Stop Living Paycheck to Paycheck: An Introduction to Zero-Based Budgeting

Recorded live at Podcast Movement 2023 in Denver!

Are you exhausted by living paycheck to paycheck and constantly worrying about your finances? What if I told you there's a simple yet powerfully effective method you can use to break free from this cycle? Welcome to this episode of Savvy Budget Girl, where I shine a spotlight on the art of zero-based budgeting. This budgeting style is perfect for beginners, empowering you to assign a job to every dollar you earn and gain a handle on your finances. I'll also delve into the secrets of combining this model with the cash envelope system.

Excited to pay off debts and start building generational wealth? Zero-based budgeting is your ticket to achieving these financial goals faster. In this episode, I walk you through the process of creating a zero-based budget that aligns with your financial aspirations. Let's take this journey together and make your money work harder for you. Remember, financial freedom is just a podcast episode away!

Subscribe to the YouTube channel and join me in revolutionizing the way we handle our hard-earned cash.

Complete show notes available at https://savvybudgetgirl.com

Episode Transcript

Speaker 1 (00:00):
Have you heard of zero-based budgeting, but you
don't know what all the fuss isabout.
In this episode, we'll diveinto the world of budgeting and
explore how to make thisbudgeting technique work for you
.
What's up, fam?
Welcome to Savvy Budget Girl.
My name is Wendy and I'm yourhost, and on this show, I teach
you how to keep your lattes well, in avocado toast, if you like.

(00:26):
Today we're going to discuss apowerful budgeting method called
the zero-based budget.
This means that every dollaryou have has a job, but it's
perfect for beginners and ithelps you take control of your
finances.
And if you've been following acertain person he who shall not
be named if you don't know whothat is, just ask in the

(00:47):
comments then you've probablyheard of this.
And, like I said, a zero-basedbudget is a budgeting method
where your income minus yourexpenses equals zero.
That means every dollar has ajob.
Every dollar has a name.
You know where every dollar ofyour income is going, whether
it's for bills, saving ordiscretionary spending.

(01:10):
The goal is to ensure you'renot overspending and that you're
using your money efficiently.
So this is different from otherbudgeting methods, like the
50-30-20 method, where 50% goesto needs, 30% to something else
and 20% to something else.
But it's pretty common tocombine zero-based budgeting

(01:32):
with the cash envelope system,which is why you see it on that
show, okay, and you also see metalk about it all the time on
this channel.
You see me cash stuffingenvelopes.
If you haven't seen any ofthose videos, be sure to check
out the links in the descriptionif you're watching this on
YouTube, or head on over to theSavvy Budget Girl channel if
you're listening to this on yourfavorite podcast platform.

(01:55):
But I love it because it's avery visual way of tracking how
much money you spent during eachpay period.
So why should you choose azero-based budget?
Well, the zero-based budget,like I said, is an excellent
choice for beginners becauseit's straightforward and it's
easy to understand.
It encourages you to beintentional with your spending

(02:18):
and helps you identify areaswhere you can cut back and save
even more money.
This is especially true if yourmain issue is overspending or
just not knowing where yourmoney is going.
A lot of us have had thatproblem.
Like, we know we make goodmoney, but we just don't know
where the money is going, and azero-based budget, combined with

(02:39):
the cash envelope system, canhelp you figure that out.
Plus, it's a flexible budgetingmethod that can be adapted to
your financial situation.
There's no arbitrary percentageto squeeze your spending and
goals into, like the 50-30-20method.
So this is always my choice andrecommendation if you're just
starting out on your budgetingjourney.
By the way, if you want to knowother types of budgets, you can

(03:02):
find them in my book Budgetingfor Women, which is available on
Amazon.
And hey, if you're gettingvalue out of this episode and
you're watching on YouTube, hitthat subscribe button and leave
a comment and let me know ifyou've ever created a zero-based
budget before and if you'reready to finally take control of
your money and build wealth,head on over to
KeepYourLatkescom.

(03:24):
That's KeepYourLatkescom.
Now back to the show.
All right.
So how do we actually create azero-based budget?
I'm going to take you through afew steps on how to actually do
this and give you some tips onhow to actually do this and do
it well.
So the first step is tocalculate your monthly income.

(03:44):
Include all your sources ofincome, so salaries side,
hustles, any other regularearnings, disability, social
security, pension, all of thosethings.
And if your income is variableor you work in a
commission-based job or field,like you're a real estate agent
or you sell cars, then budgetfor the least amount of money

(04:06):
you get every month.
If you get more than that, useit to either beef up your
envelopes or save or pay offdebt, whatever your goals are
telling you to do.
Step number two list yourmonthly expenses.
Start with fixed expenses likerent and mortgage and insurance,
and then add variable expensessuch as groceries,

(04:29):
transportation and entertainment.
Now it seems strange to saygrocery is a variable expense.
I budget the same amount forgroceries every month, so for me
it's more of a fixed expense,but for you for most people it
is variable.
It's necessary, but it'svariable because we tend not to
spend the same every month.
Step number also in step numbertwo.

(04:53):
Remember there's no such thingas a perfect month, so there's
no perfect budget, but thelonger you're doing this, the
better you'll get at it.
Step number three is to assignevery dollar a purpose.
Allocate your income to eachexpense category until your
income minus expenses equalszero, so there should not be any

(05:15):
money left over.
Remember to include savingsgoals and debt repayment in your
budget.
One of the other categories Ilike to put in my budget is the
stuff I forgot.
You've seen that in mybudgeting videos.
It's the stuff I forgotenvelope and that is for what it
says.
Some people call it otherthings, but it's basically for
the things your family forgot totell you about, the things you

(05:37):
just forgot to budget for.
And as you budget more you willbe able to figure out how much
you actually need in an envelopelike that.
But typically it's for lastmany gifts, stuff at school,
maybe emergencies if you haven'tbeefed up your emergency fund
yet, or medical expenses fund.

(05:58):
So that's typically what goesin the stuff I forgot envelope.
You'll also find that as you dothe budget more, that you're
probably spending more than youthought on groceries and eating
out, and there's alwayssomething you forgot to budget
for.
So keep that in mind for thenext budget.
Step four is to track yourspending Throughout the month or

(06:22):
each pay period.
Track your spending to ensureyou're sticking to your budget.
This is also why I like to pairit with the envelope system
because, like I said, it's ahard visual on how much you're
actually spending and how muchmoney you have left.
So adjust your budget as neededto accommodate any changes in
your financial situation.
This is especially important incases of a medical emergency or

(06:45):
job loss and, as you track yourspending, make note of whether
your spending was for a want ora need.
This way, if you have to cutyour expenses, you'll have an
easier time knowing what to cutout, even if you're cutting it
out for just a temporary periodof time.
As for where to track it, itdoesn't actually matter Pen and

(07:08):
paper and apps, the Notes app onyour phone, like they all work.
So just pick the method thatmakes the most sense to you.
And if you prefer the paperroute, well, I've got an expense
tracker in my Etsy shop and youcan click the link in the
description of this video Ifyou're watching on YouTube, or
go to the show notes at, or youcan just go to
SavvyBudgetGirlcom.

(07:30):
So here are some tips to helpyou succeed with your zero-base
budget.
Be realistic with your budgetcategories in and out, but I
budget per pay period ratherthan the whole month, so you
should always budget with themoney you have, not what you
think you're going to get.
This is why my budgeting sheetshave two columns One for the

(07:50):
budgeted amount and one for theactual amount, so that you can
see the difference and adjustfrom there.
Number two use budgeting toolsor apps to help track your
spending.
Again, I have paper-based tools.
That's what I prefer, but ifyou're an app space person or
you like your spreadsheets,definitely do that as well.

(08:10):
Number three tip number three isto review and adjust your
budget regularly to stay ontrack.
If you're married or shareexpenses with someone, include
them in your financial planning.
They should have a say in thebudget.
You should have moneyconversations at least once per
week to make sure that everyoneis on the same page.
If you live alone and you don'thave someone for accountability

(08:32):
, see if you can get a trustedfriend or family member to
provide a safe space for you towork out.
You know your budgeting journeyessentially, and if you still
can't find anyone, message me onInstagram at SavvyBudgetGirl
and we will figure it out, Ipromise you.
And tip number four is tocelebrate your financial wins,

(08:53):
no matter how small.
Maybe you didn't buy that caseof soda and your health got
better because of it, or youfixed something instead of
buying a new thing.
Whatever it is, make sure youcelebrate it.
In fact, I want you to keep alist of wins on your phone so
that when you feel like you'renot winning.
You can refer back to that listand know that you have actually

(09:17):
accomplished something.
And that's it.
With a zero by budget, you cantake control of your finances
and work towards your financialgoals, pay off debt and create
generational wealth, all with abudget.
Didn't know it could do that,did you?
So give it a try and let meknow how it works for you.
Take a screenshot of thisepisode and tag me on Instagram

(09:41):
at SavvyBudgetGirl.
And hey, if you enjoyed theshow, don't forget to head on
over to keepyourlattescom Ifyou're ready to take control of
your money and follow the showso you can get notified when
there's a new episode.
If you're watching on YouTube,make sure you hit that subscribe
button.
Thanks for tuning in to theSavvyBudgetGirl podcast and
we'll see you in the nextepisode.