The goal of a zero-balance budget is to command your money and have absolute control over it. This is an important skill for getting out of debt and building wealth.

So how does it work and how can you do one? The steps to getting started are below.

Step one:

Write down your income for the month and the dates that you get paid


Step two:

Write down all your monthly payments. As you write them down also include:
Day of the month it’s due
The amount of the payment
If it’s a debt, the total remaining balance


Step three:

Write down your other expenses for the month and the amount you will need for that expense.


Step four:

Let’s prioritize bills and expenses.
In every budget, you should start with the essentials: those are food and shelter, i.e. groceries, rent and utilities. The next most important thing is your transportation because it’s what you use to get to work and earn your paycheck. So, transportation is your car payment, gas, and auto insurance.
Now that your needs are taken care of, begin to prioritize your remaining expenses and payments.

Step five:

Now that you have the bills and expenses listed in order of importance, you can create your budget.
Start with the total income you expect for the month then subtract, in order of priority, your expenses and bills.


Step six:

Well you have a budget… that doesn’t mean it’s a pretty budget. This step is different depending on your situation.

  1. Negative balance at the end of the month:
    First of all don’t panic, this is where most people find themselves when they start out, so you’re not alone. This is the part of a ‘budget’ people hate. You’ll need to look back at your bills and expenses to see where you can reduce or eliminate. I’ve looked at 100’s of budgets so if you need help with this step, don’t hesitate to contact me.
  2. Money left at the end of the month:
    Hooray! You’re in a good place. You see that by creating a plan for your income you can live on less than you make, and that’s a key to building wealth. If you have debt, put that money to work by committing it to paying down one of your debts. For help selecting which debt to pay down first read here. If you are out of debt it’s time to start creating an emergency fund and then start investing. If you’re wondering “how big should my emergency fund be” read here. If you’re wondering how can I get started investing read here.

Now you have a zero-balance budget! Every dime for your income next month is allocated.

If you commit to following that plan you’ll begin to win with money.
Be advised:  If you’re new to budgeting don’t get discourage if things don’t go perfectly as planned. You’ll find it gets easier in the months to come and you may have to adjust things because you didn’t realize you needed so much money for gas or you allocated too much for groceries. Stick with it. Things that are worth doing are not always easy, and that’s why doing them can make you different. It’s how you start winning and building wealth.

From the peanut gallery (aka Jen Lynne): If you are married, you NEED to do this activity with your spouse. Even if you are the one who goes and pays all the bills every month and keeps track of who gets paid on what date, you BOTH need to agree to the budget!