Budgeting

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July 8, 2019

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Free Download & Printable Budgeting Guide to strengthen your money management skills. 

Why You Should

Zero-Base Budget (ZBB)

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Kraft Foods to 3G Capital Partners  with high-profile exposure operate their budgets on ZBB.

Source: Adobe Stock

In zero-based budgeting, your expenses and savings must equal your income.  The process is to achieve its name, reaching a total of $0 at the end.  This requires assigning every dollar to a category in your budget.  Whether the category is your savings account, retirement, credit card bills, or mortgage, you cannot achieve a surplus (having extra money left over).  

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In zero-based budgeting, your expenses and savings must equal your income.  The process is to achieve its name, reaching a total of $0 at the end.  This requires assigning every dollar to a category in your budget.  Whether the category is your savings account, retirement, credit card bills, or mortgage, you cannot achieve a surplus (having extra money left over).  

 

Here is a demonstration of zero-based budgeting as an example.

 

For each month, make a list of all your expenses. Your expenses will consist of payments,
and any other bill payments you have to make.


Let’s assume your monthly income is $4,000.

Below is an example of expenses: 


1. Transport cost- $500
2. Grocery cost- $1,000
3. Debt payments (includes all your debts both secured and unsecured)- $1,000
4. Electricity bill- $100
5. Other utility bills (if any)- $100
6. Luxury activities (including eating outs, partying, weekend trips, etc.)- $700
7. Monthly personal savings- $200


If you add all the expenses, the sum is 3,600, total. This means you a remaining $400 of unused income (surplus).

Remember: No Surplus!

 

You must find a place to assign this remaining $400.  Can this be used to pay off debt, put into an IRA, or towards savings?


Determine the appropriate location to assign it in order to get to $0.   Everyone's financial situation is different so analze your finances carefully.

"Expenses fluctuate by nearly $1,300 or 29% on a month-to-month basis for median-income households, or $7,391 year-to-year."

- Diana Farrell, CEO, JPMorgan Chase Institute

29%

How to Build a Solid Budget

In this video, I walk you through the budgeting process to assign categories to your budget and the logic behind it.  Discover the household cash flow management and be sure to write down tips that you might find helpful. 

Also, please give this video a thumbs up!

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