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!
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I need to work on this one too!! When I run outta money, I borrow. And that is sooo bad!!
This is a great post! I love thinking of a budget in terms of financial freedom instead of something that is restricting. My husband and I have been working really hard to stay on a budget and live frugally so we can pay off student loan debt. Thanks for the encouragement! 🙂
Hi Bree! Thank you for dropping in and commenting. That’s wonderful that you and your husband are getting in the habit early on! I wish we had been more disciplined years ago, but no time for regrets – only progress forward!
This is exactly what I try to tell my personal finance students when we discuss budgets! At first, budgeting feels restrictive, but then you realize how freeing it is to make a purchase and know it’s in the budget.
I like this idea! We’re doing Dave Ramsey’s course right now and are learning some great tips!
That’s great Susannah! Such rich materials!
We have an overly detailed monthly budget. But it is not an every dollar budget. Basically, after we pay all the bills, everything left over goes for food. I always manage to stick to the budget on every category except food.
Mine isn’t overly detailed and that’s probably why I’m sticking to it! Aside from our mortgage our food line is the largest budget item.
This post is inspiring! OK, so I have to admit that we do not have a monthly budget, even though I have a certificate in financial planning and have read that having a budget is even more beneficial financially than investing your money. What we do do is take a look at where we spent our money the month before and see if anything is out of wack or needs changing. But reading this article – and being introduced to the app you mentioned – I think our family needs to start creating a budget again! Thanks for sharing your story. I’ll be sharing this post on many social media platforms.
Hi Kerry! I’m so glad you’ve found value in the post! I’m so surprised that we can make our monthly expenses on my part time income. I attribute it to the zero based budget. I wish I had done this sooner – I can only imagine the money we could have saved and/or invested! I’ve tried other apps and paper budgets and this is the only one sticking so far. Thank you so much for sharing the post as well – I truly appreciate it!
Erin @ Stay At Home Yogi says
I’m a zero based budgeter too! I really think it’s the best way to handle our money!
Me too Erin! I wish we had started doing it earlier – when we had more income to zero out. ?
Jeanne Grunert says
Great tips and suggestions. It is so hard for many people to stay on a budget. I am sure that your blog post on the topic will help many. Visiting from the #HomeMattersParty
Thank you Jeanne. I’m learning myself so I understand that it’s hard!