Zero-based budgeting templates are another way to save money for now and the future. While there are many ways to save money on a weekly or monthly basis including the printable 52-week money challenge, penny savings challenge and participating in a no-spend month, using zero-based budgeting templates will help you keep on track with your savings. In this article, I’ll go over the steps of zero based budgeting and how this method can help you save money and get ahead.
Without further ado, let’s get into the features of zero based budgeting templates.
What is Zero Based Budgeting?
Before we get into the details on how to use zero-based budgeting templates and why they’re a great way to track finances, what is zero-based budgeting?
While this phrase might sound confusing and strange, it’s actually a lot easier to understand than you might think. Zero based budgeting, also known as zero sum budgeting, is quite simple. Each month, every dollar made has a job to do – the money will either be spent, invested or saved.
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Why Use Zero-Based Budgeting Templates?
Zero-based budgeting templates are a simple way to get started with long-term saving habits. Since you’ll be using a template, you’ll have a system to keep track of how much money is going into and leaving your wallet each month.
Advantages of Zero Based Budgeting
One major advantage of zero based budgeting? Each month, you have a system and structure to follow. The template is customizable, so you can change around the amounts to suit you. For example, if you’ve finished paying off your car, you can allocate the rest of the money you were spending on the car payment towards something else, like a vacation fund or saving more for retirement. The zero based budget is the best method of budgeting because you’re tracking every single dollar that comes in and out of your wallet.
Disadvantages of Zero Based Budgeting
Are there both advantages and disadvantages of zero based budgeting? Absolutely. While the benefits of zero based budgeting outweigh the cons and the disadvantages of zero based budgeting are small, they are still worth talking about. When using zero-based budgeting templates, the main disadvantages is that there is a lack of flexibility with planning . Sometimes, we may have one-off or unexpected expenses that might come up. If you are using the same template month over month, the template may not account for a one-time car repair or large purchase, such as an international airline ticket. Yes, there are several cons to this strategy. However, don’t let the limitations of zero based budgeting hinder you from trying it out!
How can you prevent forgetting to account for unexpected expenses? Create a line in your budget for ‘extra’ expenses and put this extra money into an emergency account. You’ll be well-prepared to cover any expenses whenever they come up!
Why is it important to account for emergency expenses? Life happens, and there are so many things out of our control. While you can put expenses on a credit card, it’s a lot better to pay for items with cash to avoid compound interest – spending much more than the original cost of the item.
How Do I Get Started With Zero-Based Budgeting Templates?
Income Calculation
Let’s begin with the steps of using a zero based budgeting template, starting with the first one. What are the features of zero based budgeting and using this strategy to save money? First, look at different templates and how to calculate your monthly income. There are different ways to get started. The most common way to keep track of your finances using zero-based budgeting templates is to use a spreadsheet. On the top line, put your total monthly income. If your income fluctuates each month, take the average of the last 3 months of your income. How do you do this? Add up your income from each month and divide it by three.
Example:
January 2023 income: $2600
February 2023 income: $3100
March 2023 income: $2800
2600 + 3100 + 2800 / 3 = $2833.33 = $2834 (round up to the nearest dollar for simplicity).
Therefore, this person’s income and expenses should equal $2834 each month when using zero-based budgeting templates.
Why use the average of the last few months? It’s a good way to estimate how much you make over a longer period of time. You can even do the last 6 months if you feel like this is a better way to track your income more accurately.
One more note: want to learn how to budget weekly paychecks? Easy – just add up how much you make each week and do it by month. For example, if you got paid 4 times in March, add up the total made each week. If your income fluctuates, calculate the average of each month for the last 3 months.
Expenses Calculation
Next, decide on expenses – what items do you spend money on every month? In the expenses category, put every single expense you have – rent, utilities, car payments and groceries. With zero-based budgeting, you’ll also need to put a line for any extra income – where does it go? In this example, the extra $1000 goes towards saving and investing.
This person’s monthly income is $4000. In their expenses section, every single dollar goes somewhere, adding up to the $4000 they made that month:
- $1600 – rent
- $100 – utilities
- $300 – groceries
- $1000 – miscellaneous expenses
- $1000 – saving and investing
- Total = $4000
If you subtract the expenses from the income line, you’ll come to $0 – hence, the zero-based method.
One great aspect of zero based budgeting templates is that they are customizable to you. Create your own categories based on how you spend your money. Divide them into fixed expenses (rent, utilities) and variable expenses (groceries and cooking, clothing, investing/saving etc.) Everyone is different, so don’t be afraid to experiment and choose a method that works for you!
To help you get started, allocate a percentage towards each category. In the example above, rent would be 40% of this person’s expenses ($1600 rent / $4000 monthly income). Customize the categories according to your current fixed expenses. For variable expenses like investing, choose a number that’s achievable. If you aren’t ready to commit to a larger percentage like 30% in the 30 30 30 method (covered later in this article), start with just 10%. If you try out a template and you’ve underestimated a category, you can always change it later on. Experiment and have fun with it!
How Do I Track My Progress With Zero-Based Budgeting?
Zero-based budgeting templates are a fun and enjoyable way to track the money you make and how you use it. Spreadsheets are a good start, but templates are the way to go if you’re looking for a fun and interactive way to keep on track with your goals! Additionally, they’re easier on the eyes and well-suited to beginners.
Check out Pinterest to find a zero-based budget template that works for you. Additionally, you can check out some template examples here.
How Do I Reward Myself?
After you’ve stuck with the zero-based budgeting method for a while, it’s important to reward yourself for all the hard work and discipline you’ve put into saving. Budgeting and sticking to it isn’t for the faint of heart, and you should be proud for taking this step towards financial freedom!
Take an extra $50 and treat your family to a night out at the movies or a trip to a national park. Feeling something sweet? Take the family out for ice cream! If you want to reward the family (or just yourself) with something bigger, why not save the money and do something once every 2 or 3 months? All that matters is that you’re sticking with good habits and enjoying your journey. If you’re serious about saving, involve your family in financial planning. Set aside some time every month to go over your spending and saving goals. If you have younger children, ask them what rewards they would like. When your family is involved, you’ll be more motivated to work towards those goals, since you’ll have a reward waiting for you once you’ve hit them!
If you want to reward yourself on a monthly basis, you can include a monthly reward as a line item on your budget using the zero-based budgeting method. Here’s an example below of a budget that allows for an $100 reward per month (highlighted in orange):
If you include a reward in your monthly budget and stick with good habits, it’ll be easy to treat yourself and stick with good savings habits!
Conclusion – Zero-Based Budgeting Templates
Zero-based budgeting templates take some time and thought to get started with. However, they are a simple yet effective way of controlling and tracking savings, spending and investing month over month. Additionally, there are so many online resources available – including zero-based budgeting templates.
Choose a paid or free zero based budget template here and get started with your financial planning. Save money and don’t forget to enjoy a treat every once in a while! Make life easier by following a savings routine with zero-based budgeting.
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Janita is a frugal living expert and owner of Frugal Fun Finance. With over five years of personal experience finding and trying out the best ways to make and save more money, she's eager to share her knowledge. Janita's strategies have helped her save thousands of dollars for funding investments and traveling to over 20 countries.
Janita completed training in personal finance at The University of Western Ontario and McGill University, two prestigious Canadian universities. Her expertise has been shared on GoBankingRates, Yahoo Finance, and NASDAQ.com.
