Since no two months are ever the same, you may want to compile a list of expenses for the past three months and then average them together to get an accurate picture of how much you typically spend.Īnd don't worry. After that, compile a list of all your expenses in a spreadsheet or on a piece of paper.
The best way to do this is to look at your bank and credit card statements. Now it’s time to calculate how much you typically spend each month. For example, you'd include any income you receive from your job, side hustles, rental properties, alimony, child support, investment income, you name it! 2.
Similar to other budgets, with zero-based budgeting you start by listing out all your monthly income. Here are the five zero-based budgeting steps to take if you want to give this method a try: 1. However, in this case, "expenses" also include the money you pay yourself in savings and extra debt payments. It’s sometimes referred to as the “zero-sum method” because your income minus expenses always equals zero when you’re finished. So, what's a zero-based budget anyway? A zero-based budget is where you assign all of your income to specific budgeting categories until there’s no money left over.įor instance, if your paycheck is $3,000 a month, you divvy all $3,000 up among your expenses, debt payments, and savings goals until you're left with $0. In addition, you can review our example of a zero-based budget and free templates to help you get started. Read on to learn what a zero-based budget is, how it works, and the advantages and disadvantages of zero based budgeting. That's why today I want to talk about the zero based budgeting method which just happens to be my personal favorite.
However, you most likely failed because you haven't found a method that works for you. Very few people get it right the first time (including me). If you've tried budgeting before and failed, first of all, welcome to the club.
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