Zero-Based Budgeting (Sunday's Practical Post)

I budget each month one week before I get paid. I know that many people do not like this word and feel that it is a tedious task or too confining when it comes to their money. But it actually has the opposite effect. A budget provides a plan and therefore the permission to spend how you want. You are essentially telling your money what you want it to do. Let me explain the steps that I take BEFORE I even get paid. I have a greater control of our spending, and it also lessons the money stress that can sometimes occur in life.

1. Telling your money what to do before you even get paid is the first step. This is very important. And the approach I take is called the Zero-Based Budget. In order to do this I use the budgeting tool by Dave Ramsey, Monthly Cash Flow Plan (click here for PDF).


2. Fill in the blanks. Remember to be honest. Write out exactly what you will earn in your next month, what you will spend and what you want to spend. Ask yourself what are your needs vs. wants. In filling in the blanks spend all of your income/pay check/maintenance making sure to write in money you will put away for savings. You basically spend all of your income so that you are left with zero.


3. When you get paid execute the budget by using the envelope system (click here for this next practical post).

It takes a couple of months to get used to using the budget, but it does really help you stay in control of your money....rather than your money being all spent when you get paid. This method allows you to build savings and be happy about your personal finances. 

My next post is my Thoughtful Thursday Being Honest with Yourself about Your Money. I call these Thoughtful Thursday Posts and hope to discuss about our personal relationship with money, the economy and any ideas you the reader might comment on (just leave a request or comment below). Money is our life. We deserve a good life and that is what this blog is about.