Best: Budgeting with a zero-based budget approach

Best: The zero-based budget approach progresses you to the point that you can comfortably budget monthly and have every dollar allocated accordingly.

Let’s say your gross income is $65k, and after deductions, retirement contributions, taxes, etc., you are left with an after-tax income of $46,150.00—resulting in $3,845.83 per month net pay to your account.

This $3.8k will then be split into 11 categories, encouraging you to live below your means. The 11 categories were outlined in a resource by EveryDollar. (See [Margin] Episode: How to build your Plan to Spend) link -https://www.youtube.com/watch?v=QErzBDgbo9Y&ab_channel=MillennialMargin

Step 1: Insert net pay to your bank in Income.

Step 2: Insert Giving as 10% of the first figure.

Step 3: Insert Saving as 10% of the first figure.

Step 4: Insert mortgage (if a mortgage exists) or rent as 25% of the first figure under Housing.

Step 5: Insert Utilities as 5% of the first figure under Housing.

Step 6: Insert transportation costs as 10% of the first figure.

Step 7: Insert food costs as 10% of the first figure.

Step 8: Insert personal expenses as 5% of the first figure.

Step 9: Insert miscellaneous expenses as 5% of the first figure under Lifestyle.

Step 10: Insert recreation expenses as 5% of the first figure under Health.

Step 11: Insert insurance expenses as 15% of the first figure under Insurance.

Whether you are utilizing the 80/20, the 50/30/20, or the Zero-Based Budget, all of them will allow you to build Margin. 

You must be intentional about knowing what matters most to you, limiting those aspects that do not add significant value, and maximizing those that are life-giving. Where are you at, and which best fits you?

CTA:

If you already have a budget but have not succeeded in following it, break it down into these 11 steps. This systematic approach will allow you to look line item by line to see if you have spent more or less over the last 90 days and adjust accordingly.