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In my opinion, a zero-sum budget is superior because it forces you to "spend" every dollar that you make. And, no, I don't mean you should spend it on dinner at Outback or a weekly mani/pedi. Instead, you allocate all of your earnings into the different categories that your finances require. You don't need an Excel spreadsheet or a complex software program to use a zero-sum budget. In fact, all you really need is a pen, paper, and the desire to begin budgeting for your benefit. So, how do you begin using a zero-sum budget? Follow these simple steps:
Step 1: Determine how much you make
Whether you're paid hourly or salary, you need to figure out how much money you make on any given month. So, you need to ask yourself a few questions. For instance, "How many paydays fall within this month?" And, "How much will each paycheck be?" For salaried workers, this should be fairly easy. For those with a fluctuating income, it can be much more difficult. However, one of the easiest ways to make a zero-sum budget work for your family is to get all of your finances "one month ahead."
Easier said than done, I know. But, using that method, a fluctuating income won't matter as much. Since you're using
this month's income for
next months' bills, it will be much, much easier to plan.
Step 2: List your bills
Once you determine how much money you'll make
this month, you need to figure out how much money you need to spend
next month. Using pen and paper, write out all of your monthly bills, estimating bills that fluctuate like utilities. You'll also need to set a reasonable allowance for spending categories that you're trying to keep under control (like groceries and gas). And, don't forget about bills that are paid quarterly or seasonal expenses. The best way to make a zero-sum budget work is to include
I'll use a generic version of one of my old budgets as a real-life example: