6 Steps to a New Financial Approach
Have you heard of zero-based budgeting?
This approach isn’t for everyone, but many people find it’s an efficient way to keep track of their finances and stick to their goals.
And zero-based budgeting can be a good fit no matter where you are in life, whether you’re a young adult just learning about money or you’re retired and want to make every dollar count.
Find out if this is the right budgeting mindset for you:
A Step-by-Step Approach
The idea is to make your income minus your expenditures equal zero. Here’s how that could work:
Sit down with your favorite budgeting app, a spreadsheet or just a pencil and paper. Write down the amount of your monthly take-home pay, making your best guess if your income varies.
Below that, list your essential monthly expenses, like housing, transportation, groceries, utilities and health care.
Next, list your savings goals, including an emergency fund, retirement and travel as well as debt payments, such as credit cards and student loans.
Are there irregular expenses you’ll need to cover, like insurance, taxes, gifts, car repairs or home maintenance? Estimate the costs based on your previous spending.
Then, plan for some fun! Think restaurants, baseball tickets or a concert.
Finally, assign a dollar amount to each category. Prioritize what’s most important, and tinker with the numbers until your monthly inflow equals your monthly outflow.
Remember, budgeting isn’t about deprivation or creating additional stress for yourself. Ideally, it’s a tool for building wealth. And of course, everyone’s plan will look a little different.
Have questions? Want to discuss the financial approach that’s right for you? Reach out anytime.