Trying to get your finances in order? Congratulations on taking the initiative! Like any goal in life, it\u2019s best to start with a plan \u2014 in this case, you\u2019ll need a plan for your finances.<\/p>\n\n\n\n
If your money is flying in and out of your bank account like Boeing 747s at LAX, consider budgeting to be something like an air traffic controller. Seat yourself in the control tower and try the zero-based budgeting method \u2014 sticking to it will help direct your finances, help you see where your money is going, and safeguard against fiscal disaster.<\/p>\n\n\n\n
Never made a budget before? We\u2019re glad you\u2019re here. There are actually tons of different ways you can create one, but a simple \u201chow-to\u201d Google search can definitely feel overwhelming! The zero-based budget (ZBB) is a popular choice for both beginners and budgeting pros who want to get a solid handle on their spending.<\/p>\n\n\n\n
Ready? Let\u2019s dive into it!<\/p>\n\n\n\n
When it comes to zero-based budgeting (sometimes called zero-sum budgeting), the ultimate goal is assigning a job for every cent you earn. With all your money earmarked and accounted for, the idea is to cover each category of expenses, investments, and savings, giving you total control over your finances. <\/p>\n\n\n\n
When the end of the month rolls around, success looks like no dollar going unused.<\/p>\n\n\n\n
So what exactly does this budgeting process look like? Consider your own monthly expenses \u2014 you\u2019ll have:<\/p>\n\n\n\n
By directing <\/em>your money into designated categories, you can form a plan for every dollar you earn to cover your bills and pad your savings, and this allocation of funds should leave nothing unaccounted for.<\/p>\n\n\n\n Of course, the zero-based budgeting approach does not <\/em>encourage you to haphazardly blow any money that\u2019s left after paying the bills. Okay, yes, we\u2019re always into a good treat-yourself purchase when you can do it (by all means, buy that Dolce & Gabbana moka pot you\u2019ve had your eye on \u2014 if you can afford it.) But money that\u2019s unaccounted for goes against the rules of the budget. <\/p>\n\n\n\n So if you want to splurge, add a \u201csplurge\u201d category to your budget. Just be sure to think about your emergency fund and your retirement savings too \u2014 the goal is to find a home for all your money and make sure all the important things are covered.<\/p>\n\n\n\n Let\u2019s visually take a look at how you might put together a zero-based budget. Remember, personal finances are just that \u2014 personal. There\u2019s no such thing as a one-size-fits-all budget, but the technique and the strategy of the ZBB can easily be integrated into nearly any lifestyle. <\/p>\n\n\n\n Here\u2019s how it might break down for an individual earning $5,500 after taxes:<\/p>\n\n\n\n Okay \u2014 it may not be as nice and tidy as this in real life, but this is the general idea of how to create a zero-based budget. When you add it up, the full $5,500 is accounted for; every cent has a job to do.<\/p>\n\n\n\n The goal is to cover your obligations and put extra money into savings, investments, vacations, the occasional splurge \u2014 just make sure you assign all your earnings to a category. <\/p>\n\n\n\n Like we stated above, no budget is universally perfect for everyone \u2014 you need to consider your lifestyle, your spending habits, your debts and liabilities, and your disposable income when putting together a type of budget that will work for you. <\/p>\n\n\n\n The zero-based budgeting process can be extremely effective if you want to:<\/p>\n\n\n\n We\u2019ve discussed the merits of zero-based budgeting, but what might work for some people might not work for you. <\/p>\n\n\n\n Consider a different, more traditional budgeting method if you:<\/p>\n\n\n\n By now you\u2019re familiar with the broad strokes of the zero-based budget. Want to give it a whirl yourself? Here\u2019s how to get started on your new budget: <\/p>\n\n\n\n Start by determining your net pay every month \u2014 for example, if you\u2019re paid twice a month, take a look at the deposits in Simplifi<\/a> or your banking app and multiply the number by two. This is the total cash coming into your bank account every month, which is essentially what you have to spend. If you have any side gigs<\/a>, be sure to include that estimated income, as well. <\/p>\n\n\n\n This part is where you\u2019ll consider everything you\u2019re spending money on each month. Take a look at your spending habits and see where your money is going. You\u2019ll want to list all your major expenses out as line items, and also consider what else you\u2019re spending on.<\/p>\n\n\n\n Don\u2019t forget to include any regular, automated savings, like an emergency fund or vacation money, and investments, as well!<\/p>\n\n\n\n A good budgeting app like Simplifi will already have your categories filled in based on your expenses in your bank account, making it a lot less time-consuming on your end. If you have to identify your expenses by hand, use your bank statements to find recurring bills and view budget cycles. Just remember to go back a full year so you don\u2019t miss any payments that happen quarterly or annually.<\/p>\n\n\n\n Chances are that your rent or mortgage payment, auto loan, and car insurance are all the same amount every month. Identify each of these static expenses that you can anticipate to owe every month, and include any subscriptions, credit card minimum payments, and any other recurring charges too. Once you have these fixed amounts identified, you can move forward.<\/p>\n\n\n\n If you\u2019re not using a budgeting app, consider creating a spreadsheet with all the aforementioned info, along with savings goals and other expenses. You can start with a template, but you\u2019ll probably need to customize it heavily before it will fit your unique needs.<\/p>\n\n\n\n Here\u2019s where science becomes an artform \u2014 you\u2019ll need to estimate the rest of your expenses and allocate money accordingly. Think about your grocery budget, your utility bills (which can be hugely affected by seasonality), your entertainment budget, and your outstanding debt. Once you have an idea of what you\u2019re spending, you can start to create a system of cost management and cut out what you don\u2019t use.<\/p>\n\n\n\n Eventually, you want to find a comfortable middle ground that lets you chip away at debt, stay current with your bills, save money, and move with confidence toward your financial goals. <\/p>\n","protected":false},"excerpt":{"rendered":" There are many ways to create a budget, but the zero-based budgeting method makes sure every dollar you earn has a job. Learn how to set it up today!<\/p>\n","protected":false},"author":59,"featured_media":5571,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_robots_primary_cat":"108","_seopress_titles_title":"Zero-Based Budgeting: Put Every Dollar to Work | Quicken","_seopress_titles_desc":"There are many ways to create a budget, but the zero-based budgeting method makes sure every dollar you earn has a job. Learn how to set it up today!","_seopress_robots_index":"","inline_featured_image":false,"footnotes":""},"categories":[108],"tags":[],"class_list":["post-5569","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-budgeting-savings"],"acf":[],"jetpack_featured_media_url":"https:\/\/www.quicken.com\/blog\/wp-content\/uploads\/2023\/02\/man-counting-coins.jpg","_links":{"self":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/5569","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/comments?post=5569"}],"version-history":[{"count":9,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/5569\/revisions"}],"predecessor-version":[{"id":5649,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/posts\/5569\/revisions\/5649"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/media\/5571"}],"wp:attachment":[{"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/media?parent=5569"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/categories?post=5569"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.quicken.com\/blog\/wp-json\/wp\/v2\/tags?post=5569"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Here\u2019s an example of <\/strong>zero-based budgeting<\/strong> <\/strong><\/h2>\n\n\n\n
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Advantages of zero-based budgeting<\/strong><\/h2>\n\n\n\n
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Disadvantages of <\/strong>zero-based budgeting<\/strong><\/h2>\n\n\n\n
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How to start a <\/strong>zero-based budget<\/strong><\/h2>\n\n\n\n
1. Determine your <\/strong>monthly income<\/strong> <\/strong>after taxes<\/strong><\/h3>\n\n\n\n
2. Identify your expenses <\/strong><\/h3>\n\n\n\n
3. Fill in what you know<\/strong><\/h3>\n\n\n\n
4. Estimate the rest<\/strong><\/h3>\n\n\n\n