Jones and I have been working Dave Ramsey’s Total Money Makeover for about three months and there are several things we are still trying to work out. One of those things was the Zero-Based Budget. I’d had difficulty grasping the concept but I think I’ve finally got it. What helped was watching a YouTube video How the Zero Based Budget and Envelope System Works by wbhomesteader where he walked through the process step by step. After looking and listening, I went to the Gazette Budget tool at DaveRamsey.com and created my September budget. Previously, I couldn’t figure out what “$350.47 left to budget” meant. After all, I had put in all the bills for the month so what more did I need to do? Then, a light bulb turned on. I remembered wbhomesteader said to save some money in the checking account so it didn’t get overdrawn and Dave Ramsey emphasized having every dollar allocated. All of a sudden, I got it! Here’s what I figured out.
It took me a while to figure out what a zero-based budget is and how it fit’s into the Dave Ramsey Total Money Makeover. Now that I know, my budgeting process is much easier. Darcy Jones
Make a plan for every dollar. That means when you create the budget, allocate every single dollar. Allocate money for bills, food, fun, saving, whatever but allocate every single dollar. When wbhomesteader said save some money back so the checking account doesn’t get overdrawn, plan it in the budget. If you want to keep at least $100 in checking so you don’t overdraw the account, include an item such as Minimum Bank Balance $100. If you have $350.47 left over after all the bills are paid, tithes, savings, and whatever is accounted for, plan what to do with that $350.47. You could allocate it for debt reduction or allocate it to savings. You get to choose — you just have to decide then include the item in the budget – Debt Reduction $350.47 or Emergency Fund $350.47. Just put it somewhere so that what you bring in equals what you plan to shell out. You should end up with zero left to spend.
Why is this so important? Well, from experience, I’ve learned that if I think I have extra money, my first thought is not to save it. Like most people, my first thought is usually how to spend it. Telling the money where to go while I’m planning the budget avoids this dilemma.
I’ve decided to be the boss of my money. What about You, Inc.? How are things going with your family’s zero-based budget and Total Money Makeover? We’re on a journey – a journey for financial freedom. Every dime counts and a zero-based budget will help you get there.