What Are The Four Walls According To Dave Ramsey?

What are the Four Walls of a budget according to Dave Ramsey? According to Dave, “The Four Walls are the most basic expenses you need to cover to keep your family going: That’s food, utilities, shelter and transportation.”

When creating your budget, the Four Walls are the foundation of any budget and what you should focus on in the early stages of your debt free journey, especially if you don’t have additional income to work with.

If you’re not familiar with Dave Ramsey, take a moment to check him out. He is (unknowing) my virtual mentor, and who I received my Financial Coach Certification with.

I have been following Dave since the early stages of my own financial journey and have found myself telling anyone and everyone about how Dave Ramsey’s 7 Baby Steps Changed My Life.

Okay, I’m done fangirling. Back to the Four Walls.

What is the purpose of the Four Walls?

The purpose of the Four Walls is to help you stay focused in the event of a financial emergency. And, to be honest, one of the biggest financial mistakes I made when my husband died.

In the event of a job loss, major financial disaster, or death of a spouse, the four walls can be your best friend. When you are in a crisis it is difficult to think straight. It is hard to really focus on anything except being in panic mode. That’s what the four walls are for. It eliminates the need to try to “figure it out”.

When I lost my husband and my job in the same year, instead of focusing on my four walls I tried to keep going just as I had before. But, what I learned was that it was unsustainable for me and my family.

I wish I had known about the concept of the four walls at that time because I wouldn’t have had so many initial financial setbacks as a new widow.

How Do You Use the Four Walls Budget Method?

When you’re ready to use the four walls method for budgeting in an emergency, what you want to do is start with a pen and paper. Nothing fancy needed.

Step 1 – List out your income first.

It’s important to know much money you actually have coming in so that you know what you have to work with.

Step 2 – Identify your expenses.

Then identify your four walls expenses. Now, I will say that going to a bare bones budget is hard! But in the event of an emergency or financial crisis, you don’t want to make hard, harder.

1. Food

When you’re budgeting for food, consider the absolute essentials needed to feed your family. And according to Rachel Cruz (Dave’s daughter), “I need you to hear this loud and clear: Groceries are essential—restaurants are not.”

Focus on budgeting for the necessary groceries to feed your family and remove the excess. That means, bye-bye Door Dash and Uber Eats.

2. Utilities

Your next focus is budgeting for your utilities. Utilities include things like:
✅Lights
✅Heat
✅Water
✅Phone
✅Internet (if you have work/school from home)

But because these expenses tend to be inconsistent every month, it’s best to take a look at your previous months (or even the prior year) and gauge what the average cost was and round up a little.

The point of this is that you don’t want to undercut your budget and not have enough to cover these expenses.

3. Shelter

This is an obvious one, but shelter is a must for all. Prioritizing your housing costs are essential.

Add your regular rent or mortgage payment to your budget.

Now, depending upon your situation, you may have some assistance available through various programs. If you’re struggling to make your mortgage payment, your lender may have temporary payment assistance, or you could check your local HUD Agency.

4. Transportation

Some may be surprised to see transportation on this list, because it can be perceived as more of a luxury. But, transportation is essential, especially if you are working outside of the home.

Transportation costs can include:

✅Car Payment
✅Insurance
✅Gas
✅Maintenance Costs
✅Bus Passes

If you can reduce your transportation costs by taking the bus, walking, or riding a bike (aside from being environmentally friendly), it could help you decrease the money going out each month.

When Do You Use the Four Walls Budget Method?

There are many situations in which utilizing the Four Walls budget method may be necessary, including:

Job loss
Medical Emergencies
Divorce/Separation
Significant Reduction in Income
Excessive Debt
Natural Disasters
Identity Theft/Fraud

While every situation is different, it is important to evaluate your own circumstances and ask yourself, “Do I need to stop what I’m doing and focus on my four walls?”

If you’re wondering if you need to use the four walls budget, ask yourself these questions:

1. Are my expenses consistently exceeding my income?: If you find that you’re consistently spending more money than you’re earning, it may be a sign that you need to reassess your budget and consider a more minimalist approach.
   
2. Am I struggling to pay for basic necessities?: If you’re having difficulty covering essential expenses such as housing, utilities, groceries, and transportation with your current income, it’s a clear indicator that you may need to switch to a bare bones budget.
   
3. Do I have little to no savings or emergency fund?: If you lack sufficient savings to cover unexpected expenses or emergencies, it’s a sign that you may need to tighten your budget to build up your financial cushion.
   
4. Am I relying heavily on credit cards or loans to make ends meet?: Using credit cards or loans to cover daily expenses or bills may indicate that your current financial situation is unsustainable and that a bare bones budget could be necessary to avoid accumulating more debt.
   
5. Have I experienced a significant decrease in income or loss of employment?: A sudden decrease in income, such as losing a job or experiencing a reduction in hours, can necessitate a more frugal budgeting approach to make ends meet.
   
6. Am I facing a large, unexpected expense?: If you’re suddenly confronted with a significant and unexpected expense, such as a medical bill or car repair, it may require temporary adjustments to your budget until you can recover financially.
   
7. Do I feel overwhelmed or stressed about my finances?: Persistent feelings of stress, anxiety, or overwhelm regarding your financial situation can be a sign that you need to take immediate action to simplify your budget and reduce financial strain.

When To Stop Using the Four Walls Budget Method?

Just like with anything, there are some quick rules or scenarios to help you determine if you’re ready to step outside of your emergency budget.

Once you feel like you’re ready to resume paying additional bills without having to sacrifice your four walls, then ask yourself the questions above.

But, remember, your budget doesn’t have to be perfect – it just needs to be sustainable. Ensure that you are taking care of your family first by safeguarding your four walls. Everything else will follow.

Other Things To Consider

Don’t avoid your responsibilities.

The Four Walls method is not intended to be a way to avoid your debts or ignore your responsibilities. In fact, it’s better if you communicate with your creditors or other obligations to ensure they are in the loop.

In many situations, credit card companies, lenders, and even insurance companies can employ hardship reduction plans to temporarily help you reduce the interest you accrue on your loans, or even defer payments to make things easier.

Remember, lenders want you to pay them, and as long as you keep communication open they’ll work with you.

It is going to be okay.

Things are tough. Trust me when I say everyone is feeling the strain. But no matter what is going on, remember this: You can do all things through Christ who strengthens you.

Even when life feels impossible, God is still in control and He will show you the way.

If you need a little more encouragement today, check out these Bible Verses for When You Feel Like Giving Up.

Links & Resources for You! 

30-Day Money Makeover – Ready to align your finances with God’s plan? Join us on this transformative 30-day journey to financial freedom guided by biblical principles! Let’s steward our resources wisely and watch God’s blessings overflow! 

Budget & Bill Planner – Take control of your finances with our Budget & Bill Planner! Organize your expenses, track your bills, and honor God with faithful stewardship! Let’s manage our finances with wisdom and glorify Him in all we do! 

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