Introduction

Do you want to take control of your money and achieve your financial goals? If so, you need to learn how to budget. Budgeting is the process of planning how you will spend and save your income each month. It helps you track your cash flow, avoid debt, save for emergencies, and reach your dreams. But budgeting is not easy for everyone. According to some budgeting statistics, only about 25% of people take the time to budget and lay out their finances. Many people struggle with overspending, saving, or managing their debts. That's why in this blog post, we will show you how to budget like a pro and save money every month. You will learn how to create a zero-based budget that works for you, how to stick to your budget without feeling deprived, and how to save money on your expenses without sacrificing quality. By the end of this post, you will have all the tools and tips you need to start your own budget today and improve your financial health and well-being.

How to create a zero-based budget

A zero-based budget is a budgeting method that requires you to allocate every dollar of your income to a specific category until you have zero dollars left. This means that your income minus your expenses equals zero. The goal of a zero-based budget is to help you spend only what you need and save more for your goals. A zero-based budget can also help you avoid overspending, debt, and financial stress.

To create a zero-based budget, you need to follow these steps:

• Track your income and expenses. You need to know how much money you earn and spend each month. You can use a spreadsheet, an app, or a pen and paper to record your income and expenses. Make sure to include all sources of income (such as salary, bonuses, side hustles, etc.) and all types of expenses (such as rent, utilities, groceries, entertainment, etc.)
• Categorize your spending. You need to group your expenses into different categories based on their priority and purpose. Some common categories are housing, transportation, food, health care, debt payments, savings goals, etc. You can also create subcategories within each category for more detail (such as mortgage/rent, insurance/taxes/maintenance for housing; gas / car payment / insurance / maintenance / public transit for transportation; etc.)
• Allocate every dollar. You need to assign a specific amount of money to each category based on your income and needs. Start with the most essential categories (such as housing, food) and work your way down to the least essential ones (such as entertainment). Make sure that every dollar of your income has a destination and that your total expenses match your total income.
• Adjust as needed. You need to review and update your budget regularly (at least once a month) to reflect any changes in your income or expenses. For example, if you get a raise or a bonus at work, you can allocate more money to savings or debt payments; if you have an unexpected expense or emergency situation such as car repair or medical bill), you can reduce some discretionary spending or use some savings.

To help you visualize how a zero-based budget works, here are some examples or templates of zero-based budgets for different scenarios:

• Example 1: Single person with no debt

  Income: $3,000

  Expenses: Housing: $1,000, Transportation: $300, Food: $400, Health care: $200, Savings goals: $800, Entertainment: $200, Miscellaneous: $100

  Total Expenses: $3,000; Income - Expenses = 0

• Example 2: Couple with student loan debt

  Income: $5,000

  Expenses: Housing: $1,500, Transportation: $600, Food: $600, Health care: $400, Debt payments: $800, Savings goals: $800, Entertainment: $200, Miscellaneous: $100

  Total Expenses = $5,000; Income - Expenses = 0

How to stick to your budget

Creating a zero-based budget is only half of the equation. The other half is sticking to it. This can be challenging for many people, especially if you are new to budgeting or have irregular income or expenses. However, with some tips and tools, you can stay on track with your budget and achieve your financial goals.

Here are some tips on how to stay motivated and disciplined with your budget³⁴:

• Decide why you're budgeting. Start by articulating what's inspiring you to create a budget. Is it to pay off debt, save for retirement, travel the world, or buy a house? Having a clear and specific goal can help you stay focused and motivated when you face temptations or difficulties.
• Use empowering language. The term “budget” can be off-putting for some people, as it may imply restriction or deprivation. Instead of thinking of your budget as something that limits you, think of it as something that empowers you. A budget is a tool that helps you take control of your money and live according to your values and priorities.
• Test out different budgeting methods. Just as there are many reasons to budget, there are many ways to budget. You can use a spreadsheet, an app, a pen and paper, or even an envelope system to track your income and expenses. Experiment with different methods until you find one that works best for you and your lifestyle.
• Prioritize expenses and goals. A zero-based budget requires you to allocate every dollar of your income to a specific category until you have zero dollars left. However, this does not mean that all categories are equally important or urgent. You need to prioritize your expenses and goals based on their necessity and impact. For example, paying rent or mortgage should come before buying new clothes or eating out; saving for an emergency fund should come before saving for a vacation.
• Leave room for surprises. No matter how well you plan your budget, life happens. You may encounter unexpected expenses such as car repairs, medical bills, or gifts. To avoid going over your budget or dipping into your savings, you need to leave some room for surprises in your budget. You can do this by creating a miscellaneous category for unplanned spending or by setting aside some money in a separate account for emergencies.
• Automate responsibly. One way to make sticking to your budget easier is to automate some of your payments and transfers. For example, you can set up direct deposits from your paycheck into different accounts for savings goals; you can schedule automatic payments for recurring bills such as utilities; you can use apps that round up your purchases and invest the difference. However, automation does not mean abdication; you still need to monitor your accounts regularly and adjust them as needed.
• Revisit your budget monthly. A zero-based budget is not set in stone; it is flexible and adaptable depending on your income and expenses each month. Therefore, you need to review and update your budget regularly (at least once a month) to reflect any changes in your financial situation or goals. This will help you stay on top of your spending and progress, as well as identify any areas where you can improve or celebrate.

In addition to these tips, you can also use some tools or apps that can help you track your spending and monitor your progress. Some examples are:

• YNAB (You Need A Budget) - This app helps you create a zero-based budget based on four simple rules: give every dollar a job, embrace your true expenses, roll with the punches, and age your money. It also syncs with your bank accounts and provides reports and graphs to show you how you are doing.

• EveryDollar - This app helps you create a zero-based budget in minutes by using templates and categories. It also allows you to track your transactions manually or automatically by connecting with your bank accounts. You can also set up savings goals and view reports on your spending habits.

How to save money on your budget

Once you have created and stuck to your zero-based budget, you may wonder how you can save more money for your goals. Saving money on a tight budget can be challenging, but not impossible. There are many ways to reduce your expenses and increase your income without sacrificing your quality of life.

Here are some ways to save money on your budget:

• Creatively cut your grocery shopping costs. Groceries are one of the biggest expenses for most households, but also one of the easiest to trim down. You can save money by planning your meals ahead, using coupons or cashback apps, buying in bulk or seasonally, cooking from scratch, and avoiding food waste.
• Negotiate your car insurance to a lower rate. Car insurance is another major expense that can eat up a large chunk of your budget. However, you don't have to settle for the first quote you get. You can shop around for better deals, compare quotes online, ask for discounts or bundling options, raise your deductible, or switch to a pay-per-mile plan if you drive less.
• Reduce your cell phone plan. Cell phones are essential for communication and entertainment, but they can also be costly if you have an unlimited or high-data plan. You can save money by switching to a cheaper carrier or plan that suits your needs, using Wi-Fi whenever possible, avoiding roaming charges or international calls, and negotiating with your provider for a lower rate.
• Avoid monthly bank fees. Bank fees can add up quickly and silently drain your savings account. You can avoid them by choosing a bank that offers free checking and savings accounts with no minimum balance requirements or monthly maintenance fees; opting out of overdraft protection; using ATMs within your network; and paying bills online instead of by mail.
• Declutter and sell things you don't use. One way to make some extra cash and free up some space in your home is to declutter and sell things you don't use anymore. You can sell clothes, books, electronics, furniture, or anything else that is in good condition on platforms such as eBay, Craigslist, Facebook Marketplace, or Poshmark. You can also donate items that are not worth selling to charity and get a tax deduction.
• Take a break from shopping for non-essentials. Shopping for non-essentials such as clothes, shoes, accessories, or gadgets can be fun and rewarding, but it can also derail your budget and savings goals. You can save money by taking a break from shopping for non-essentials for a month or longer, and instead focus on using what you already have, borrowing or swapping with friends, or finding free alternatives. You may find that you don't miss those items as much as you thought.
• Eat-in more often. Eating out is convenient and enjoyable, but it can also be expensive and unhealthy. You can save money by eating in more often, which means cooking at home or bringing lunch to work instead of ordering takeout or going to restaurants . You can still treat yourself once in a while, but make it an occasional splurge rather than a regular habit.

These are just some of the ways you can save money on your budget; there are many more areas where you can find savings opportunities, such as household bills, living costs, financial products, etc.

Conclusion

Budgeting is one of the best financial habits you can develop to take control of your money and achieve your goals. By creating and sticking to a zero-based budget, you can plan your income and expenses, track your spending and progress, and save money for what matters most to you.

If you are ready to start your own budget today, don't wait any longer. You can use the tips and tools we shared in this article to create a budget that works for you and your lifestyle. Don't let money stress you out or hold you back. Start budgeting today and see how it can transform your life!

Before you go, I want to share some more resources that can help you on your journey. Here are some links that cover topics related to budgeting, saving, and investing:

(1) 18 Ways To Save Money On A Tight Budget | Clever Girl Finance

(3) How to budget: tips to better manage your money

(4) Budget Planner: how to manage your money - Money Saving Expert: Energy

(5) 10 Tips for Saving Money on a Tight Budget - Investopedia

(6) What is zero-based budgeting? | McKinsey

(7) Zero-Based Budgeting: What It Is and How to Use It - Investopedia

(8) Budgeting Tips For Beginners: How to Budget in 2023

(9) 7 of the Best Budgeting Tips - NerdWallet

(10) 15 Effective Budgeting Tips Everyone Should Know | Indeed.com