The Zero-Based Budget
A Zero-Based Budget or “zero balance budget” forces you to justify each expense by assigning a dollar amount to every move you make with your money. That is to say, your income minus your expenses, equals zero. Radio host and financial advisor Dave Ramsey explains, “If you cover all of your expenses during the month and you have $500 left over, you aren’t done with the budget yet”. Although Ramsey speaks of the zero based budget in terms of monthly spending, I prefer to budget twice a month since I have irregular income. You know exactly where your money is going, it leaves no room for overspending, and it is based on your current needs, which are clear advantages to this type of budget.
I used to write down every expense to get an overview of how I spend money. It was good because I was able to see patterns in my spending that I was unaware of. Outside of being a very tedious task of tracking every expense (pre-smart phone apps), doing this sort of overview only happened AFTER I have already spent the money. Nowadays, I take a more proactive overview of my finances and I spend my income on paper BEFORE I spend a dime in reality by using a zero-based budget.
How to Make a Zero-Based Budget Work for YOU!
Sure there’s computer based software for budgeting, but I find a simple pleasure of the good ole’ pen to paper method. It’s my personal preference but in order for you to be diligent in your effort, you should choose whatever makes you most comfortable. Got your tools? Let’s go!
Read the Full Post Here: 6 Easy Ways to Make A Zero-Based Budget Work
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