I have always been a big proponent of cash budgeting and the zero-based budget since first learning about it in a personal finance book. Cash budgeting is when one takes out the allotted cash for their variable expenses and use cash only to pay for such items like food, health and fitness, clothes, fun and recreation, and miscellaneous items. What I do each bi-weekly paycheck is pay my fixed expenses online such as housing, insurances, internet and cell phone and then withdraw my allotted cash for my remaining variable expenses. This, along with the zero-based budget, work hand-in-hand to keep people on-track with their total paychecks, physical cash and overall finances.
The zero-based budget is when you take your payroll deposit, and subtract all of the fixed and variable expenses you most consistently pay for, being sure to allocate every dollar and penny to a home to finally end up with a zero balance. This doesn't mean that all the money gets spent. For example, this could mean that certain amount of dollars goes to savings and investing or towards a fun money cash envelope to ensure that while we are budgeting for present and future expenses, we are still able to live a lifestyle that is sustainable and meets are basic needs (as opposed to skimping on all necessities, strictly adhering to our budget but living a lifestyle that is unsustainable for the long term).
It is important to ensure we are still living in a way that is sustainable so that we are able to meet our financial goals while still be satisfied and nourished. There's no sense in strictly skimping on food, for example, and being miserable because the food that we are eating is not healthy nor nourishing while our financial goals are being met in an extremely unbalanced way. If you need tips on how to make your budget more sustainable for the long-term, tune in to next week's post about Budgeting Sustainability. Signed, Filipina Budget Girl.