Being on the pursuit of financial freedom is one of the best decisions I could’ve made for my life. To be really committed to understanding money, my relationship with it, getting out of debt and much more. In the last, two months I have switched my finances over to a zero budget method and lets just say my finances have improved drastically in a short period of time.
Yes, in general having a budget really did change things in regards to my pursuit of financial freedom but when I decided to do the zero budget, I discussed this last month everything had changed. Basically, I knew I had flat income that would come in for six months for contracts. Covering me from January to June of this year. All extra money from digital products would be handle separately from my contract money. All my contract money is budget for all the bills and stuff for the month. This is virtually like a person who only gets paid once a month. Which for the last couple months has been really great knowing everything is already handle. The income we will use for an example will be $5000 a month, which is $60,000 a year if you make that at your 9 to 5 or in your small business.
We are going to cover every bill that comes through the door. Every penny in your budget will be spent. Any extra money at the end of the month will be carried over to that line in the budget for the following month.
Income: $5,000 take home
Your Monthly Bills:
- Tithes: $500
- Saving: $500
- Rent: $795
- Cable: $70
- Internet: $65
- Water/Sewage: $30
- Electricity: $80
- Food (take out & restaurants): $170
- Gas: $140
- Gym (Yoga): $85
- Car Maintenance: $150
- Debt (student loans): $565
- Credit Card: $200
- Business: $1,500
- Blew Money: $150
How It Breakdowns
After you have listed every expense you have, you will go next to each line and write the cost of living next to it. Most people will notice they are living above their means not aligned with it. Which happen for me when I ran the numbers somethings, I was spending on average 10% more than I was actually making.
Remove Excess In Your Budget
You need to get rid of expenses in your life that are causing you to live above your means. One thing that was gone was extend trips I was putting on my credit card. My credit card was suppose to be for once a month spa trip thats it. However, last year I was going back and forth a lot putting money on my card causing strife in my budget.
Non Negotiable Line Items
Are things such as rent, tithes, saving and debt for me. Those four things need to paid every month. As you see by the example 10% goes to savings and tithes and then less 16% of the example budget goes to rent. They say your rent or mortgage should be less than 25% of your income. Most people rent is taking up 40% of their income causing the issues in the budget. You need to downsize so you can actually live and if you’re trying to pay off debt that money can go towards that.
Bonuses In Budget
One thing my zero budget has a line for is yoga and blow money. In my actual budget, it is $100 for blow money but for the example I used $150. Your blow money can be used for mani/pedi, going to the movies, clothes or something of that nature. I don’t have a clothing line in my budget because I actually don’t shop that much for clothes. In addition to that, I have been saving money to buy investment pieces or shopping sales. I own six pairs of jeans none of them cost more than $20. Two pair came from the Loft and I got them for $4.
Lessons In Zero Budget
Adding the envelope system to the line up that Dave Ramesy teaches has been a really good part of me keeping to my zero budget. Especially, when it comes to grocery shopping. Before, I would just go to the grocery store and buy whatever I saw not really having a plan. In my real life budget that line is $120 which might not sound like a lot but when you start meal prepping and planning it changes things. I buy groceries every week verse monthly now and plan every meal from breakfast, snacks and dinner.
The zero budget method really did change my financial outlook and life. I am able to account for every penny in the budget and pull areas if I need to be.
