Financial wisdom from a woman of faith

Why Zero Based Budget

I have often heard people say, I have a budget – I know every bill I have to pay with each paycheck.  Thus they feel they have a budget.  But a budget is not a schedule of payments. It is an intentional plan based on your values.  So if every dollar doesn’t have a name on purpose and on paper…it will just disappear.  There will be unintended spending and goals/values/dreams will not be pursued.  As a result, you will simply continue to live paycheck to paycheck…even though you thought you had a plan.

So try it this month – put it on paper before the month begins.  Give every dollar a name.  Don’t leave anything at the bottom.  Now that doesn’t mean don’t have anything in your bank account.  It’s prudent to keep a buffer in there – maybe $100-$200.  But in your budget make it clear what you will do with every dollar.  And if you have something left over go back and give it a name.  Add some to savings, start a debt snowball, make sure you have some pocket money, etc.


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