Which Budgeting Method Should I Use?

If you want to make the most of your money, you need to start at zero. Sounds weird, I know. But a zero-based budget makes sure you give every single dollar a job to do.

The Power of a Zero-Based Budget

Pretend you’re counting calories for the month. Now make note of only the foods you eat at mealtimes. Don’t include mid-morning treats, afternoon snacks or late-night desserts.

It sounds like a fun way to count calories—but not an effective one.

Some people apply this thinking to their monthly budget. They make note of the big stuff—like a mortgage payment and utility bills—but pretend other smaller money matters don’t matter.

The zero-based budget encourages you to really think about how you spend all your money. When you’re budgeting, you’ll be able to clearly see where you might put your hard-earned cash to better use. Of course, “better use” looks different from one person to another. After you’ve been budgeting for a while, you might find “extra” money in your account each month. Then you can decide to:

  • Pay off debt
  • Buy a home
  • Save for retirement
  • Give to people in need
  • Have a little fun

You choose upfront and on purpose where you want your money to go. In fact, many budgeters report finding money the first time they create a zero-based budget.

Think about it: One month you’re tossing cash around on toys your kids play with once, a shirt you don’t even like anymore, and snacks you definitely ate but maybe shouldn’t have. But the next month you eliminate all that mindless spending, and you have $75 to put toward that living room couch you thought you’d never be able to buy.

A pretty empowering feeling, if you ask us. And all thanks to a zero-based budget!

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