The following guest post is from Craig Ford of MoneyHelpforChristians.com.

The only good way to spend money before you earn it is to spend it on PAPER.

Spending it on paper first is especially important for UNRI (Unexpected Non-Reoccurring Income)

What type of income is considered UNRI?

• Gifts - Christmas, birthday, or any other occasions where someone gives you money
• One time earning opportunities – this might include an honorarium for a speaking engagement, a thank you gift for a service you offered someone, or getting paid to participate in some type of survey.
• Side Job – You’ve been working away at turning a hobby into a source of income.  Sometimes you make money, sometimes you don’t.  It certainly isn’t consistent enough income that you can depend on it or predict the amount of money it will provide.
• Inheritance
• Prize/bonus money – while I personally don’t gamble and rarely even participate in raffles, some people will get money this way.  You might even have signed up for something that rewards you with a cash bonus.
• Any other source that currently you do not know the amount, frequency, or likelihood of getting money.

My theory is if you don’t pre-spend UNRI on paper you will waste it when it comes!

Our spending can be categorized in one of two ways:  Reactionary or Proactively.

Reactionary Spending:

We get a check for helping someone and we say to ourselves, “Hmm.  I wonder what I should buy?”  On other occasions we might get a cash gift and we immediately start to wonder how we should spend the money.  People love to ask the question “What would you do if you won a million dollars?”  Most of us won’t really need to answer that question, but many of us will need to know what we would do if we got $100.

The problem with reactionary spending is that it tends to be spent on short-sighted, temporary desires.

Proactive Spending:

A better way to spend is proactively according to a predetermined game plan.  In other words, spend it on paper before you make it.

Here are five suggested places you could allocate some UNRI:

1. Giving

If you decide that you will give only when you have extra money, you will probably never have extra money.  Decide today to give a certain percentage of your next UNRI dollar.  Once you receive that dollar you don’t need to decide if you are going to give some or not.  That decision has already been made before your greed can emotionally influence you to keep more of the money.

2. Debt Reduction

A common complaint when it comes to paying off debt is that people feel as if they are not getting any traction.  They feel as though they are simply treading water without making any progress.  Putting your UNRI towards debt payment will both reduce your debt load and motivate you to become debt-free.

3. A Long Term Saving Goal

This might be saving for retirement, saving up for a new car purchase, or saving for a home down payment.  Because the money is UNRI it shouldn’t impact your normal budget so this gives you a great opportunity to contribute to some of your long term goals.

4.  Short Term Purchasing Goal

Perhaps you have been wanting to do an upgrade on your house.  Maybe the car needs a new air conditioner.  Perhaps you have been wanting to take a vacation for some time.  This unexpected income can help you purchase some of those items.

5. Fun

Some of this extra money can be used just for fun.  It’s not bad to blow some of your UNRI, but make sure you decide how much you want to blow.  Since the money is unexpected it is alright to enjoy it, but keep your passions in check by predetermining how much you are willing to use for fun.

Go ahead and decide today, how are you going to plan to spend your UNRI?

You don’t need any number, just percentages.  Grab a paper or open a Word document and write the words give, debt, long term savings goals, short term spending goal, and fun.  Now beside each word put a % amount.  The only rule is the numbers need to add up to 100%.  Below is an example (but not a suggestion).  You will need to customize these numbers according to your situation.  If you have consumer debt that should get your largest percentage by far.

Give: 15%

Debt: 20%

Long term savings goal: 25%

Short term purchasing goal: 25%

Fun: 15%

Now you have officially decided to be proactive with your spending.  Next time you get an unexpected check you know exactly where to put that money.

About the Author:  Relying on his ministry experience and background in Biblical Studies, Craig Ford writes daily personal finance articles from a Christian perspective.  You can visit his site at www.moneyhelpforchristians.com or you can sign up to receive free daily email updates.

Is it possible to save too much money, particularly when you are young? After all, aren’t these the years when you should be filling your time with life experiences that you will never have the opportunity to repeat? There’s college, and trips with friends and the freedom from an 8-5 grind that you’ll never get to experience again. However, your 20s are also an excellent time to lay a foundation for wealth building that can give you a great head-start on financial freedom.

I recently received an email from a concerned Frugal Dad reader we’ll call “Brian.” Here’s the relevant portion of his message to me:

I’m 22, employed, making “OK,” but not “great” money, live at home but have several monthly expenses beyond the standard cost of living. I’ve managed to save $26,000 over the last year and a half after paying off almost $6k in credit card debt. I’m currently in the process of attempting to save $750-1,000/month.

Being tight with my money in order to meet my savings goals sounds like sound advice on the surface, but im begining to question if all this attention to saving is worth the heache. I’ve spent the last hour going over my finances to try to justify the additional monthly cost of the new iPhone…and while I clearly “could” afford it, I’m finding my lust for saving money to be much stronger than my attraction to the iPhone.

So my question is. How can I enjoy these years of financial freedom guilt free while saving for my future?

Well Brian, you’ve certainly impressed me with your savings intensity. It’s hard for an old frugal dad like me to find fault with your plan, but because you took the time to put what you’re feeing into words, I suspect you are slightly resenting your financial plan.

When I was your age, I was on a fairly similar path. I married young (when I was 20), and instantly wanted to learn, and do, everyone “grown ups” did with their money. I began learning about Roth IRAs and 401(k)s and starting dabbling with single stock investing. I was a savings madman.

Sensing my over-exhuberance for all things finance, my grandfather wrote me a letter on my 20th birthday, and one line in particular really stood out. He told me to slow down, enjoy life, to stop and smell the roses. Life is meant to be enjoyed. It had a profound effect on me because I realized then that even smart things done to a point of obssessing over them didn’t make them any smarter. In fact, it hurt you in the long run.

So, while I salute your ability to pay down debts, and save $26,000 at such a young age, I would also advise you to live a little. If you want that iPhone, can afford to pay cash, have researched and thought long and hard about the purchase, and still decided you want it – then I say go for it! By allowing yourself a few rewards you will be less likely to grow resentful of your plan.

On the other hand, your penchant for saving money and living frugal may mean that you decide a new cell phone will do, or a cheaper version BlackBerry may meet your needs. Think more in terms of what the device will cost each month to operate rather than the initial cash outlay, because it is those monthly bills that will get you in the long-run.

One word of caution. It’s a slippery slope. Today’s iPhone might be a new entertainment system tomorrow, and then a new car, and then a bigger house, etc. You see where I’m headed. Continue to approach things from a frugal perspective, separating true needs from true wants, only occasionally allowing yourself some of those wants.

I fully expect you to be a millionaire one day because you have such a great foundation. Keep up the great work!

The following guest post if from Neal Frankle of WealthPilgrim.com.  You can read more about Neal’s inspiring story immediately following this post.

If you’re lucky enough to be a huge, multi-gazillion dollar company like AIG, you can afford to make a few tiny financial mistakes. Lose a few hundred billion here or there. No problem – the government will pick up the tab.

But if you’re a small fry like me, you have to use your own initiative.

Unlike the fat cats, we live with this simple equation; Income – Expenses = Security.

Right now, your ability to increase income might be limited but I can all but guarantee that you have opportunities galore to slash your expenses. And if your financial security is threatened, its time to take action.

There are a number of wonderful blog posts that will help you save money. Those dollars add up quickly and it’s critical that you implement as many of those tips as possible. As Benjamin Franklin once said, “Watch the pennies and the dollars take care of themselves.” While I love those tips, if you take the steps I’ve outlined below you may save lots of time and lots more money than you can imagine.

Don’t track your daily expenses at first

This may sound counter-intuitive but if you’re not already tracking your daily expenses, don’t start now. (If you do track your daily expenses…don’t stop)

Why shouldn’t you track your daily expenses first? Because if you haven’t been doing this religiously for several years, you’re probably like most people I know. They start tracking every expense for a few days or weeks but then they stop. I understand why that happens. It’s a pain in the neck to track every little expense. Let me share a much better approach.

Let the bank track your monthly spending for you

In fact, you don’t even have to ask to them to do it because they already have.

Let’s back up a bit.

At the end of the day, it really doesn’t matter if you spend your money on doughnuts or diapers. All that matters is that when you subtract total expenses from total income, the result is a positive number.

Your first goal is to determine what you spend on average every month. Lucky for you the bank sends you this information in your monthly checking account statement. It’s the number under “Total Withdrawals”. You want that one number. You don’t care about the details….at least not now.

Think about it. That “Total Withdrawals” number includes cash withdrawals, credit card payments….everything. It’s the total of what you spent last month.

(Just make sure you use one checking account to pay all your bills and you’ll have all the information at your fingertips. If you use more than one account to pay bills, you live off credit cards, or you earn and spend cash, the process is more complicated.)

That one number on your monthly checking account statement tells you what you spent.

Create a spreadsheet

Get out your checking account statements for each of the last 12 months. List the “Total Withdrawals” number on a spreadsheet. Then calculate a 12 month moving average to determine what you spend on average. The reason this is so important is that some months are more expensive than others. You want to calculate a 12 month average in order to really know what you spend. Update the spreadsheet every month and recalculate your 12 month average spending. The first time you do this exercise it will take you 45 minutes at most. From then on, it will take you 5 minutes each month to update the information. Is it worth it?

Trust me. This exercise is far more powerful than trying to track your every expense. Even if you do track your daily expenses, this is an important exercise. The results will shock you I promise…..in fact your average expenses are probably 25% higher than what you think you spend.

You know what? Let’s have some fun. Before you calculate your average monthly spending, jot down what you think you spend on average. Now, go ahead and do this exercise. Let me know what your results are. Do you spend 25% more on average than you thought? Told you.

When people list their every expense, they ingeniously find ways to leave certain expenses out. “Oh…you mean I have to add in the home mortgage?” “Oh, you want me to add in groceries?” “Property tax?” “The trip to New Jersey?”

It’s just too easy to fool yourself if you don’t calculate your average monthly spending using this method. Do this exercise and keep doing it until I tell you to stop – and I never will.

Have “The Conversation”

Once I did this exercise I showed the results to my wife. Because I’m the man and therefore always wrong, I came prepared with the facts. When we both examined the facts, there was no arguing or blaming. In fact, once she saw the numbers she became a savings zealot. We both looked for ways to cut. It became a mindset and believe it or not, it was kind of fun.

The absolute beauty of this approach is that its simple, quick, 100% accurate and there is no arguing against the facts. It’s formidable.

Include everyone in your family in this conversation.

Once you and your partner are on the same page, have the same conversation with the kids. Of course, depending on the age of your children, you will present the information differently. Just assure them that the family is fine. Explain what you are doing and why.

My wife and I explained to our kids that we were cutting expenses and the reasons for it. We explained that the family is safe and fine and that everything was going to be ok and that they should not worry. We found that the kids actually relaxed once we had the conversation. They had known something was off but they didn’t know what. As a result of hearing a straight explanation of what was going on, they realized that their worst fears were unfounded. I encourage you to have these conversations with your children too.

This will create a new focus at home. Rather than being resentful about all the items you can’t buy, you’ll be delighted about the money you’ll be saving. Have a monthly meeting with the entire family to discuss your progress.

It may not be enough

If after a few months you see that you need more fire power to slash expenses , now is the time to start tracking daily expenses. Use programs like YNAB, Quickbooks or Quicken. Why wait to do this daily tracking? Because the process I outlined above is the best way to put the spending/income equation in context. It gives everyone the big picture view of your situation and it helps you get everyone to buy-in to the solution. If you don’t have the big picture buy-in, it will be very tough to achieve your goal.

And this exercise is going to take you 5 minutes a month. It’s a very easy way to get into the habit of following your expenses. If you won’t even spend 5 minutes a month on this, what makes you think you’ll spend all the time to track each and every expense?

Be flexible

Sometimes a $5 coffee at Starbucks will save you thousands of therapy bills. Just because you’re cutting expenses doesn’t mean you have live poor. Find ways to really enjoy your life and if that means having a $5 coffee once in awhile or splurging for a dinner out, then do it. Life’s too short to live in deprivation. Just relax your rules moderately and mindfully.

These steps helped me save over $14,000 in the last 6 months alone. Do you think it would help you? Have you ever calculated your average monthly spending? What did you learn and how did it change your spending?

About the author: Neal Frankle found himself in a financially fragile situation at the age of 17. Both his parents passed away while he was still in high school, leaving behind a small insurance settlement. Neal sought out a financial advisor to help him invest his nest egg so that it would help put him through college. Instead, the advisor charted a self-serving course and was on the verge of burning through the money when Neal realized what was happened and fired him just in time to avoid losing everything.

The experience had a deep impact on Neal and formed in him a lifelong desire to help people learn to make smart financial decisions. Today, with more than twenty-five years of experience in the financial services industry, Neal is an author and avid blogger. Subscribe to his blog at www.wealthpilgrim.com.

This article originally appeared April 28 of last year, but because I’ve had a few gloomy days to contend with the last couple weeks, I thought it might be fun to run it it again for some fresh input.  I’m already planning to start a “Sunny Day Fund” or two soon–life is short.

The other day I read an excellent article that provides some ideas for things to do with a tax refund. I enjoyed the list because it was outside of the normal, “pay off debt, start an emergency fund” standard listing of things to do with the upcoming tax rebate checks. One item in particular really caught my eye – “add it to your sunny day fund.” What a refreshing concept. I think way back in the annals of personal finance journalism someone first wrote that we should all save for a “rainy day.” It is one of those timeless axioms that we hear repeated over and over from anyone identifying themselves as a financial expert. But what about saving for sunny days, too?

Starting a “Sunny” Day Fund

If rainy day funds are for negative life experiences, it only makes sense that sunny day funds are for the good times. Maybe you save in a sunny day fund for some tickets to a place you have always wanted to visit, or for that cruise you have been promising to take your family on for years. Maybe it is something small, like saving up to take your kids to the zoo, or to take a pottery class. Whatever it is, the sunny day fund doesn’t have to be limited to just material items.

I’ve been reading The 4-Hour Workweek by Tim Ferriss and in it he advocates taking planned sabbaticals at regular intervals. A sabbatical basically involves walking away from your career for an extended period of time, usually six weeks to three months. At one time it was a growing perk, particularly in highly competitive industries with high burnout rates. The thought was that offering employees a chance to take a break made them less likely to take a permanent one.

It is hard to imagine taking an extended break from work on purpose! Most people who receive a pink slip desperately need to be re-employed because they typically have a stack of bills, and very little in savings. Imagine that same scenario if you had very few bills, and a large amount saved in a sunny day fund. No worries, right? You could live off the severance package, take an extended break to do some traveling, or whatever your heart desires, and take your time finding a new job. It is an exciting concept, but one that most people find unattainable because they continue to live paycheck to paycheck. If this is you, start thinking about ways to reduce your expenses and/or increase your income to fund a “sunny day” account.

So What’s in Our Sunny Day Fund?

I recently wrote about how much I was enjoying my new savings accounts at ING Direct. One of the best features is the ability to create “subaccounts” and give them a nickname. Our current list of subaccounts includes Emergency Fund, Christmas Shopping, Orthodontics, etc, all based on some upcoming expenses that we need to be saving towards. In addition to those accounts we also created a “Sunny Day Fund” where we are currently saving towards a vacation destination that we would like to take the kids next year. I think I’ll take Nickel’s advice, and use some of our upcoming economic stimulus payment to get a head start on the sunny day fund balance.

Ask the Readers: What kinds of things would be in your “sunny day” fund?

A good number of people expected a second stimulus check by Christmas, and many others held out hope for another stimulus check by the end of the year.  Well, with the year winding down it looks like the chances of getting another stimulus check are zilch.  And the stimulus package pitched by the incoming Obama administration looks less like a tax stimulus package and more like increased federal spending on infrastructure projects–great for our interstate system, but not so great for those looking forward to an economic stimulus check.

We The People, Without A Bailout

Since it appears we can give up on the idea the government will bail us out, even though they have bailed out numerous industries, I say it is time to bail ourselves out.  Yes, it is possible even in rough times. I frequently get asked how it is possible to save money when you are not even earning enough to cover expenses.  Well, that’s a good question.  And with rising prices and falling wages, it only gets tougher.

However, at some point we all need to give our financial picture an honest assessment.  Have we really cut out every single thing possible?  Are we really maximizing every single earning opportunity available? Chances are we are not, because to cut deeper or earn more requires making some extremely tough sacrifices.

No one likes the idea of living without cable television or cell phones, or working a 40-hour a week job and then picking up night and weekend work.  But the hard truth is that is often exactly what it is required to claw your way through a financial turnaround.  I know because we have had to do those same things.

I won’t lie to you; it was hard work and it hurt to be away from my kids while I was working two jobs and going to school at night. But we scraped and we sacrificed for a short time to get things under control so that we can enjoy the rest of our lives without financial worry.  We’re not quite there, but we are on the right path.

How To Create Your Own Stimulus Check

So rather than sitting around complaining about the government not bailing us out, or giving us yet another stimulus check, we have decided to create our own.  The last stimulus check was for $600 per individual.  That’s $50 per month, or roughly $25 per paycheck, or $12.50 per week.  Most people can easily spend $12.50 eating junk food in a week, or buying cups of coffee in the mornings on the way to work, or playing the lottery.  By simply eliminating those activities you can come up with $600 per year to add to your savings account.

The current federal minimum wage is $6.55 per hour.  To generate $50 per month one would only need to work about 10 hours (allowing for taxes). That’s 2.5 hours per week. Could you work an extra couple hours a week at your current job?  If not, could you pick up a part time job a couple nights a week, or work one full Saturday a month selling newspapers?  Sure you could, if you really wanted to.  I know people who have worked much harder, and overcome much more difficult circumstances to become successful. So instead of blaming the government for not cutting another check, or bailing you out, I encourage you to join me in a plan to rescue my own household finances.