This is part two of a 2-part article by Angela Tatem that was featured on Shespeaks2me.com, a women's empowerment blog hosted by Elaine Houston.
A zero-based budget is the blueprint for our lives each month. It is the master plan that helps us reach our major goals by first taking care of the smaller, everyday goals. It is where we decide how we are going to spend each penny of the income we bring in that month. It’s the no dollar left behind campaign for our personal finances. It is written out on a cloud-based spreadsheet that we both have access to all the time.
Read the 4 tips on how to create your zero-based budget:
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Every penny needs to be categorized into a line item. There should be no money left-over. This is what makes it zero-based. Not that you have zero dollars in your checking account but you have spent every penny on the spreadsheet. No stragglers, every penny is accounted for.
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Start your budget line-item categories with what is most important. For some people, that will be their rent. It is best to list the must-haves first and go down the page with the less important and more flexible categories like “Mani/Pedi”, “Dunkin Donuts coffee”, “Dinner out with friends.” These three examples can be eliminated or modified without significant consequences to your financial goals, where a house payment will.
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Have accountability. If you are doing life with another person such as a spouse, or significant other, the budget should be completed by both of you together. It is a shared responsibility. If you are a single person, after your budget is complete, share it with a trusted money coach or accountability partner. This person isn't afraid to tell you “no.”
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Create a category for savings. As women-leaders we are givers. We give to others and sometimes it is at our own financial detriment. We need to save to protect our own well-being. The budget helps you become strategic and intentional about building your savings. It must be a part of your budget each month, and this category should be on top, not the bottom because savings is imperative.
Most women-leaders already plan and allocate their time each day to be most effective in their roles, whether it be a stay-at-home mom or a CEO. A lot of us have our year planned out because there is so much we want to accomplish and we understand the power of intentionality, goal-setting, and making strategic moves. With cash-flow planning, we transfer those same concepts to money. We prepare in advance how we will spend, give, invest, and save each dollar. It works for our time, and it works for our money. This doesn’t mean all our money problems will magically disappear. But how much smoother does our day flow when we have it planned out in advance and we took the time with a trusted mentor or partner to plan it? Our mentors do not have a perfect marriage, they have struggles just like every other relationship, but the difference is that investing in cash-flow planning provides a deeper level of commitment and transparency to their relationship when it comes to goal setting. Every goal and decision we make has a financial cost associated with it. Either the decision will involve you paying out money, or you saving money.
As women-leaders we often go above and beyond to take care of the companies we work for. Nurture your own personal economy too. Our commitment to cash-flow planning is the foundation of having a wealth-centered financial game plan. There are many more topics that we teach (getting out of debt, saving, establishing a wealthy mindset, and investing) but the foundation is to establish strong budgeting skills. Knowing where all our money will be spent before the month starts brings a sense of relaxation to many women. We have much to concern ourselves about, so being on top of our personal finances, and having a written game plan for our money helps us be more effective with our other roles. It gives us one less thing to worry about. Cash-flow planning is transformative. It helps us clearly see what needs to be done to meet our money goals. Money is interwoven into all aspects of our lives. If you have your money goals in order, it makes your life goals that much more attainable.