If you get to the end of the month and wonder where all your hard earned money went, you are missing a crucial step in your financial routine. You are tracking your spending after it happens, instead of planning your spending before it happens.
To truly take control of your finances, you need to tell your money exactly where to go. That is the magic of a zero based budget. If you want to stop living paycheck to paycheck and start building wealth, here is how to create a budget that actually works.
What Is a Zero Based Budget
A zero based budget is a method where your income minus your expenses equals zero. Every single dollar you earn is assigned a specific job before the month even begins.
This does not mean you have zero dollars in your bank account. It means you have zero dollars left unassigned. If you earn four thousand dollars a month, you plan exactly what every one of those four thousand dollars will do. Some will pay rent, some will buy groceries, and some will go into savings.
Step 1: List Your Income
The first step is knowing exactly what you are working with. Write down all the income you expect to receive this month. Include your regular paychecks, any side hustle money, and child support. If your income fluctuates, use the lowest amount you reasonably expect to make. It is better to budget with less and be pleasantly surprised later.
Step 2: List Your Expenses
Next, write down every single expense for the month. Start with your four walls: housing, utilities, food, and transportation. These are non negotiable. Then list your other monthly bills like insurance and phone payments.
Finally, list your variable expenses like dining out, entertainment, and personal care. Be honest with yourself here. If you know you are going to get your nails done, put it in the budget. Budgeting, but make it doable.
Step 3: Give Every Dollar a Job
Now, subtract your total expenses from your total income. If you have money left over, you are not done. You must assign that extra money a job. Put it toward debt payoff, add it to an emergency fund, or put it in a sinking fund for a future vacation.
If your expenses are higher than your income, you have to go back to your variable expenses and make cuts until the math equals zero. Stop guessing with your finances.
Your Financial Glow Up Starts Here
For the woman who is done playing about her money, a zero based budget is the key to freedom. It removes the guilt from spending because everything is planned. You do not need to be perfect, you need a plan. Get your money together and watch your stress disappear.
Ready to build a zero based budget you will actually stick to? Grab one of our Budget Planners and start giving every dollar a job today.