Did you know that according to a 2013 Gallup poll, only 32% of Americans prepare a detailed monthly household budget? Up until 2016, our family would have been in the 68% that did NOT prepare a detailed monthly budget – let alone live by it. However, our family is learning how to find freedom within limits in order to stay on budget with our new reduced household income.
My one and only new resolution for 2016 was to set a budget and stick to it. So far, so good…overall. Like any new habit, though, we are getting used to living within this new plan.
Freedom within Limits: the Zero Based Budget
The free EveryDollar Budget program and app has been extremely helpful in my attempt to tweak our monthly budget and track our expenses throughout the month. The app was developed by Dave Ramsey’s team and it works with the zero based budget idea – every dollar that comes in as income needs to be assigned to a budget category. Every dollar has a job that you pre-determine. The jobs are flexible though and can change within the month and from month to month.This #budgeting program is simple and easy to use. #zerobasedbudget Click To Tweet
Freedom within limits: Keeping our “free spirits” happy
I’ve mentioned before that my husband and I are both more “free spirits” versus “nerds”, but my husband’s recent career transition has forced us to discipline ourselves and focus on details about our money. While we were both working, our family had plenty of income to cover our monthly expenses plus other “miscellaneous” purchases throughout the month. We did not assign jobs to the dollars coming in. That felt like freedom at the time – the ability to relax and not worry about every cent coming in.
Although our income has been reduced by more than 50%, we are still able to meet our essential monthly expenses without dipping into savings. This is because we are assigning every dollar to an essential line item:
- household items
- and even a little towards “miscellaneous” because I still need that category while I’m figuring out what our “miscellaneous” expenses really are.
Budgeting has set limits on each category, but the zero based budgeting allows freedom within the limits. This makes my “free spirit” happy. For example, our grocery bill tends to hover around $400/month for our family of five. I used that number in January and February as the amount budgeted for groceries. It hasn’t been enough up to this point. I’ve made every effort to stay within that amount, to the point of meal planning from the pantry at the end of the month. The beauty of the zero based budget is that when we run out of staple groceries, I can just take $25 or $50 from our “Eating Out” line item (which is not really being used) and put it towards the “Grocery” budget so that everything zeros out again.
Redefining Financial Freedom
The sense of financial freedom we now have, is the freedom that comes from working within predetermined limits. We used to believe that when it came to finances, freedom was not having to pay attention to the details. We now know that the first step to finding freedom is to pay attention to the details. Establish a zero based budget and stick to it. It’s not easy and we’re still learning how to live this way, but it is keeping us from spending our savings and free from debt.How do you define freedom when it comes to your #finances? #budgeting #zerobasedbudget Click To Tweet
Are you within the 32% of Americans who make (and follow!) a detailed monthly budget? I’d love to know!
This post will be shared at these fabulous link ups.
FREE 7 Day Decluttering Course
If you want a SLOW but STEADY method to declutter this year, this is the course for you! Sign up for seven days of:
- Step-by-step guidance
- Tools and
- Renewed motivation to declutter at your own pace. Find what works for you!