Hello, beautiful people from across the lands! I have said the B-word over a thousand times I’m sure. I’m talking about a BUDGET. Umm hmm, what you thought I was talking about?! Just kidding, but seriously budgeting has truly changed my life and is the foundation for reaching financial freedom. In this post, I want to discuss the zero-based budget and the 50 30 20 rule of budgeting method. Remember personal finance is personal so there is no wrong or right method just work works best for you.  

Zero Based Budget

Zero Based Budget

What is it?

Zero based budget is a budgeting method that subtracts your income from your expenses down to zero.  

How to Use it?

Using the ZBB method you ensure every dollar has an assignment. If there is any money left over after expenses are paid you can allocate that to your savings or other miscellaneous expenses. The key is to not leave any dollar to its own doing or you will catch the “where did my money go?” syndrome. 

50 30 20 Rule Budget

What is it?

This budgeting rule states that you spend 50% of after-taxed income on needs, 30% on wants, and 20% on savings and/or paying down debt.

How to Use it?

Using the 50 30 20 rule groups your income into priority delegating a certain percentage to each category. It provides a structure that gives limits to different spending areas. 

Action Steps to Take NOW

Step 1: Chose one budgeting method to adapt and begin 

Step 2: Download this free budget template or purchase one of these budget planners under $20

Step 3: Push to budget consistently for the next 3 months

Conclusion 

A Zero-Based Budget ensures every dollar has an assignment and leaves no money on the table. This allows you to manage your budget with clear guidance on where your money will go.

50 30 20 Rule is somewhat similar to the zero-based budget in that dollars are given an assignment but it is more specific. This budgeting provides structure on how much money should be allocated per section. 

Either method has worked for thousands of others. Remember personal finance is personal so there is no wrong or right way. There is just a way that works best for your financial journey. Have you adopted either of these budgeting methods? If so, what do you find to be the pro & con?

Until next time dream, believe, and achieve.