8 Simple Steps to Make a Plan for Every Dollar
8 steps to create a zero-based budget
1. Remember what's essential.
- food – You need to keep food in your belly.
- shelter – You need a roof over your head.
- utilities – You need to keep the light and heat on and the water running.
- personal maintenance – You need to keep yourself and your home clean.
- transportation – You need to be able to get to work.
- communication – You need to be able to keep in touch with work and loved ones.
2. Know your priorities.
3. Write down your income.
4. Write down your monthly expenses.
5. Write down your seasonal expenses.
6. Add a budget line for fun.
7. Subtract your expenses from your income to equal zero.
- Fund bare essentials first. This is the one rule you can't break.
- List other expenses in order of importance. When you run out of money, that's it. If things are really tight, the items toward the bottom of the list don't get funded.
- Removing debt must become your priority. Not having enough money and paying for things with a credit card is like jumping into a hole and digging it deeper and deeper.
- Earn more money by selling something or by starting a side hustle.
- Cut expenses. Buy generic, carpool, cancel subscriptions, make coffee at home, go longer between salon appointments or do it yourself, buy clothes at the consignment shop, etc.
8. Take the long view.