Prioritization is the key to zero-based budgeting. вЂњWe just donвЂ™t know those things.вЂќ His approach is to think of yourself as a coach making a game plan with room for adjustments, rather than as a fortune-teller. вЂњWhen it comes to budgeting we pretend like we should have this crystal ball and just be perfectly clairvoyant in what we think weвЂ™re going to spend, or what is going to happen around us,вЂќ says Jesse Mecham, founder and CEO of You Need a Budget. If you arenвЂ™t willing to invest the energy in adjusting your budget each month, thatвЂ™s a recipe for failure. She recommends using cash or a separate checking account for variable expense categories that are more tedious to track, like eating out or groceries.ДЄlso, for a zero-based budget to work long-term it needs to be flexible. If that sounds miserable, Greutman encourages you to find another way to corral your spending. ItвЂ™s a big commitment to maintain an accurate zero-based budget, because you must track and record every expenditure. This is how the zero-based budgeting app You Need a Budget works (more on that later). Lowry believes that zero-based budgeting can help stabilize irregular incomes when you set it up so that youвЂ™re spending last monthвЂ™s income on the current monthвЂ™s expenses.

So each month youвЂ™ll be making decisions about where you want to intentionally direct your spending.ДЄnd because what you spend is tied to what you make, your monthly budget is set up to be more flexible, which makes it a good option if you have unpredictable income. That extra $1,000 must be designated to account for all of your needs and wants. So if you make $3,000 a month and have $2,000 a month in fixed expenses (rent, insurance premiums, etc.), then youвЂ™ll have $1,000 left to divy up among your variable expenses. Paying off debt, saving, and investing are examples of the priorities you can build into your zero-based budget each month. But that doesnвЂ™t mean youвЂ™re spending it all - in fact, it should be just the opposite. With a zero-based budget you wonвЂ™t have extra money lying around at the end of the month. Greutman explains the system this way: вЂњZero-based budgeting is when you give every dollar, every cent, a purpose throughout the month.вЂќ For that reason, itвЂ™s also referred to as zero-sum budgeting. With zero-based budgeting, your income minus what you spend and save each month equals zero. So what is zero-based budgeting, and is it right for you? WhatвЂ™s Zero-Based Budgeting?

Ynab budgeting emergency fund