B-U-D-G-E-T-S Zero Based

 It looks like a 4 letter word right up there with F***, S***, and D****, but a budget just might be the greatest financial tool since the good old calculator.  Want to know how I know budgets are good for you?  I didn’t follow one for about the first 28 years of my life.  Guess what I was in credit card and student loan debt, but I didn’t have a budget!  Idiota!!  That’s Spanish for exactly what you think it is.

So here’s how I kept track of my budget in my “I’m the Smartest Man Alive” days and I’m guessing a few of you might use it today.  I logged into my bank account online or checked the ATM to make sure I had enough money available,  BOOM Budget done, why are all these people cutting back and wanting to know exactly what they have in their accounts.

I was in college for most of my “I’m the Smartest Man Alive” and I came out with student loans and credit card debt, so eventually a budget had to be in order.  I started off with the mindset that I wanted to pay off debt and if I wanted to pay off debt I needed to know where my money was going.  If I needed $200 for groceries and still had $500 leftover, the good news is I had $300 for my credit card payment.  That’s where the budget started.

For me I need 2 things, I need my online account and I need my spreadsheet. I have adapted the spreadsheet over time, but the main focus is I get paid X amount so that’s my starting point, I then keep a running total to bring down each expense.  Here’s an example.  Groceries I have an expense of $100, which then subtracts from the running total of $1,164.18, which brings the new running total to $1,064.18.  I try to keep it as simple as possible or Keep it Simple Steven (KISS).

Budget Example

Budget Example

By the end you should have exactly $0 remaining.  This is called a zero based budget.You may have heard about it from Dave Ramsey and his financial teachings or read about it here at Get Rich Slowly

It’s not going to be perfect and you might even trip up along the way, but this is the first step to becoming debt free, check out these YouTube clips for a little motivation.

What budget tool do you use?  Spreadsheets, Mint, Smartest Man Alive tool, Credit Card only, Cash only?  What works for you?

This is a series of Budget Blogs, it’s like a house we have to build a strong foundation and the Budget will be our bricks.

Need something more technical check out this Zero Based Budgeting post.  Photo courtesy of foodsafetynews.com



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