What Does a Zero Balance Budget Mean
The latest buzzword in personal financial circles is 'zero balance budget.' It's a term taken from big business and it could make a huge difference in the quality of your life and finances. With a zero balance budget, the balance between your income and expenses are equalized - meaning the end result is a zero balance. Learning how to plan for a zero balance, and what it means for your future, is easy to do. If you are thinking of taking out a personal loan, creating a zero balance budget plan can help you use the money more effectively.
Can you save with a zero balance budget?
The first question that comes out of everyone's mouth about a zero balance budget is whether or not it means that you can save towards the future. The answer is 'yes.' A zero balance budget treats savings as an expected expense. It is not viewed as optional, but is given the same priority as paying your rent or utilities. The thing that you have to know is what you are saving for, and how you are going to get there. Saving without having a purpose can make the money seem like it is just there to be used for anything, and that can get you into trouble. It isn't so much that you will fritter it away on something you don't need, but you may not see that using your savings to handle an unexpected expense may be more harmful to your long range plans that talking out a personal loan to cover the cost.
Getting to zero
Getting to zero is easy to plan for, and it is easy to do. It does take some adjusting to, and practice. On the average, it takes one month of dedicated practice to learn to live within a budget. Start by outlining your income and your expenses for each month. Make sure you add in plans for savings, repairs and the "expected unexpected" costs. Divide all of that by 4 to get a general weekly expense budget. Now, look at your income and do the same. You have to follow a weekly budget, while always checking it against your monthly budget so you know what the reality of your spending really is. Adjust your expenses so that if you can lessen the per month cost by savings towards paying a larger bill you do so. Subtract your expenses from your monthly income. You want the result to be zero, but it may take a while to get there.
Fixing the wrongs of the past
If you came up with anything but zero you need to now look at how you can use a personal loan to increase your monthly income until you reach zero with your end sum. Many times having an affordable loan repayment will be easier to plan for in a zero balance budget then to continue with a budget that always produces a negative number. Think in terms of months when it comes to fixing your budget, not weeks. Be patient and you will arrive at zero.
Can you save with a zero balance budget?
The first question that comes out of everyone's mouth about a zero balance budget is whether or not it means that you can save towards the future. The answer is 'yes.' A zero balance budget treats savings as an expected expense. It is not viewed as optional, but is given the same priority as paying your rent or utilities. The thing that you have to know is what you are saving for, and how you are going to get there. Saving without having a purpose can make the money seem like it is just there to be used for anything, and that can get you into trouble. It isn't so much that you will fritter it away on something you don't need, but you may not see that using your savings to handle an unexpected expense may be more harmful to your long range plans that talking out a personal loan to cover the cost.
Getting to zero
Getting to zero is easy to plan for, and it is easy to do. It does take some adjusting to, and practice. On the average, it takes one month of dedicated practice to learn to live within a budget. Start by outlining your income and your expenses for each month. Make sure you add in plans for savings, repairs and the "expected unexpected" costs. Divide all of that by 4 to get a general weekly expense budget. Now, look at your income and do the same. You have to follow a weekly budget, while always checking it against your monthly budget so you know what the reality of your spending really is. Adjust your expenses so that if you can lessen the per month cost by savings towards paying a larger bill you do so. Subtract your expenses from your monthly income. You want the result to be zero, but it may take a while to get there.
Fixing the wrongs of the past
If you came up with anything but zero you need to now look at how you can use a personal loan to increase your monthly income until you reach zero with your end sum. Many times having an affordable loan repayment will be easier to plan for in a zero balance budget then to continue with a budget that always produces a negative number. Think in terms of months when it comes to fixing your budget, not weeks. Be patient and you will arrive at zero.
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