Zero based budgeting is very easy to implement.

1. Create a monthly budget based on your income. As you assign amounts to each category, subtract from the total income.

EXAMPLE:

Item------Amt Budgeted------ $ Left

Income-----------------------$5000.00

Food -- $500.00----------- $4500.00

Utilities--$350.00 -----------$4150.00

House $1700.00 -----------$2450.00

Continuing on down the list until your $ Left = $0

2. Stick to your budget! If you have to change things, be sure you subtract from one category to ad to another.

EXAMPLE

Let’s say you have a car repair one month that costs you $300. But you only have $250 saved up in your Car Repair Category. You need to come up with an extra $50. If you just go over by $50 for Car Repair. At the end of the month your formula will look like this:

Total Income – Total Budgeted $= <$50>

You’re in the hole! That is never a good place to be. So instead, you need to rearrange your budget a little for that month to “find” an extra $50.

So, let’s say your budget for Clothing has $100, but you don’t really plan on buying clothes that month. You budget will look like this:

Item_____________Amount Budgeted

Food-------------------------------$500.00

Utilities-----------------------------$350.00

House Pmt----------------------$1700.00

Clothes---------------------------$100.00

Car Pmt--------------------------$375.00

Car Repairs----------------------$50.00

(Note: You have $200 in the bank that you’ve saved up for the past 4 months for Car Repair.)

You can take Clothing down to $50 and increase Car Repair by $50. So your budget will now look like this:

Item_____________Amount Budgeted

Food-------------------------------$500.00

Utilities-----------------------------$350.00

House Pmt----------------------$1700.00

Clothes-----------------------------$50.00

Car Pmt---------------------------$375.00

Car Repairs----------------------$100.00

(Plus $200 in the bank = your needed $300)

Now your formula looks GREAT because it is still:

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Total Income – Total Budget $= $0

3.      Review your budget on a monthly basis.  Make changes accordingly.  If there are any budget categories that you find yourself falling short in, increase (by decreasing amounts elsewhere).  In the example from above, you may want to increase your monthly Car Repair contribution by $20 each month so you don’t have to be short next time something happens.

With these simple steps, you will find that you have more control of your money.  It will go further, and last longer.  You will find “extra” money all over the place to play, put in savings, or pay off debt.  You will feel much more peaceful about your financial situation because YOU are the one in control.