Zero-Based Budgeting is the new way of budgeting. It takes into account worldly factors and allows more flexibility than the traditional budget. But What is it? And how can I use it in my own life?
What is a Zero Based Budget?
A zero-based budget us “Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period.” by Investopedia. It stops the assumption that last month or period will be the same as the future or coming period. Everything starts at zero and all expenses need to be justified and explained.
This process forces managers to review every expense and justify it.
Why should I use a Zero Based Budget?
Zero-Based Budgeting can help you by cutting costs and to be knowledgeable about where your money is going. By assuming nothing and justifying all your expenses bi-yearly or quarterly, you can find wasteful spending and ways to improve your spending. Finding extra money for what you enjoy.
I personally do this quarterly and this quarter I found that I still had a subscription that I was no longer using. This saved me around R200 a month!
How do I use a Zero Based Budget?
Start by reviewing your expenses quarterly. You will need to sit down with all your bank statements and go through your expenses.
Add up what you are spending and divide it into categories. Such as Groceries, Health and Beauty, Petrol and Transport, Debt Repayments, Entertainment, Personal Growth/ learning, and accommodation/ rent.
Analyse each of these categories and be honest with yourself about where you are spending too much and too little money. Look where you can save and what you can improve!
Well done! You got this far! And now is the hard part….you have to start! Take it one step at a time and with this process, you can dominate your finances!
Keep Safe and Keep Dominating!