Zero Based Budgeting: A perfect Financial Fairytale.

Once upon a time you were a young woman like me. You loved to eat pizza while binge watching your favorite series on Netflix. You used to spend money on last minute hangout plans. Gucci and Prada were your go to brands. You felt happy to wake up to new online shopping parcels every other day. Your luxurious Instagram and Snapchat stories  

Once upon a time you were a young woman like me. You were not financially independent. You never kept any record of your finances. Your expenses were way more than your income. You were financially distressed and severely broke down in keeping up your fancy lifestyle. 

Finally, some sense knocked into you just like me. Like me, while crying for a credit card bill during a shopping spree you finally decided to end that financial disharmony in your life. You replaced your traditional budgeting techniques with Zero based budgeting plan. You were still young but not naive anymore. You were still living a good life but not a stressed one. 

How to introduce Zero Based Budgeting Management in your life: 

Let’s see how a zero-based budgeting plan transformed my financial life. 

To manage your personal finances through zero based budgeting, you need to understand the logic and philosophy behind the term. You must start fresh for each new period, keep the base zero, assign every dollar in our bank account to specific expense until your income minus expenses practically become zero. The anxiety of not knowing where your money is going to finally reclaim the power to know exactly where each penny of yours is going. Zero-based budgeting can do worders for you. For complete understanding on the topic, you can also read my previous article on zero-based Budgeting.

Now the question is how to make and implement zero based budget plan effectively in your life. 

Here is a manual guide to rearrange your personal finances according to zero based budgeting. 

1. Enlist your total income from all the available sources. 

2. Grab your notebook and start writing every expense (either it’s fixed like rent or gas or random like Netflix and Amazon subscriptions or unplanned hangouts. 

3. Now allocate your income to your expenses. Keep assigning money until the difference between expenses and income becomes zero. 

4. If money remains after all your expenses are done, then keep them for some other purpose like saving or debt repayment. Not a single penny should remain unassigned. 

5. Keep records of every financial transaction for 30 days either in your notebook or use some tracking application. 

Demonstration of assigning income to expenses in zero based budgeting 

Imagine you’re a student with no fixed income. You got $500 from your parents as pocket money. You earn $80 per week from your part-time job. That gives you $820 per month. 

Total Income= $820 

      STEP 1: Select must pay expenses first 

Category	Amount
Groceries	$150
Transportation Bill	$40
Phone Bill	$30
University essentials	$25
Subtotal	$245
Remaining amount	$820-$245= $575

STEP 2: Money for Savings and Debt Repayment 

Purpose	Amount
For emergency needs	$50
Productive savings	$70
Remaining	$575-$120=$455$

STEP3: Fun Lifestyle Expenses 

Fun	Amount
Fast Food	$60
OTT Subscriptions	$15

Unplanned Hangouts	$50
Mindful Shopping	$40
Snacks	$25
Self-Care	$30
Remaining	$455-$220=$235

STEP 4: Distribute Remaining $235 

Extra activities	Amount
A guilt free ‘fun fund’	$150
Add to emergency funds	$135
Total	$235

STEP 5: Income _ Expenses = Zero 

Total Income	Total Expenses	Remaining
$820	$820	$0

This demonstration made it visible that managing your personal finances by using zero based budgeting plan doesn’t mean cutting out your expenses or stop spending the money. It simply means using your money strategically. You can still eat fast food while binge watching your favorite show, you can still order parcels (once or twice in a month), you can still hang out with friends and post as many stories as you want without any guilt, distress or surprised debt at the end of the month. 

Pro-Tip: If your income fluctuates, set your zero-based budget plan on your least expected income. This way, you can treat yourself with sur-plus income. 

WHY ZERO BASED BUDGETING? 

As a young adult, you would have tried budgeting multiple times. You strived to do your best to keep records of your every financial transaction, writing down every cent and promising yourself to stay financially disciplined but failed miserably after one overspending. Now you must be wondering what miracle zero based budgeting might do to your finances. What new zero-based budgeting would bring to the table what traditional budgeting methods failed to deliver. 

The answer is very simple. Zero-based budgeting is active. ZBB doesn’t hold reminiscences of your past spendings. Zero Based Budgeting doesn’t leave any room for surprise drafts and ventures. Traditional Budgeting is kind of passive. It tracks what has already happened. 

Ways of Tracking Finances in Zero based Budgeting: 

So, now everything is sorted out, you’ve decided to become financially disciplined and maintain the record of every dollar you spend. You also decided to follow my advice to go for an unconventional way of budgeting which is zero-based budgeting. Now the foremost question which arises here is how to do zero-based budgeting in the most efficient way possible. 

I am providing you with a complete guide on how to manage it in different manners whether you’re a pen and paper person like or a hardcore tech lover. 

Option 1: If you love to play with numbers, want customization, command and control then Spreadsheets are your go to spot. 

They offer numerous subscription free templates which you can use according to your needs. I am going to enlist few options here which include: 

• The template’s name is Aspire Budgeting in the format of Google sheets, and it offers a full zero-based budget management system with charts and tables. 

• If you’re making a budget for your whole family and household, then the better choice would be the Vertex42 Family Budget Planner in the format of Excels and sheets. 

• The third option would be convenient for you if you want to picture receipts of your finances. The name is Complete Budget and Receipt Tracker in the format of Google Sheets. 

Spreadsheet also offers a feature to zero-based budgeters named Sinking Funds Tracker. This will genuinely make your life easy by saving you unnecessary expenses. 

Option 2: If you want to cut the hassle, then automated zero-based budgeting apps are exactly for you. Many of them directly access your bank accounts through mobile banking apps. They offer premium offers according to your budget but save you time and energy. 

Here is a list of some top zero-based budgeting apps which you can use. 

• PocketGuard 

• YNAB 

• EveryDollar 

These apps also provide a free trial period. You can explore them and use any application according to your financial needs. 

Option 3: 

There are two budget applications that don’t need to connect to your bank accounts, and most of their features are free. 

One of them is BUDGEY, it offers manual tracking, and you can also get receipts. 

Another one is ZERO, which offers AI tracking of your finances through voice and text input both. 

Option 4: 

The 4rth option is a classic one. Grab some aesthetic and cozy notebook dedicated to this cause. Make categories at the start of the month and keep records of every transaction in it. As a zero-based budgeter myself, I recommend this method. I named it Financial Journaling. Writing yourself makes you more conscious. It helps you think clearly and mindfully. 

Conclusion: 

Once upon a time you were a young girl who loved to spend but remained guilt ridden and financially distressed. Then you decided to introduce a logical, sequential, structured, and strategic way of maintaining your finances with the help of a zero-based budgeting plan in your life. So, once upon a time you were a girl who loved to spend but stayed guilt free and financially peaceful. A perfect financial fairytale. 

My Take

One who learned to manage her finances hard way by studying and researching multiple financial gurus and online platforms. This article is based on the author’s personal experiences and recommendations. For further professional advice, please consult the professional financial advisors.