Dave Ramsey’s Allocated Spending Plan: Guide and Forms

Trying to make the most of dave ramsey allocated spending? You are in the right place. Below we break it down in plain English, with practical tips you can actually use.

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• Table of Contents Toggle At a GlanceOverviewAllocated Spending Plan On an Irregular IncomeFour Steps to Implement the Dave Ramsey Allocated...

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Table of Contents

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• At a Glance
• Overview
  • Allocated Spending Plan On an Irregular Income
• Four Steps to Implement the Dave Ramsey Allocated Spending Plan
  • Step #1: Insert Your Pay Periods and Expenses
  • Insert Pay Periods and Expenses
  • Step #2: Determine Your Expenses
  • Step #3: Track Your Expenses
  • Step #4: Rebalance to Zero
• Alternative Budgeting Methods
  • The Reverse Budgeting Method
  • The 50/30/20 Budgeting Method
  • The Cash Envelope System
• Allocated Spending Plan Tips
• Final Thoughts on Dave Ramsey’s Allocated Spending Plan

At a Glance

• What it is: A budgeting method that divides expenses based on your pay periods (bi-weekly, semi-monthly, etc.) rather than by calendar month. You budget around when you actually get paid.
• How it works: You track spending for each pay period separately and “budget to zero” by giving every dollar a job, including leftover money, which goes toward financial goals like debt payoff or savings.
• Who it’s for: People who struggle with traditional monthly budgets, especially those with irregular income, multiple pay schedules in a household, or who consistently run short before month’s end. It requires manual tracking but can be highly effective.

If you’re struggling to stick to a budget, the Dave Ramsey allocated spending plan can help. 

An allocated spending plan , which is outlined in his best-selling book The Total Money Makeover and his paid course Financial Peace University , is a type of budget that allocates expenses into groups based on pay periods.

I’d describe this method as “old school.” It predates the smartphone , and therefore even Ramsey’s own budgeting app EveryDollar. For most people, it’s still a manual pen-and-paper process that will take some effort.

Despite that, an allocated spending plan can be an effective way to save money and take control of your finances.

Keep reading to find out whether an allocated spending plan is right for you.

Overview

What’s unique about Dave Ramsey’s allocated spending plan is that it allocates expenses based upon when you’re paid. 

This means you will no longer budget on a month-by-month basis (unless you get paid monthly, of course).

Let’s say you’re paid bi-weekly on Fridays. In that case, your budgeting cycles would be something like:

• Pay Period #1: Friday, January 6th through Thursday, January 19th.
• Pay Period #2: Friday, January 20th through Thursday, February 2nd.

If you get paid bi-weekly on Fridays, and your spouse is paid on specific days (the 1st and 15th of the month, for example), you would then have four or even five pay periods within each month.

Once you have your pay periods figured out, your next goal is to budget your expenses for the month within each pay period (as explained below).

Allocated Spending Plan On an Irregular Income

For irregular income planning, Ramsey suggests basing your income on your lowest-paid month from the previous year.

If you’re self-employed, or even have side hustle income, I’d suggest setting specific dates each month to withdraw funds from your freelancing/side hustle platform, or to pay yourself from your business bank account. 

As a personal example, I have calendar alerts set up for the 5th and 20th of each month. These are the two days when I pay myself from my company (and also set aside money for taxes). 

Four Steps to Implement the Dave Ramsey Allocated Spending Plan

To follow an allocated spending plan, there are four steps you’ll need to follow:

• Step #1: Insert your pay periods and expenses into the allocated spending plan.
• Step #2: Determine your expenses.
• Step #3: Track your expenses.
• Step #4: Rebalance to zero.

You’ll be entering these numbers into two different forms.

Step #1: Insert Your Pay Periods and Expenses

There are two forms you’ll need in order to get started with an allocated spending plan.

Form #1: The monthly cash flow plan.

This is the form you’ll use to insert the data into your allocated spending plan. If you’re following along step-by-step, go ahead and complete that form now. 

Pro Tip: A more modern (and quicker) way to get the data would be to use one of the numerous free budgeting trackers. My favorite is Rocket Money, which automatically syncs data from your financial accounts and has the cleanest dashboard of all the budgeting apps I’ve tested. Read my Rocket Money review to learn more.

Form #2: The allocated spending plan.

Form #1 is designed to help you build out

Final Thoughts

The bottom line: a little research on dave ramsey allocated spending goes a long way. Compare your options, watch for seasonal offers, and never pay full price when a better deal is one click away.

Originally published at thewaystowealth.com.