychecks every now and
then I've got three columns, whycan't I do a month and a half
at a time?
Then, eventually, why can't Ido two months at a time?
And so the more experience thatI've got at this I now do a
rolling one year cash flow plan,meaning as soon as I get a new

(11:06):
paycheck, and of course, I doall this in a spreadsheet now
makes it a lot easier.
But every time we get a newpaycheck, I add another paycheck
at the very end, a year fromnow.
So why is this important?
If you pay your insurance everysix months, you can go through
and plug in when those paymentsare going to be due, so you

(11:29):
don't forget about them and tohelp you make sure you've got
enough money.
So maybe you've got to set somemoney aside in savings so when
those bills become due, we callthat a sinking fund.
You've got money in yoursinking fund to pay the
insurance car insurance whenit's due.
Now I'm not out there suggestingright now that all of you

(11:50):
immediately start doing ayear-long cash flow plan.
But what I am suggesting isstart with a budget, do it for a
few months and then eventuallystart doing a cash flow plan,
breaking your monthly budgetdown into paychecks.
And again, just because I didit a certain way doesn't mean
you have to do your cash flowplan.

(12:10):
That way I could have just aseasily had a column for my
wife's paycheck on the 13th,another one for my paycheck on
the 15th, another one for mywife's paycheck on the 27th and
another column for my paycheckon the 30th.
You don't have to necessarilygroup, it just made it easier
for me to not have too manycolumns on a piece of paper.
But do your budgeting for a fewmonths At least.

(12:32):
Kind of get the hang of it.
Then start slowly working in acash flow plan.
How am I going to break downall of my income to make sure
that I have enough money to payeach bill when it's due and then
slowly see if you can't workyourself out a month into the
future and do two months at atime and then three months and

(12:55):
as you get new paychecks, redoit.
That'll help you to startbudgeting for the future.
And so think of a cash flowplan as this Not all the money
comes into your checking accountat the same time and not all of
it leaves at the same time, sothis is a projection of when
money is going to come in andwhen money is going to leave, so

(13:18):
that you make sure you have themoney when you need it to pay
the bill or you make sure thatyou have enough money to fund
your food envelope or your gasenvelope.
I hope this is making sense toyou.
So budget once you do it for afew months, start breaking that
budget down per paycheck that'sa cash flow plan and then

(13:40):
eventually work to where you'redoing it a month, two months,
three months and by the timeyou've done this for several
years and you really have yoursystem down, then maybe you can
work up to a year at a time.
The more you are in control ofyour money, the more you tell it
what to do, the more you'regoing to have of it, the more
control you're going to have ofit, the more control you're

(14:00):
going to have in terms oftelling it what to do and the
more you're going to not letyour money tell you what to do,
but rather you're going to becontent with knowing that
eventually I've paid off all ofmy debts.
And now what do I do with allthis extra money that I have
every month?
And you can start to do somereally cool things, and cash
flow planning becomes even moreimportant the more you do it.

(14:23):
So cash flow plan is thekissing cousin or the partner in
crime of the budget.
Give it a try.
I think you're gonna see thatit works.

Brad Nelson (14:35):
Now listen if you're ready to break free from
living paycheck to paycheckwhich, if you're listening, I
hope you are.
You wanna reduce financialstress.
You wanna build.
You want to finally pay offdebt for good, but you're not
sure where to get started.
Don't worry, we've got youcovered here at Debt Free Dad.
Simplify my Money is sent eachSunday to your email.
We make it easy and Simplify myMoney.
It's your step-by-step roadmapto better financial control, and

(14:58):
you're also going to learn easyto follow strategies to manage
your money effectively.
You're going to get stress-freemoney decisions that will help
you simplify your financial lifewith proven tips that actually
work.
You're also going to gain thetools and the confidence to
tackle your financial goals headon.
You can sign up for Simplify myMoney by clicking the link at
the top of the show notes.
Thanks for joining us ontoday's show and we will see you

(15:21):
guys on the next episode.
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