i recently downloaded an app called DEM (Daily Expense Manager) in my xperia phone and i'm so religiously updating it everytime i take away money. It's so nice because it is in pesos and can have lots of categories. I can easily see which one had the most expense and if i'm going beyond my budget. When you only have enough to last you until the next payday, better take in charge in how you spend your hard-earned money. ;) Then i got this in my mailbox a few days back and reminded to continue with what i'm doing. Happy investing and saving! ☼
If you’ve been living from paycheck to paycheck, deep in debt and
without a clear financial future – then I suggest you make yourself a
grumpy saver now before you turn into a financial disaster in the
future.
I hope these simple steps on creating a zero-based budget can help.
ZERO-BASED BUDGET PLANNING SYSTEM
1. Account all your income sources in a month. This is simple if
you’re an employee. For entrepreneurs and freelancers, simply take the
average of your monthly income for the past 3 to 4 months.
2. Track down all your monthly expenses – include everything – then categorize them into three types:
- Fixed expenses such as rent, mortgage payments, etc.
- Semi-fixed expenses such as electricity and other utility bills which fluctuate very little every month
- Variable expenses such as entertainment spendings and other regular expenses whose amount varies each month
3. Assign the exact amount from your income to fixed expenses first.
Next, allocate part of your income to your semi-fixed expenses (
try using the highest amount from the past three months). And lastly, budget what’s left of your income to your variable expenses.
4. The key here and what your main focus should be is to
make sure that all your monthly expenses are covered by your income.
5. What if my income is not enough to cover all the expenses?
6. What if my income is more than enough to cover all the expenses?
- First, congratulate yourself because you’re actually living below your means.
- Then, assign the extra money you have to ‘Savings’ or ‘Investment Budget’
- Lastly, allocate some of it to ‘Luxury Expenses’ (you deserve the reward)
7. Adjust your budget until all your money has been “spent on paper”.
Don’t stop until every cent has been assigned – which means your ‘Income’ less your ‘Expenses’ is equal to ‘Zero’ (
thus the name of the system).
8. Review your budget status and progress once a week. Constantly work on how you can improve your system until
it becomes a habit.
And that’s it – that’s how you do a
zero-based budget planning system. It will be difficult at first but it gets easier as months go by, trust me.
Again, the important thing to remember, whether you’re doing the
Envelope System, the Zero-Based Budget Planning System, or a combination of both – is to
have a healthy mindset about what you’re doing.
Let go of envy and self-pity and have an optimistic attitude – know
that someday, with enough patience and persistence, you will become
smarter with how you handle your money, you’ll live without financial
worries and of course, be happier than you are today.
Full text here of the blog
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