How To Use a Zero-Based Budget

With a budget, everything else flows. A spending plan is a quick way to achieve your financial goal, get out of debt, or take control of your money. MoMa recommends a zero-based budget and here’s how you can use it.

Strictly following a monthly budget is one of the better ways to utilise your income. Moreover, if you want to recover from your debt, you can include it in your spending list.

Zero-based budget

Zero-based budgeting is to make income minus the outgo (savings + expenses) equal zero. Based on surveys, those who practice the zero-based budget save 18% more money and pay off 19% more debt.

Every dollar has to go somewhere. This is to allot your income to your expenses and savings until it’s zero.

Income – (expenses + savings) = zero

Here are suggested expense categories you can work on. You can modify these according to your circumstances.

  • Savings
  • Debt
  • Utilities
  • Food
  • Health/medical
  • Clothing
  • Housing
  • Transportation
  • School
  • Personal
  • Recreation
  • Pocket money
  • Charity
  • Miscellaneous

Money savers

Start to cut down if you spend more than you make monthly. Creating a shopping list, planning a weekly menu, eating at home, and turning off unused appliances are some of the most effective money-saving tips you can do.

Here are some money-saving activities that can help with your budget:

  • Utilities — Turn off the lights each time you leave your house, or even a room. To help keep your electric bill down, take advantage of natural sunlight.
  • Groceries — deals, vouchers, and coupons are some of the best ways to save money. Furthermore, make a shopping list before you go to the supermarket to avoid unplanned spending.
  • Eat at home — it’s so expensive to dine out. You better just eat at home. You can also save leftovers for packed lunch for school or work the day after.
  • Cutting down on watching television — it is another way to save money. It also lessens your exposure to ads, which encourage you to spend more.
  • DIY beauty procedures — spa treatments can easily add up to your expenses. Go online and look for DIY beauty treatments and home remedies using common household products.

If you liked our “How To Use a Zero-Based Budget” and took away some valuable and useful information, check our blog space regularly for more updates on the best budgeting apps in Australia.