Ready for a cool budgeting tool? Meet the zero based budgeting template!
(I sometimes call it a reality-based budget too, because it helps you manage your money in a way that actually works in the real world. Getting real in a nice way!)
You can get your copy of the printable zero based budgeting form here for free later on in this article. But first I want to talk a little bit about how to budget and — more importantly — why budgeting can change your finances for the better.
Let’s start with this: What IS zero based budgeting anyway?
If you’re not already familiar with the term, a zero-based budget is where you account for all of your money each month. The idea is to plan out where your money will go, so that it goes where you want it to.
It’s much easier to get the things you want and need (without stressing out or paying extra in the form of interest) when you’re in charge and proactive. And lots better than wondering what happened to all your money at the end of the month.
Planning out where your money goes with a monthly budget can also go a long way toward helping you become debt free.
Simply put, using a zero based budgeting worksheet is a great a way to decide where YOU want your money to go. (And to make sure you don’t miss some of those irregular expenses that can otherwise sneak up on you.)
The biggest advantage to this method of budgeting is that there are no surprises, especially once you’ve done it for a while. No surprises are a good thing, because unexpected expenses can lead to debt.
When all of your income and monthly expenses are accounted for and planned out — including chunks for savings and having fun — things are a whole lot easier.
Zero based budgeting does not equal restriction.
That “zero” word in zero based budgeting may make it sound like you’re never going to have any money leftover, but that is NOT how it works at all. Not even remotely.
You get to decide what portion of your money goes to bills, fun, debt, savings, investing, etc. So while technically you do in fact make a plan for all of your money (budgeting down to zero), the process doesn’t have to be complicated at all. You can do whatever you want with your money.
In short, budgets do NOT have to be a restrictive thing. In fact, I’d argue that they shouldn’t be. You see, a “budget” is really just a plan.
We plan things all the time in day-to-day life without stressing out about it or feeling restricted. Sometimes we actually have FUN planning things. (Like a trip or outing of some kind.) Believe it or not, filling out the budgeting sheet can be the same way.
Don’t budget for the wrong reasons.
People often start using a zero based budgeting form because they think it will help them cut back on their spending. Then they start viewing the form as some kind of restrictive, uncomfortable thing.
“I can’t,” they say when invited to do something. “We’re on a budget.” Then they feel deprived and maybe a little embarrassed.
After a while, they start “blowing the budget” or making exceptions to reward themselves for “being good” and sticking to their budget.
Well, that’s looking at it all wrong. Budgets are not like restrictive diets! Sure, you may need to cut back in order to get out of debt. (Although you could also make more money.) But you’re not cutting back because you’re on a budget.
You’re cutting back in one area because you want something else, whether that’s a debt free life, a trip to Belize, or to be able to pay for your child’s education.
When we were paying off our house, our answer to things like “Want to take a trip to the beach?” wasn’t “We can’t, we’re on a budget.” Instead, it was “Sure! After we get the house paid off.” — because that was the biggest of our financial goals.
It’s what we wanted most, and we got it done. (We did travel too during the process, using money we already had. Yup, budgets let you do that too.)
You already budget more often than you realize.
If you’ve never done a zero based budget for your money, or have done any sort of budget for your money and hated it, you probably still budget all the time without even realizing it or feeling the least bit deprived. What do I mean?
Think about what you want to do over the next few days. Maybe you’re going to the movies tomorrow night with friends. Well, if someone else were to call you up and invite you to a different movie at the same time, you’d tell them that you already had plans. Maybe you’d arrange to do it at a different time instead, or cancel your original plans if you really, really wanted to attend the conflicting event instead.
The one thing you wouldn’t do is say that you “can’t go to the movies because you’re on a time budget”.
Sounds kinda silly, right?
You also wouldn’t feel embarrassed that you couldn’t go, or wonder what your friends must think because you were forced to say no because you already had plans. You wouldn’t throw your hands up in despair or whine about how hard it is to choose one movie over the other when you only have a limited amount of time.
You’d all just go on with your life, and you’d see one of the movies or maybe do something else entirely. In short, you’d do the things that mattered to you and skip the things that didn’t.
Good news: Budgeting your money is almost exactly the same as budgeting your time.
You can’t do everything at once, but you can do what’s most important to you. The only difference is, you can’t make more time. You definitely can make more money.
Budgets are about planning ahead to get what you want and need. Those plans can be fun to make, because they give you something to look forward to, and it feels good to know that you’re doing what you set out to do. A zero based budgeting form can be the thing that helps you get what matters most.
I encourage you to get started if you’re not budgeting your money successfully already. Take control of making sure you get what you want most.
A little secret about budgeting…
If you’ve tried budgeting in the past and failed, here’s a little secret. There’s no such thing as the perfect month, so stop beating yourself up or feeling like a failure when it doesn’t happen.
Instead, stick with that budgeting thing! It makes a huge difference. You’ll eventually get everything added in that you’re really spending money on. (That’s why my zero based budgeting form includes both “Planned” and “Actual” fields for each line item. Using both of those fields will help you adjust for the following month.)
Be realistic when filling out the template. Don’t write down what you think you “should” be doing. Write down what you’re actually doing. (Tracking your spending helps a lot with that.)
If you don’t have enough money…
If you don’t have enough money to cover all of your bills, savings, and fun money, you’ll want to do some juggling so you don’t end up in the hole. That might mean cutting back in certain areas, taking on additional work, or a combination of the two.
If you’re cutting back to pay off debts, that’s awesome. Just be careful not to cut back so much that you sabotage yourself later. Smaller, gradual changes usually work better because they become a normal part of your life, especially if they’re in areas you don’t care much about anyway. No matter what, keep some fun money in every month. Fun is a requirement for a happy life — and it helps you stay on track with your goals too.
Give using a budget template a try.
How to use the zero based budgeting form:
Once you’ve downloaded the free printable budget template, open it using the free Adobe Acrobat Reader to view it and fill it in. (It’s a fillable, savable pdf form, so you can’t just automatically view it in many browsers or with Apple’s Preview, but you can use it with Acrobat once you’ve got it on your computer.)
The worksheet has budget categories for housing, transportation, utilities, food, debt (although hopefully someday that will be ZERO for you!), entertainment, pets, health & appearance, outside help (around the house), and miscellaneous. Finally, savings and income are included too since it’s a zero-based budget.
I tried to list a huge variety of items in this zero based budgeting template so that fewer things will slip through the cracks, but don’t feel like you have to use them all! Skip all of the ones that don’t apply to you. (Or to your family, if you’re creating a family budget.)
Make a new copy of the budget worksheet for each month, and adjust it as needed to reflect your changing situation.
Remember that budgets are living, breathing documents. It’s perfectly normal to take time to get things exactly where you want to be. Just keep at it and pretty soon your money will be working for you instead of the other way around :)