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Have you heard of zero-based budgeting, but you don't know what all the fuss is about. In this episode, we'll dive into the world of budgeting and explore how to make this budgeting technique work for you. What's up, fam? Welcome to Savvy Budget Girl. My name is Wendy and I'm your host, and on this show, I teach you how to keep your lattes well, in avocado toast, if you like. Today we're going to discuss a powerful budgeting method called the zero-based budget. This means that every dollar you have has a job, but it's perfect for beginners and it helps you take control of your finances. And if you've been following a certain person he who shall not be named if you don't know who that is, just ask in the comments then you've probably heard of this. And, like I said, a zero-based budget is a budgeting method where your income minus your expenses equals zero. That means every dollar has a job. Every dollar has a name. You know where every dollar of your income is going, whether it's for bills, saving or discretionary spending. The goal is to ensure you're not overspending and that you're using your money efficiently. So this is different from other budgeting methods, like the 50-30-20 method, where 50% goes to needs, 30% to something else and 20% to something else. But it's pretty common to combine zero-based budgeting with the cash envelope system, which is why you see it on that show, okay, and you also see me talk about it all the time on this channel. You see me cash stuffing envelopes. If you haven't seen any of those videos, be sure to check out the links in the description if you're watching this on YouTube, or head on over to the Savvy Budget Girl channel if you're listening to this on your favorite podcast platform. But I love it because it's a very visual way of tracking how much money you spent during each pay period. So why should you choose a zero-based budget? Well, the zero-based budget, like I said, is an excellent choice for beginners because it's straightforward and it's easy to understand. It encourages you to be intentional with your spending and helps you identify areas where you can cut back and save even more money. This is especially true if your main issue is overspending or just not knowing where your money is going. A lot of us have had that problem. Like, we know we make good money, but we just don't know where the money is going, and a zero-based budget, combined with the cash envelope system, can help you figure that out. Plus, it's a flexible budgeting method that can be adapted to your financial situation. There's no arbitrary percentage to squeeze your spending and goals into, like the 50-30-20 method. So this is always my choice and recommendation if you're just starting out on your budgeting journey. By the way, if you want to know other types of budgets, you can find them in my book Budgeting for Women, which is available on Amazon. And hey, if you're getting value out of this episode and you're watching on YouTube, hit that subscribe button and leave a comment and let me know if you've ever created a zero-based budget before and if you're ready to finally take control of your money and build wealth, head on over to KeepYourLatkescom. That's KeepYourLatkescom. Now back to the show. All right. So how do we actually create a zero-based budget? I'm going to take you through a few steps on how to actually do this and give you some tips on how to actually do this and do it well. So the first step is to calculate your monthly income. Include all your sources of income, so salaries side, hustles, any other regular earnings, disability, social security, pension, all of those things. And if your income is variable or you work in a commission-based job or field, like you're a real estate agent or you sell cars, then budget for the least amount of money you get every month. If you get more than that, use it to either beef up your envelopes or save or pay off debt, whatever your goals are telling you to do. Step number two list your monthly expenses. Start with fixed expenses like rent and mortgage and insurance, and then add variable expenses such as groceries, transportation and entertainment. Now it seems strange to say grocery is a variable expense. I budget the same amount for groceries every month, so for me it's more of a fixed expense, but for you for most people it is variable. It's necessary, but it's variable because we tend not to spend the same every month. Step number also in step number two. Remember there's no such thing as a perfect month, so there's no perfect budget, but the longer you're doing this, the better you'll get at it. Step number three is to assign every dollar a purpose. Allocate your income to each expense category until your income minus expenses equals zero, so there should not be any money left over. Remember to include savings goals and debt repayment in your budget. One of the other categories I like to put in my budget is the stuff I forgot. You've seen that in my budgeting videos. It's the stuff I forgot envelope and that is for what it says. Some people call it other things, but it's basically for the things your family forgot to tell you about, the things you just forgot to budget for. And as you budget more you will be able to figure out how much you actually need in an envelope like that. But typically it's for last many gifts, stuff at school, maybe emergencies if you haven't beefed up your emergency fund yet, or medical expenses fund. So that's typically what goes in the stuff I forgot envelope. You'll also find that as you do the budget more, that you're probably spending more than you thought on groceries and eating out, and there's always something you forgot to budget for. So keep that in mind for the next budget. Step four is to track your spending Throughout the month or each pay period. Track your spending to ensure you're sticking to your budget. This is also why I like to pair it with the envelope system because, like I said, it's a hard visual on how much you're actually spending and how much money you have left. So adjust your budget as needed to accommodate any changes in your financial situation. This is especially important in cases of a medical emergency or job loss and, as you track your spending, make note of whether your spending was for a want or a need. This way, if you have to cut your expenses, you'll have an easier time knowing what to cut out, even if you're cutting it out for just a temporary period of time. As for where to track it, it doesn't actually matter Pen and paper and apps, the Notes app on your phone, like they all work. So just pick the method that makes the most sense to you. And if you prefer the paper route, well, I've got an expense tracker in my Etsy shop and you can click the link in the description of this video If you're watching on YouTube, or go to the show notes at, or you can just go to SavvyBudgetGirlcom. So here are some tips to help you succeed with your zero-base budget. Be realistic with your budget categories in and out, but I budget per pay period rather than the whole month, so you should always budget with the money you have, not what you think you're going to get. This is why my budgeting sheets have two columns One for the budgeted amount and one for the actual amount, so that you can see the difference and adjust from there. Number two use budgeting tools or apps to help track your spending. Again, I have paper-based tools. That's what I prefer, but if you're an app space person or you like your spreadsheets, definitely do that as well. Number three tip number three is to review and adjust your budget regularly to stay on track. If you're married or share expenses with someone, include them in your financial planning. They should have a say in the budget. You should have money conversations at least once per week to make sure that everyone is on the same page. If you live alone and you don't have someone for accountability, see if you can get a trusted friend or family member to provide a safe space for you to work out. You know your budgeting journey essentially, and if you still can't find anyone, message me on Instagram at SavvyBudgetGirl and we will figure it out, I promise you. And tip number four is to celebrate your financial wins, no matter how small. Maybe you didn't buy that case of soda and your health got better because of it, or you fixed something instead of buying a new thing. Whatever it is, make sure you celebrate it. In fact, I want you to keep a list of wins on your phone so that when you feel like you're not winning. You can refer back to that list and know that you have actually accomplished something. And that's it. With a zero by budget, you can take control of your finances and work towards your financial goals, pay off debt and create generational wealth, all with a budget. Didn't know it could do that, did you? So give it a try and let me know how it works for you. Take a screenshot of this episode and tag me on Instagram at SavvyBudgetGirl. And hey, if you enjoyed the show, don't forget to head on over to keepyourlattescom If you're ready to take control of your money and follow the show so you can get notified when there's a new episode. If you're watching on YouTube, make sure you hit that subscribe button. Thanks for tuning in to the SavvyBudgetGirl podcast and we'll see you in the next episode.
