Living Well Money

How to Do a Zero Balance Budget

Hopefully this new year will bring you opportunities to reclaim your financial situation. However, whether new opportunities come along or not, one of the very best things you can do for your finances is to create a budget; more specifically, a zero balance budget.

What Is a Zero Balance Budget?

Strictly speaking, a zero balance budget is a system that requires you to “spend” every dollar on paper before you actually spend it. Essentially it is assigning your money to specific budget lines until it is all gone.

Experts suggest doing your budget this way so that you know exactly where your money is going and what you

What Kind if Things Should I Include in my Zero Balance Budget?

Ultimately, this is up to you. However, here are a list of things to get you started:

  • Mortgage/rent
  • Utilities
    • Electricity
    • Gas
    • Garbage
    • Internet/cable
    • HOA
  • Groceries
  • Gas for your car(s)
  • Insurance
  • Debts
  • Clothing & Grooming
    • Hair appointments
    • Toiletries
    • Money towards a larger future purchase (new shoes, etc.)
  • Entertainment
    • Subscriptions (i.e. Netflix, magazines, etc)
    • Eating out
    • Movies, activities, etc
  • Savings
    • Emergency fund
    • General savings
    • Holiday savings
    • Car maintenance

You may also have fees, pet expenses, tuition, taxes, etc. to consider. Whatever you will spend money on this month needs to be on the list before you begin.

How to Complete Your Zero Balance Budget

To begin with, subtract your non-negotiable costs: housing, food, etc. Then add in savings, followed by entertainment.

  • Do you have money left over? Assign it somewhere! You’re the boss of where your money goes, it is not the boss of you!
  • Did you run out of money? What can you cut? What is non-essential? What are your financial priorities?

Take time to sit with your budget and once you’re done, make sure you have a good way to track your spending—whether that’s using cash in an envelope or using a budgeting app like YNAB or Goodbudget.

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