Why You Need A Zero Based Budget and How To Make One

Sometimes, it’s easy to look at someone’s success and only see where they are right now without seeing the many hours of hard work and years of blood, sweat, and tears that they have invested to get there.  However, the truth is there are very few overnight successes.  Our journey to debt freedom is another one of those stories.  (And, it all began with the zero based budget.)

How To Make a Simple Budget | Budgeting | Get Out Of Debt | MoneyOur story is a story of almost two decades budgeting, planning, and saving…  Two decades of being selective about extra-curricular activities, vacations, nights out, and play dates.  Two decades of saving wherever we can–making my own worksheets for homeschooling, meal planning, limiting unnecessary driving to save on gas, and couponing.  Two decades of holding down the home front while Mister worked 60, 70, and 80 hour weeks.  (Shoot, we’ve even seen a 100 hour work week a time or two.)  Overall, it is the story of learning contentment

Because, it’s not what we have that brings happiness, but an attitude of appreciation for the blessings in our lives.  And, as we reach the goals that we have sacrificed for, it is sweeter than it ever could have been had we given in to instant gratification.  

As you can see, I’m big on frugality.  It’s one of my very favorite subjects, because, no matter what your dreams and goals are, getting your money in order is essential to your success.  And, the very first step is the secret to our debt free homestead–the budget.  

This post contains affiliate links.  Please see my full disclosure in the left sidebar.


Here’s a quick outline of the video.

To keep up with your bills:

  1. Each year, get a calendar.  On each month, make a master list of all bills that are due that month on the bottom of the page.
  2. Put all paydays and bill due dates (as well as amount due when you get it) on proper dates on the calendar.
  3. Add up all of your 6 month or annual expenses (taxes, insurance, car tags, etc.).  Divide by your number of paydays.  List that amount to put into a separate account each payday.  This allows you to save a small amount each payday instead of having to come up with a large amount to pay insurance or taxes.  If you would like help with this step, we have a free worksheet to help you get started!
  4. On payday, pay all bills that are due.  Write the check number or confirmation number under the bill and amount on your calendar.  Also, cross off that bill from your master list at the bottom of that month’s page.
  5. If you keep paper bills, also write the confirmation or check number on the bill and file it.
  6. Be sure to balance and reconcile your checkbook at least every payday.

Your calendar will serve as a valuable tool to make sure that everything is paid on time and will help you make a monthly budget.  We (along with Dave Ramsey) recommend operating on a Zero Based Budget.


To make a Zero Based Budget:

  1. Before the month begins, write your monthly income at the top of the page.
  2. List all of your expenses, subtracting them from your income.
  3. Find a category for EVERY SINGLE DOLLAR.  The total at the bottom must be zero.  If not, decide what categories will have to be adjusted to make that happen.  
  4. Make sure your spouse is on board and you are in agreement.  If you have differences of opinion, discuss them now, not after the money is already spent.

Check out this post about the envelope system to manage expenses such as groceries, eating out, and household goods. For more information on making a budget or getting out of debt, I highly recommend The Total Money Makeover by Dave Ramsey.  It has a great straightforward game plan for getting your finances in order.  It isn’t easy, but it’s totally worth it.  🙂

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The Envelope System–5 Reasons You Should Give It A Try

Does it seem like you blow your budget every week? The cash envelope system really works. Read to find out why you should give it a try! #envelopesystem #debtfree #frugallliving #budgeting

It happens so easily.  You run into the grocery store to pick up two things, and $200 later you are loading a whole buggy full of stuff into your car.  From bright, enticing displays to candy bars right at your 5-year-old’s eye level, retailers have a plan to get you to spend!  In order to keep your hard earned cash in your pocket, you have to have a plan, too.  Enter… The Envelope System!

Does it seem like you blow your budget every week? The cash envelope system really works. Read to find out why you should give it a try! #envelopesystem #debtfree #frugallliving #budgeting

I know.  I know.  Using cash is SO 1980, but stick with me here while I tell you why I LOVE the envelope system.

1.  I always know how much I have to spend.  When I go to the store, there is no question how much I have left in my budget.  All of the cash I have to spend is right there.  When it’s gone, it’s gone!

2.  It’s guilt free.  When I make a purchase, I don’t have to feel guilty about spending the money.  It’s already been set aside for that purpose.  And, once the purchase is made, I don’t have to think about it anymore.  There’s no receipt to keep up with or deduction to be made from my account.

3.  I don’t go over budget.  I don’t spend money that’s not in my budget because it’s not there!

4.  I spend less!  I am attached to my money.  When I spend it, I have to leave it there at the store.  When I use plastic, I swipe it, and they give it back to me.  I just don’t feel the same loss that I feel when I spend cash.

5.  It helps us reach our goals.  Sometimes when we are really working at a goal, I will get creative at the grocery store or with our entertainment and put the money I saved towards our goal.  I love the challenge and the extra boost it gives our financial situation!

I challenge you to set up an envelope system and use it for the next few months.  Grab a few envelopes, write the categories that are influenced by your spending on them–things like groceries, entertainment, and clothing.  Don’t worry about making envelopes for things such as utilities and rent payments.  Put your budgeted amount in each envelope, and you’re good to go!

If you would like something besides plain envelopes, check out these options for every budget!

Have you ever used the envelope system?  If you, would you give it a try?

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