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What Is a Zero-Based Budget And How To Use It

It's a new year, and I have new goals. Resolutions are fleeting, so I dumped those a long time ago. In the words of Tony Robbins, "Setting goals is the first step in turning the invisible into the visible." You want your goals to be visible, and writing them down and tracking them using the SMART method can help you achieve them. You can accomplish your goals by budgeting your income and keeping an accurate record of your weekly and monthly expenses using a budget tracker. 

Pink Piggy Bank with Red glasses

Zero-Based Budgeting 

Using the zero-based budgeting approach, I account for every dollar of income and expenses at the beginning of each month to ensure that every dollar has a purpose. For example, when my paycheck was deposited on December 31st, I ensured that my savings, monthly expenses, investments, and other incidentals were accounted for until my budget reached $0. Creating a budget helps ensure that I don't overspend and guides me in achieving my goals faster. 

Income & Expenses

At the beginning of every month, I use an Excel spreadsheet to track my income. My husband and I have a separate account for household bills and groceries, and we both deposit a portion of our income into our joint account to cover the costs. Every six months, we have conversations to review our expenses and adjust our deposits as needed for changes to our monthly expenses. We also have a joint savings account and separate savings accounts for our individual goals. This helps keep the peace in my household. 

Calculating My Budget

Here's an example of how I distribute my monthly income and expenses:

  • Household Expenses = 15%
    • Utilities, Charity, Tithes, Groceries
  • Joint Savings = 27%
    • Vacation, Home Improvements, Emergency Fund
  • Individual Savings = 18%
    • For Gifts, Treating Myself, and Future Goals
  • Investments = 29%
    • Stocks, Retirement, Wealth Fund
  • Miscellaneous = 10%
    • Gas, Hair Salon, Starbucks!
  • Individual Life Insurance = 1%

See my feature in 5 Money Lessons For New College Graduates.

What Happens Next?

I create a new budget for the next month and continue the cycle. Using a zero-based budget enables me to achieve future goals for myself and my family. We can also pay cash for our vacations and any needed repairs or upgrades to our home. The end goal is that we want to remain debt-free, financially independent, and live life as we see fit. 


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