Have you established a zero-based monthly budget yet?

How to do a zero-based budget (and why!), featured on the Southern Momdays blogIt’s the first question I ask couples when they tell me they’re ready to get out of debt fast.

The idea of planning something called a zero-based budget doesn’t make many people grin with glee. This adulting thing never promised an amusement park of existence, though, and how we handle our money can seriously make or break our goals for adulting in the future. It’s important! And that’s probably why you’re here.

Most often when I ask the above question, I get an answer that sways back-and-forth between “We keep an eye on it” to “We think we’ve got that down,” but no details ensue. It always reminds me of when I was planning weddings as my side-gig. I’d ask the couple how many guests they were inviting, and they’d say it was “up in the air.” Well…practically everything depends on that one detail. It’s a guideline. The same is true for our money, friends. The zero-based budget is our defining outline for all costs and financial success moving forward.

So what is a zero-based budget?

Money is buying power. A zero-based budget shows you how much buying power you really have when you follow a simple plan. It takes the total income you make in a month and allocates every single dollar to some bill or category by subtracting each respective amount until you’re left with $0 at the end.

And before you think it’s going to be depressing and restrictive, you can work things like pedicures and date-night cash into your zero-based budget! The only difference is that these things are planned and saved for now, versus a don’t-know-if-I-can-afford-it-but-gonna-buy-it-anyway approach. As Dave Ramsey says, a zero-based budget “gives every dollar a name.”

By setting this simple budget up, you’ll be able to maximize the effectiveness of your money by making sure every bit of it has a job. At first, your money’s job will be to help you get out of debt. Later, though, it will be to help you buy something you really want – like a luxurious vacation.

Andy and I discovered this amazing tool the hard way, which is why I can stand behind it. (Learn more about our debt-free journey here!)

A zero-based budget looks like this:

Total Monthly Income – Expenses (i.e. Bills; Necessities; Tax, Tithe, Retirement, and Education; Monthly Savings for Semi-Annual or Annual Dues; Monthly Savings for Future Perks) = $0

Luckily for all of us, creating a zero-based budget is far easier than you think.

It does take simple organization up-front, so give yourself an hour or two to hammer out the following details. After these steps, you’ll be well on your way to creating a solid zero-based budget to start gaining financial success.


Money by Mom: Your Personal Finance Solution online course - simple, stress-free budgeting for overwhelmed moms, by Southern Momdays


How to set up a zero-based budget:

Here’s what you need before you actually do your zero-based budget.

  1. A list of your have-to-pay monthly bills.


Everything paid by a due date each month that you need to keep your household running smoothly hits in this category. It includes rent or mortgage, electricity, sewer, water, Internet, your cell phone bill, etc.

  1. A list of things you must buy each month, along with estimates for how much you’ll need.


This includes staples like food and gas. It also includes baby necessities like formula, diapers, and wipes, as well as pet necessities like dog food. Not surprisingly, this category is the hardest to nail down in your budget at first. It might be a good idea to look through your purchases from the last few months and get a ballpark average for how much you spent on each necessity prior to moving forward.

Although you’ll ideally have a small emergency fund already ($1000), I also suggest putting a little bit back for medical and maintenance purposes to bridge that gap, since you’ll likely have medical costs (i.e. yearly physicals) and maintenance costs (regular vehicle oil changes) at some point in your year. Best to be prepared!



  1. A list of must-do tax savings, charitable giving, retirement, and education funding.

Tax, Tithe, Retirement, and Education

If you’re an independent contractor, own your own business, or are otherwise “self-employed,” save for your tax bill throughout the year by putting aside 25% of every pay check. If you’re not self-employed, make sure you’re claiming the proper number of dependents on your W-4. (Consult an accountant for professional advice!)

As Christians, our little family believed in tithing 10% of our income throughout our debt-free journey. We saw rich financial blessings flow through that obedience to God, so I always encourage other Christians walking this journey to consider tithing as a standard deduction line in their zero-based budget.

We also believe in richly funding our futures through Roth IRAs and Andy’s Roth 401k. Now that we’re debt-free except for our house, we invest 15% of our monthly income every month. We also invest into Scarlett’s ESA for future education needs and college. You define what percentage works for your family in this stage of your debt-free journey. (If you’re not debt-free yet, you might consider pausing your retirement and education savings until you can knock out that debt.)

  1. A list of things you must pay for once or twice per year so should save for throughout the year.

Monthly Savings for Semi-Annual or Annual Dues

Rather than embracing the chaos of trying to find hundreds of dollars here and there, prep for the inevitable ahead of time. We save year-round for staples like auto and home insurance and term life insurance policy premiums, among other items.

You may need to play “catch up” for this category at first. The key is to mark down when each thing in this category is due, along with how much it will cost, and divide that amount by the number of months from now until that payment is due. Once you make a payment, you can start dividing the amount due by 6 or 12 to get your actual monthly payment. Voila! By putting a little money aside each month, you can avoid having to find a lot of money all at once later.



  1. A list of things you want to buy each month or year – if you’re debt-free already.

Monthly Savings for Future Perks

This category includes items your family could live without if necessary to get out of debt. It’s also the category you’d cut things from if you don’t have enough money for it all at the end of your zero-based budget. It includes premium things like cable TV, massages or pedicures, optional membership dues, monthly outings and yearly vacations, optional yearly software updates, Birthday and Christmas gifts, and so on. If it’s not already set up in monthly-bill format for you, define what your monthly “bill” should be so you can put enough money aside to enjoy those things when they’re “due” in the future. For instance, you need to set a pre-defined budget for your family vacations for the year, decide when you’ll travel, and start saving what you need between now and then each month to make the trip happen with little to no stress.

Once you have all of the above, you can get started creating your zero-based budget.

As an example, I’ve included a sample budget for you below. The household income for this example is $6,500 per month. (For transparency’s sake, all of these figures, including the monthly income amount, are different from my own family’s actual budget.)

Note: We consider everything after “Termite Protection,” which is a yearly cost you would break down into savings per month, to be just-for-the-fun-of-it allocations that we could cut if this family was not debt-free already.


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Zero-based budget example including how to do one and why, featured on the Southern Momdays blog


If you loved this simple run-down on how to do a zero-based budget, you’ll adore my upcoming online course, Money by Mom: Your Personal Finance Solution.

I’ve designed this course especially for fellow moms overwhelmed by their home finances. It features a straight-forward, simple, no-stress plan that will help you budget your way to fast home-finance success. In it, I’ll show you step-by-step how to master your own zero-based budget – among a variety of other topics!

Best of all, I’m including a special zero-based budget worksheet that condenses all the information you read here (plus so much more) into actionable steps for your new family budget.

You’ll be able to access this in the variety of complimentary BONUS materials found in the digital swag bag that comes with the course! I’ll have more information about it all soon. Sign up for my mailing list below to stay in the loop…you won’t want to miss it!


Money by Mom: Your Personal Finance Solution online course - simple, stress-free budgeting for overwhelmed moms, by Southern Momdays


You control your money each month. Not the other way around!

A zero-based budget is the surefire way to make that happen.

I’m excited to cheer you on as your family moves towards your financial goals, friends. Let me know if you have any questions in the comments below!

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