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Money Management

How I Budget Every Month

How I Budget Every Month

This post may contain affiliate links. Check out my Disclosure Policy for more information.

When you are first budgeting, it can be a process to figure out. After awhile, it becomes second nature though. The most important thing is to find a system that works for you. Once you’ve found the system that works, the key is streamlining it.

I would suggest trying different ways to budget until one feels natural to you. I love hearing how others budget and manage their money. It always gives me a new perspective and things to consider when I manage my money.

Sometimes I get stuck in my ways with budgeting. It’s good to periodically look over your budget to see where improvements can be made.

This is the process I do to manage my money every month. I use a template I created on Google Sheets, you can get a copy of the template here.

1. Before the month starts, I copy my budget from the previous month and make adjustments.

The great thing about using Google sheets is that you can simply copy the tab from the previous month. This makes it much easier to create my budget every month. The first thing I always do before the month is make a new tab for the upcoming month.

Once I have the new tab for the new month I can start making adjustments based on the previous month. I’ll look over my variable categories and see which I can lower or need to increase. Also, I’ll add any expenses I’ll have for that new month.

2. Throughout the month, I check in every Sunday.

I have been budgeting since 2014. When I first started, I checked in every day with my budget. This kept me accountable to my goals and made sure I was staying within my budget.

Now that I have created better habits and am naturally more frugal, I only check in once a week. During that time, I update my actual spending for the week in my different categories. Any of my bills that were paid, I add them as well.

By checking in with my budget, it allows me to see where I’m at in my budget and how much more I have left until the end of the month.

I do use credit cards that I pay off every month. This allows me to quickly update my transactions every Sunday. If you use cash, you can easily track your spending with your receipts.

Since I do a few side hustles, I will also add the additional income I make each week as it comes in. This allows me to see where I’m at with my additional income. It holds me accountable to reaching my goals and allows me to see if I need to work more to reach my goals.

This also makes it easier to work more. Sometimes it’s hard to work so much, but when I see how much closer I am getting to my goals, it’s easier. For example, I can calculate how many more VIPKID classes I need to teach that month and it might encourage me to stay up a little later or get up a little earlier.

3. At the end of the month, I zero out my budget.

I follow a zero based budget, so every single dollar has a job by the end of the month. At the end of each month, I add up all of my income and all of my expenses.

My salary is the same every month, this is the number that I budget with at the start of the month. Throughout the month, I add my side hustle income to my budget.

This means at the end of the month I have leftover money, assuming I didn’t need to cash flow any unexpected expenses. The leftover money goes to my debt.

Find your system and make it work for you.

This system took me a while to figure out. It’s what works for me, maybe it will work for you. Or, maybe part of it will work for you. Take the time to figure out what works for you and get your money to work for you.

Budgeting your money is just that, telling your money what to do. It’s not about restricting yourself, it’s about making your money go where you tell it to go. So, figure it out as soon as possible and stop letting your money slip away from you. How do you budget?

Money Management

How to Budget by Paycheck

How to Budget by Paycheck

This post may contain affiliate links. Check out my Disclosure Policy for more information.

There a ton of ways to budget out there. You need to take the time and figure out what works for you. It’s going to take time, but once you find a system that works for you, you’re going to be so much happier.

For the most part, a budget just needs to track your income and expenses. As long as it does those things, it works! Don’t be afraid to find your own system that works.

I personally use a zero based budget and am working on getting a month ahead. It works for me to use a zero based budget.

The reason this works for me is because it allows me to put a name on every single dollar. Every dollar that comes in, goes out by the end of the month. This has been especially helpful during my debt payoff of $201k. My zero based budget has absolutely been a major part of me paying off $127k in 3 and a half years.

When I first started budgeting, I tried to budget by paycheck. It didn’t ultimately work for me, but I know so many people that it has helped!

This is how I did it. It is great for people that are struggling to start or are having a hard time figuring out an entire month. I think this is a great first step to ultimately getting to a month ahead with budgeting.

1. Map out your pay schedule and how much you’ll get paid in each paycheck.

If you’re on a salary, this is relatively easy. Find out your pay schedule and then how much you’ll make. If you’re on a variable income, this will be a little bit trickier.

Whenever you’re on a variable income, you need to be prepared for lower months. I always recommend people on a variable income to either have a sinking fund for this, or a larger emergency fund. Honestly, I would use a sinking fund.

What this means is that in higher income months, you throw extra money into your sinking fund to be used during lower income months. I do this currently for my summer months. In my current school district, I am paid 10 months of the year. I add to my summer sinking fund every month that I am paid my salary to be used throughout the summer.

2. Make a list of your bills and due dates for a month.

My recommendation is to list out all of your bills and due dates. Even if all of your bills are due at the end of the month, you can still use your first check to pay them. My suggestion would be to evenly spread your monthly bills across your paychecks in a month.

For example, if you get 2 paychecks a month, you can spread all your bills across those two paychecks. You just will pay some bills very early and some bills may be paid just before the due date. It’s just important to pay them a few days before they are due.

3. Make a list of your variable expenses.

This would be anything that varies or can be changed. These are things like gas or groceries. Once you have these expenses listed, you need to figure out how much you’ll need per paycheck.

For example, if you’re paid every 2 weeks, you need to figure out how much gas money you’ll need for 2 weeks. I personally give myself a bit extra for my gas and groceries. The reason I do this is because I’m now at a point where I spend minimally and am naturally frugal.

By having a bit extra in these two funds, it means that I will usually come in under budget. This also means that I’m usually not over budget. When I get paid again, anything extra from that budget gets put towards my financial goals. I replenish my emergency fund and sinking funds, if needed, and then everything goes to debt.

4. Create your budget for 1 paycheck.

Once you have your income figured out and your expenses, you can put it into a budget. I personally use a spreadsheet to track my income and expenses. For me, zero based budgets always work best for me. I would still do this for a paycheck budget.

The reason why I love the zero based budget so much is because by the end of the budget period, all of my money is dealt with. None of my money just sits in my checking account. By the end of the budgeting period, it all has a new job.

This doesn’t mean I spend all of my money, it means it all has a job. This could mean going to savings, or going to paying down debt.

5. Implement your budget and track your expenses.

Just writing out your budget is a great first step, but you need to actually track your expenses throughout the budget period. This means tracking all of your expenses and updating your budget throughout the period.

You can do this daily, or less frequently. If you’re just starting, I recommend doing it daily. This allows you to check in with yourself and see how you are doing with your budget.

When you check in, you can also see if you need to make any adjustments to your spending in your variable expenses. If you’re getting close to your grocery budget, you may need to see how you can stretch what you have for the rest of the budgeting period.

6. Zero out your budget when you get your next paycheck.

WOOO! You made it through your first budget by paycheck, this is so exciting! The game changer will be what you do once that budget is done. Everyone needs to check in on their budget at the end of the budgeting period. Even when you budget for years.

The reason this is so important is because you may have gone over budget, or gone under budget. If you’re over budget, you need to figure out how you’re going to deal with getting that money. If you’re under budget you need to figure out what you’re going to do with that money.

Some people roll over the extra money, some pay off debt, some add it to savings. It all depends on what your current goals are.

Figure out the system that works best for you.

Every person will have a different budgeting system. You need to figure out what works for you. It’s so important to budget in order to reach your goals. Take the time to find a system that helps you to reach your goals. Do you budget by paycheck?

 

Money Management

How to Get a Month Ahead in Your Budget

How to Get a Month Ahead in Your Budget

This post may contain affiliate links. Check out my Disclosure Policy for more information.

I have always zero based budgeted. Zero based budgeting completely changed my life. It made me go from thinking my debt was impossible, to something I could actually get rid of. That may sound crazy, but that is how life changing a budget can be.

It’s incredible what happens when you start giving every single dollar a name. You will be shocked by how much further your money goes when doing this. When I first started this journey in 2015, I didn’t have enough income for my expenses. I was completely drowning.

That was when my zero based budget really helped me. It made me have control over where my money was going. It also made me realize that I would never make any traction on my goals unless I increased my income.

Now that I have increased my income through my many different income streams, budgeting is so much fun for me. At the end of the month, I get to zero out my budget and decide where all that extra money is going. I’m totally joking, there is no decision to be made, it’s pretty much always going to debt (for now!).

Up until now, I have had a very consistent income. I am paid 10 months of the year by my teacher salary. Then, I have my side jobs and I have my summer sinking fund for when I don’t get my salary. This has always made budgeting extremely easy for me.

Also, let’s be real. My bills are pretty minimal since I am living at my parent’s house to pay off my student loans. This has allowed me to play the very risky game of budgeting money before I have it. I don’t recommend anyone to do this. Honestly, it was stupid of me to ever even do this.

But, here we are. I have been budgeting this way for the last 4 years or so while living at home. It has worked for me up until this point. But, I need to make a change.

I am moving in with my boyfriend next month and will now be increasing my bills and expenses each month. This means that I will be back to a very strict zero based budget. I plan to get myself a month ahead this summer. Here’s how I plan to do it.

1. Utilize my summer sinking fund.

I always use my summer sinking fund in July and August. Even if I don’t need it, I empty this sinking fund by the end of August. And by emptying it out, I mean I throw whatever is leftover to debt.

Even though I do this every year, my new school pays me 12 months. So, I won’t even need a summer sinking fund next summer. Yes, I get paid less during the year because of this. But, now I’ll get a paycheck when I’m not even going to school every day.

What I plan to do is use this fund to help me get a month ahead. I will budget out this money for July and August. For July and August, this will be $1,500 of my income.

You might be wondering why I decided to create my summer sinking fund of $3,000. I chose this number because it is just above my minimum student loan payment. I can cover my monthly expenses with my side jobs. Or, I can always make my monthly expenses less, if needed. I’m always concerned I won’t be able to pay my student loan minimum payment.

2. I will use my “leftover” money in June.

In June, I will need to pay half of my rent, $400. Since I will still be living at home for most of the month, my expenses will still be lower and I will still have my salary. Currently, I usually have a lot of money leftover at the end of the month. This money always goes to replenishing sinking funds and then an extra debt payment.

For June, I plan to already have my July budget made. This will allow me to know how much money I need to set aside to pay for July.

I do still hope to make an extra debt payment in June, but the reality is that it might not happen. I’m okay with this because I am setting myself up for future success.

3. My VIPKID income will add to my summer income.

At the end of April, I started working with VIPKID. I didn’t get a paycheck for April because I didn’t work enough to get a paycheck. However, May isn’t even done yet and I already know I’ll have a $151 paycheck coming in June. This will get larger since I still have the rest of the month to work.

This paycheck will immediately be one of my income lines in my July budget. I plan to work VIPKID every morning and some nights this summer. This will be my main source of income over the summer.

4. Cutting my expenses.

In order to get a month ahead, I plan to cut my expenses a lot. Since I will be working from home this summer, my gas expense will be very low. Luckily, where I am moving, everything is very close and won’t require a lot of driving.

Recently, I have been trying to cut my grocery expense down a lot. This is done by not eating meat, or stretching the meat I do buy with other cheaper food items. For example, whenever I make taco meat, I throw 2 cans of kidney beans in. This allows us to make many more meals out of the same base.

Another way I cut my grocery bill down is by being very conscious about my portion sizes. Especially if I am eating meat.

Get yourself on a strict budget to get a month or paycheck ahead.

I am very fortunate that I have leftover money currently to help me get ahead. If you don’t have this, I recommend just getting a paycheck ahead. Honestly, this will probably be what I will have to do once I start working at my new school.

My plan is to try to stay a month ahead, but realistically, it might not happen. I currently budget monthly, but I am okay with changing it to paycheck, if that works better for me in this new season of life. That’s what is so great about budget. You can do whatever works for you. Are you a month ahead? How did you get there?

 

Money Management

3 Things to Immediately Change Your Finances

3 Things to Immediately Change Your Finances

This post may contain affiliate links. Check out my Disclosure Policy for more information.

There are a few things in personal finance that I feel will actually change your life. A budget, sinking funds, and an emergency fund, and I’m not being dramatic when I say this.

If you utilize these three things, you’re financial world will be better because of it. If you’ve been using these 3 things for awhile, then you know what I’m talking about. When I learned about these three things and implemented them, it was amazing how stress free my financial life became.

The reason why these 3 things make your finances so much less stressful is because it prepares you for expected and unexpected spending.

You no longer will need to stress about money because you will have money earmarked for most things that come up.

Here’s a breakdown of what these 3 things allow you to do with your finances.

1. A budget to change your finances.

A budget is going to help you manage your cash flow, the money coming in and out of your account. This also allows you to plan for expenses you know are coming in a specific month.

Personally, I use a zero based budget because it allows me to give a job to every single penny that comes into my account. By the end of the month, all income money has gone out to do something for me. This might be paying off debt, adding to my sinking funds, replenishing my emergency fund, or general monthly expenses.

There are tons of ways to budget, you need to find a system that works for you and start tracking the money you have coming in and going out. This won’t happen over night, but just by being more aware of what money you have coming in and out, you will see changes pretty quickly.

I encourage you to not put yourself on a strict budget, but to instead just track your expenses and see where your money is actually going. Once you see some of your trends, make a change in the place that makes you most annoyed.

For me, I was most annoyed at how much I was spending on convenient stops for food and drinks. It’s crazy how much it adds up. I challenged myself to not stop for convenience food anymore and this freed up a chunk of my cash flow every month.

Remember, you’re trying to create new habits when budgeting, don’t rush the process. Slowly take out expenses from your budget that you know you won’t miss. By creating new habits you will see long term results, rather than only quick wins.

I have created a Google sheet template for you to use in zero based budgeting that has all the math done for you and allows you to track your expenses, you can get it here.

2. Sinking funds to change your finances.

Sinking funds might just be my favorite part of budgeting, mostly because I love having the freedom of having cash earmarked for specific things that come up. Sinking funds are when you put aside a bit of money each month to save up for a specific purpose.

A classic example is Christmas, it comes every single year, so why not plan for it! In January, you give yourself a Christmas budget for presents of $600 (totally made up number). Then, you divide that number by however many months you have to save that. I’d want this to be fully funded by at least November, so I’d divide $600 by 11 and save $55 each month. Yes, I rounded up, I would rather have more money and an easy amount to take out each month!

The great part about this is if you don’t use the entire amount, you can roll it over to next years Christmas fund.

I personally use sinking funds for expenses that I don’t know about, but I know will come up. I currently always put aside money for my medical and car sinking funds. The reason I add to these two every single month is because I want to be prepared.

I’d hate to be in a position where I need to say no to anything health related for me because of finances. Same thing goes for my car. Some months, I don’t touch either account, other months I use them a ton!

Last month, I had a metal tool go into my tire that couldn’t be replaced. They told me it would be $120 for a new tire and I didn’t need to stress about it one bit because I had the cash sitting in my sinking fund.

This month I had to see an ENT, allergist and my orthodontist. All completely unexpected and totaling about $145 in copays. If it weren’t for my medical sinking fund, this would have had to come out of my debt pay off for the month. It’s not terrible, but it would slow down my progress.

3. An emergency fund to change your finances.

The last and possibly most important thing to do to change your finances is to have an emergency fund. This is for those times that you totally can’t plan for. Everyone has a different idea of an emergency, but because I have sinking funds, my idea of an emergency is more like job loss, or loss of one of my income streams.

Emergency funds are going to get you through those expenses that pop up completely unexpected, or in the event of income loss. There is a lot of talk on the Internet about what you should have saved for your emergency fund.

It ultimately comes down to what you are comfortable with. I suggest, at the very least to have one month of expenses saved up, and really this should only be if you have a very secure job, consistent pay, no kids, no house. Any other scenario, I would suggest 3-12 months of expenses saved up.

This allows you to weather most storms that come your way unexpectedly. When you don’t have enough in savings, it is setting you up for financial ruin in the event of something happening.

These 3 things will set you up for success.

By having these 3 things in place, you are setting yourself up for long term success. It might not look pretty in the beginning and you might feel overwhelmed, but give yourself time. This isn’t going to happen overnight, but you will see changes happening once you get started.

I encourage you to just start, start tracking your expenses and getting a budget set up. See where your money is going and start telling your money what to do instead. I know this can be difficult at first, it’s why I offer email coaching to help you get started and hold you accountable to getting things done. Send me an email, if you want to be added to my email coaching waitlist. Have you set yourself up for success by having these three things done?

Money Management

Home Renovations on a Budget

Home Renovations on a BudgetThis post may contain affiliate links. Check out my Disclosure Policy for more information.

Whenever people move they always want to make updates to their new homes, whether it is a new home, or a new rented apartment. It always is fun to make a space your own and add your touches to it.

This can be very expensive to do though. It is especially expensive if you are getting new furniture for your home. Each of those little projects really adds up and can leave you with a massive bill. But, that doesn’t have to be the case.

You don’t need to spend a ton of money to do these things and you certainly don’t need to go into debt to do these updates. Sometimes you need to get creative and think outside the box to make these ideas a reality, but they can be done on a budget.

Now, you may be wondering how I am writing a piece on home renovations when I live at home with my parents currently. I figured that may be a bit confusing. My boyfriend recently bought a fixer up and we have been fixing it up since day 1. Through this process, we both have picked up some great tips to save some money in the end and not to use debt in the process.

1. Look to garage sales and family furniture when doing a renovation.

It is amazing what people are giving away. Sometimes you can find the exact piece you are looking for from family, neighbors, or garage sales. If you get really lucky at a garage sale and they have a few pieces you are interested in, they will usually give them to you for cheaper.

When my sister and I were in college we needed to furnish our 2 bedroom apartment. We managed to furnish the whole thing for about $1,000. That included two bedroom sets, two desks, a couch, coffee table, and dining room table with chairs.

2. When doing renovations, paint everything yourself.

Painting isn’t always the most fun activity, especially when you have a lot to paint. However, hiring someone to come paint for you, can be incredible expensive. If you can get some friends to help you, order some pizza and drinks and you’ll have the place painted in no time.

By painting the place yourself, you will save so much money just in this one area. If you are going to be painting by yourself, I suggest you separate the areas and complete them one day at a time. This way you won’t get burnt out of painting, but will be more excited to see the spaces transform. It’s amazing just what paint can do to a space!

3. YouTube will be your best friend when doing renovations.

It is amazing what tutorials you can find on YouTube and I highly recommend you trying to do a lot of renovations on your own, if you feel comfortable. My boyfriend replaced a sink faucet and 2 toilets in his house just from looking up some tutorials. This alone saved him $300 in labor because they were asking for about $150 just to install one toilet.

Of course, if you watch the tutorials and you just don’t feel comfortable with doing it, then find someone that can do it for you. Sometimes, it’s worth it to get it done correctly.

4. Cash flow everything.

When you cash flow a renovation, it will take longer to complete. However, not having the burden of the debt months later will make it so much nicer to live in. When doing renovations, I would make a list of everything you would like to do and then make a list of the practical order to complete them. For example, it is easier to paint before you redo any flooring, that way if you spill paint, it doesn’t matter.

After you have this list made, you need to decide what you can do on your own with the money you currently have set aside for this and what needs to be cash flowed still. This will allow you to price out projects and add it into your budget. If you need help creating a budget, I have a template for you to use!

By cash flowing renovations it will take longer and you will be living in a work in progress for a bit, but you won’t have a bill every single month or interest.

The biggest part of making renovations is to keep in mind how much everything is going to cost, buy quality materials, and find ways to save money where you can. Don’t be concerned about working in a constant state of renovations, it will be worth it in the end not to have any lingering debt. How have you made home renovations on a budget?

 

Money Management

Living Your Best Life on a Budget

Living Your Best Life on a Budget

This post may contain affiliate links. Check out my Disclosure Policy for more information.

The first thing everyone thinks when they hear budget is being restricted. I know for myself at 22 when I thought about creating a budget I thought I’d never get to do anything, since I’d be on a budget.

The reality is that this just isn’t the case. Budgeting is simply managing your money, it doesn’t mean you need to hole yourself up at home! Your budget will set you free to spend your money because you will know exactly where your money is going.

By following these steps, you will find ways to also live your best life while still keeping to your budget. If you need help setting up your budget, I have a template you can use!

1. Determine what you value.

I am a firm believer in spending money on the things that you value. Track your spending for a month and see where your money is going. Which purchases were needs and which were wants. From your wants, what do you truly value, what brings joy to your life.

This is obviously different for everyone! Whatever it is that brings you joy, make sure you include that in your budget. The things that you could go without, cut that expense from your budget.

This doesn’t need to be extreme at the beginning. I honestly recommend not cutting much out in the beginning of budgeting because you will feel restricted, when that isn’t what budgeting is. Cut things that annoy you. I remember when I saw all my expenses the first time I realized the absurd amount of money I spent at Chipotle.

Of course, I didn’t cut Chipotle from my budget, I just cut back in how frequently I went. At the time I was a full time grad student and woking full time. Once a month I worked from 8:00-3:00 and then had back to back classes from 4-10. These were the days I treated myself to Chipotle.

Now I simply have a restaurants line in my budget that I use however I want. I found a balance of what I feel comfortable with after a few months of budget, and you will find that balance as well.

2. Find ways to lower your necessary expenses.

Of course there are things that you just can’t cut from your budget, housing, groceries, utilities, etc. These are necessary expenses and they are going to be a part of your budget, but you should find ways to lower them.

For example, I moved back home with my parents after graduating to cut a major expense when I really didn’t have money to afford moving out. Another great way to lower your expenses is to pay off your debt. Of course this is going to take time, but ultimately it will get rid of a necessary expense in your budget once it is gone. You can use this free awesome tool that helps you calculate your debt payoff date to help motivate you.

Another way to lower your expenses and pay off your debt faster is to refinance your student loans for a lower interest rate. I refinanced mine with Earnest to get a 2% lower rate and you can too, and get $200 when you refinance with my referral link!

The best part about lowering the necessary expenses you have is that these expenses are typically the higher ones. For example, if you can lower or eliminate your housing expenses, it’s going to make your money go so much further for you.

3. Tweak your budget every month.

After you complete a month on your budget you need to reflect on how that month went. Did you feel restricted? What made you feel restricted? What brought you joy this month?

By reflecting on your budget it will allow you to spend money where you want to spend it. For example, going out with my friends for happy hour on Fridays is something that I enjoy a lot. I plan for it and make sure it is in my budget every month.

Something that I don’t enjoy as much is going out for lunch and dinner during the week. For one thing, I don’t have time for it, so I don’t budget for it.

Find the things you love and include them in your budget. A budget is meant to give you permission to spend, but spend on the things you value. When we waste money on the things that don’t bring us joy, we are simply throwing money away. How do you budget for your best life? 

Money Management

How to Zero Based Budget

How to Zero Based BudgetThis post may contain affiliate links. Check out my Disclosure Policy for more information.

Creating a budget can be a daunting task and I know that it prevents a lot of people from taking control of their finances. But it doesn’t have to be! I promise that creating a budget seems like a hard task to complete, but once it is done, it is easy to maintain.

From conversations that I have had, it seems to be that people are scared of implementing a zero based budget. Creating a budget is one thing, but a zero based budget is intimidating to so many more. I was terrified to implement one at first myself. What if I overdraft? What if I mess up the math? There are so many what if’s, but a zero based budget was the game changer in paying off $105k in 3 years for me. Of course, side hustles and refinancing (use my referral link to get $200 when you refinance!) helped, too.

At first, I had this crazy system for budgeting that would take me so long to do every month. It was too much. I eventually stopped using it and wasn’t really budgeting at all, just cutting my expenses and kind of tracking it in Mint.

This worked, but it wasn’t as powerful as creating a zero based budget that doesn’t involve hours of my life. I now know that I need something simple and easy to maintain, or I just won’t use it. This is the system I created for myself to easily  maintain a zero based budget.

Step #1: Create a buffer before you create a zero based budget.

This is critical to implementing a zero based budget and if you don’t do it, you will run the risk of over drafting on your account, like I did when I got a little too confident. You need to determine what you need to feel comfortable with your zero based budget, some people need a month worth of expenses to feel comfortable, some people need $500. It all depends on what you need to feel confident in your system.

It also depends on your income and if it is consistent or inconsistent. If your income is consistent every month, or part of it is, then you might feel comfortable with less of a buffer. If your income is inconsistent, then I would recommend that you have at least 1 month of expenses as a buffer, if not more.

This might seem counter productive to have money just sitting in your account, but by having the buffer, it will allow you to easily implement your zero based budget. It gives you the peace of mind to zero out your budget every single time without thinking twice. If you don’t have the buffer, you will find yourself questioning your math and your budget every single month. This allows your zero based budget to run more smoothly.

Step #2: Create your zero based budget.

This is my favorite part when I first start working with clients. Everyone’s situation is difference, but a simple template can work for everyone. At the most basic level, a budget should have a spot for you to track your income and expenses. That is the most important aspects to any budget. If you subscribe to my newsletter, you will get a free budget template and expense tracker! Based on your pay periods and what works best for you, you will need to create your weekly, pay period, or monthly budget. I personally use a monthly budget. I now have my Google sheets budget template available for you to use!

The only difference from a budget to a zero based budget is that at the end of your budgeting period, you will have zero dollars remaining, or your income and expenses will be the same amount. The key with a zero based budget is that you are telling every penny where to go. This includes savings, paying off debt, or building sinking funds. This doesn’t mean that you are frivolously spending every penny.

Step #3: Implement your zero based budget.

Once you have created your budget, it’s time to implement it. I still use Mint to track my expenses because I use credit cards to earn cash back and other rewards. I only recommend this if you know you will pay your card off in full each month and never carry a balance, otherwise you should just stick to cash or a debit card. By tracking my expenses in Mint, it makes my zero based budget easier to maintain.

Every Sunday I quickly update my budget with my expenses from the week. This means that I subtract any expenses I had in whatever category that they are from. For example, I budget $250 for gas every month and I typically fill up once a week. On Sunday, I subtract that number from my budgeted amount to see what the difference is. This allows me to see exactly how much I have left for the rest of the month. I do this for every category that I had any expenses in for that week.

Step #4: End of the budget with a zero based budget.

At the end of every month I zero out my budget. The reason you need to do this is because you may have not spent all of your money in a certain category and you need to determine what to do with that left over money. If you don’t, that money will just sit in your account and will get “lost.”

There are many things you can do with leftover money at the end of the month, it really depends on where you are in your financial journey. If you are paying off debt, you might make an extra payment. If you know you are going to need more money in a certain category the following month, you might roll that money over. If you are saving for something specific, you might put that extra money towards your savings goal. If you are investing for your future, you might throw that money in an investment account.

The point is that you need to zero out your budget at the end of the month and determine what to do with any leftover money that you didn’t spend, if there is any. I always have money leftover because I would rather budget more and have leftover, then not budget enough and be scrambling to find the money.

Even though I am focusing on paying off my debt right now, my monthly budgeted debt payment isn’t very large because it is based on just my salary and I have other expenses. At the end of the month, I zero out my budget and determine my extra debt payment based on leftover money and money I earned from my side jobs.

Step #5: Readjust and repeat.

Once you have created your zero based budget, it can usually be re-used again and again. Of course, you need to adjust for certain things, every month is going to be slightly different. However, the overall bones of your budget you should be able to reuse. This allows you to save time once the budget is created, you just need to adjust each month and then take the steps to maintain it.

Remember: A budget isn’t made to restrict you, but to empower you.

Your budget is meant to give you the power over your money and where it goes. Determine what you value and what your financial goals are and budget your money to fulfill them. It takes time to figure out budgeting and get into the routine, but once you see your habits changing and the system working, you will feel empowered by your budget. How has a zero based budget changed your finances?