Speaker 1: Episode four ninety, The Beginner's Guide to Zero based Budgeting.
Speaker 2: Welcome to the Frugal Friends podcast, where you'll learn to
Speaker 2: save money, embrace simplicity, and liver a your life. Here
Speaker 2: your hosts Jen and Jill.
Speaker 1: Welcome to the Frugal Friends podcast. My name is Jen,
Speaker 1: my name is Jill, and today we are talking about
Speaker 1: zero based budgeting and how we would like to kind
Speaker 1: of shape it and form it around values based spending
Speaker 1: and all of the spending psychology that we talk about
Speaker 1: on the show and then also in our book Bye
Speaker 1: We Love That Going Broke.
Speaker 3: There can be a lot of these terms used in
Speaker 3: the personal finance space about different ways to pay off debt,
Speaker 3: different ways to budget, and it can feel so confusing.
Speaker 3: So we're just breaking down one particular method to budgeting.
Speaker 3: Spoiler alert, they're all pretty much the same. Some of
Speaker 3: it just has to do with the type of approach, mindset,
Speaker 3: the ways in which you kind of manipulate the numbers.
Speaker 4: But we'll get into all that.
Speaker 3: Yeah, But first, this episode is brought to you by
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Speaker 3: first episode that just went live this past Sunday.
Speaker 1: Yeah, so Frugal Friends podcast dot com, slash YouTube or
Speaker 1: just search Frugal Friends on YouTube. It is very fun
Speaker 1: and so I'm very excited. And you'll also see the
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Speaker 1: submit your own.
Speaker 3: Question and you'll get to see our new studio sat up.
Speaker 4: Yes.
Speaker 1: Yes, So we are so excited to bring you guys
Speaker 1: more video to show you guys our face more in
Speaker 1: twenty twenty five. And we just think that YouTube is
Speaker 1: going to be a way that we can help more
Speaker 1: people in a new way. So there's going to be
Speaker 1: more to come on there, not just us sitting down
Speaker 1: and talking to each other. Even though we know you
Speaker 1: guys would like that, We're not going to stop there.
Speaker 1: We can do more, so many more?
Speaker 4: Ye do more?
Speaker 1: Well, we could do more.
Speaker 4: In twenty twenty five. Yeah, all right.
Speaker 1: If budgeting is something that you want to get better at,
Speaker 1: then we have a lot of episodes on quote unquote budgeting.
Speaker 1: We also call it a spending plan, so whatever you
Speaker 1: have fewer negative feelings about, you can call it whatever
Speaker 1: you like. It's more or less the same thing. We
Speaker 1: also have some other episodes like four seventy one Budgeting
Speaker 1: Tips for twenty twenty five and then episode four forty
Speaker 1: four Try this Japanese Art of mindful Budgeting. I really
Speaker 1: like that one, so I would really encourage you all.
Speaker 1: You can pretty much just like search Japanese art mindful
Speaker 1: Budgeting Frugal Friends and it will come up for you
Speaker 1: in any podcast player. So let's get started with zero
Speaker 1: based budgeting and by first defining what it is. So,
Speaker 1: zero based budgeting is a type of budgeting where essentially
Speaker 1: you are just spending one hundred percent of your income
Speaker 1: on paper, and so that has a.
Speaker 4: Not on buying paper.
Speaker 3: If you were where.
Speaker 1: You are basically done der Mifflin and you are buying
Speaker 1: one hundred percent.
Speaker 4: Paper that's all you need.
Speaker 1: Or on an app. But it's essentially you calculate your
Speaker 1: income and then one hundred percent of that gets spent
Speaker 1: in some way, shape or form, and everybody is essentially
Speaker 1: creating a zero based budget. If you're living paycheck to paycheck, congratulations,
Speaker 1: you are already zero based budgeting, right. If you're not
Speaker 1: going into debt, then congratulations.
Speaker 3: So here's how it works before we kind of get
Speaker 3: into the exact how tose like. The framework is what
Speaker 3: we want to describe here. And they talk about in
Speaker 3: this article imagining your finances like a puzzle where every
Speaker 3: piece or every dollar kind of has a place to
Speaker 3: go and they fit together. They use the word perfectly,
Speaker 3: and I'm going to say, you're never ever going to
Speaker 3: make a perfect budget.
Speaker 1: Well, that is one of the downsides to zero based
Speaker 1: budgeting because it does lean to this perfection mentality. So
Speaker 1: if you cannot spend your money perfectly in the way
Speaker 1: that you have allotted it all, then it can lead
Speaker 1: to some of that guilt and shame cycle with quote
Speaker 1: unquote like busting your budget or overspending and all of that,
Speaker 1: which is why we don't love the traditional view of
Speaker 1: zero zero based budgeting. It If I say zero's based
Speaker 1: budgeting one more time, you don't know how many times
Speaker 1: we've had to re record me saying zero's based budgeting.
Speaker 1: If you can take away that perfection mentality or that
Speaker 1: all or nothing mentality and create a zero based budget
Speaker 1: that's a little more flexible, yet still zero based, this
Speaker 1: is going to work a lot better for you.
Speaker 3: And so the thing that I like most about it
Speaker 3: is that you are assigning a job to every dollar.
Speaker 3: I think that's kind of the banner overarching what is
Speaker 3: this approach? And so some of the parameters with this
Speaker 3: is that you are starting fresh each month. Every month
Speaker 3: is kind of a clean slate, regardless of whether you
Speaker 3: were over or under in a category the previous month.
Speaker 3: So I think that is a redeemable quality of zero
Speaker 3: based budgeting in that every month is new and fresh.
Speaker 3: It allows you the opportunity to shift kind of what
Speaker 3: your categories look like. But every month you will be
Speaker 3: saying where every dollar is going to go, of course,
Speaker 3: like all budgets and spending plans, it's going to include
Speaker 3: looking at your income, but not just the amount of
Speaker 3: money you make from your job. All of the money
Speaker 3: that you are bringing in in the month, from freelance
Speaker 3: work to side gigs, to bonuses to gifts that you
Speaker 3: might receive. We're taking it all into account while also
Speaker 3: listing out all of the expenses, so what you anticipate
Speaker 3: that month is going to look like, from subscriptions to
Speaker 3: take out to activities, to utility bills and mortgage. There's
Speaker 3: nothing that is too minor or kind of overlooked. Now
Speaker 3: that doesn't mean that you have to have such specific
Speaker 3: categories for all of these things. You know, Jen and
Speaker 3: I love a very simple, minimal, minimal spending plan where
Speaker 3: we don't have categories for like every single minutia of
Speaker 3: where our money goes, so you can still be kind
Speaker 3: of broad with it, but where typical budgeting practices are
Speaker 3: kind of going to say, list out all of your expenses,
Speaker 3: make sure you can cover that, and then it's kind.
Speaker 4: Of loosey goosey with whatever you do that's left over.
Speaker 1: We've got a free for all amount of money that's
Speaker 1: not it doesn't really have a place to go, and.
Speaker 3: Maybe you'll discover at the end of the month how
Speaker 3: much you ended up having left over. This instead is
Speaker 3: being a lot more concrete with that of with this
Speaker 3: money beyond what my bills cost me. This is how
Speaker 3: much I'm putting towards savings, This is how much I'm
Speaker 3: going to invest, This is how much is going to
Speaker 3: go to an emergency fund or debt payoff. So being
Speaker 3: really specific about what the excess might be and where
Speaker 3: each of that excess is going.
Speaker 1: This is what I thought traditional budgeting was. This is
Speaker 1: my first foray into budgeting was zero based. I didn't
Speaker 1: know that there was anything different, And I think if
Speaker 1: I had known that this wasn't actually traditional budgeting, the
Speaker 1: traditional budgeting did have that kind of like Lucy Goosey
Speaker 1: excess at the end, I would have felt more permission
Speaker 1: to maybe have like a larger miscellaneous fund or a
Speaker 1: larger slush fund or something like that, to have maybe
Speaker 1: a little less rigidity in my zero based budget. So
Speaker 1: next is we're going to give some examples.
Speaker 3: Well, I think it is worth talking a little bit
Speaker 3: more about the differences, because I still think that there's
Speaker 3: some more to tease a part here between zero based
Speaker 3: budgeting and traditional budgeting, and I really like the example
Speaker 3: that they gave here. So where traditional budgeting will often
Speaker 3: use the previous month or year as a template, making
Speaker 3: minor adjustments based on anticipated changes, they give an example
Speaker 3: of So let's say we spent five hundred dollars on
Speaker 3: groceries last month, we might think similar this month. Okay,
Speaker 3: put five hundred dollars down as the amount that I'm
Speaker 3: going to spend on groceries. And that is fine, and
Speaker 3: that can be easy and simplified and efficient. But zero
Speaker 3: based budgeting is getting a little bit more to the
Speaker 3: nitty gritty, and it's probably especially really good for those
Speaker 3: of us in debt payoff or who have specific financial
Speaker 3: goals that we really want to tackle, maybe in like
Speaker 3: the shorter term or midterm, and zero based budgeting might
Speaker 3: ask the question, Okay, five hundred is how much I
Speaker 3: spent last month, but what about this month?
Speaker 4: Does that actually make sense?
Speaker 3: What if I did for eighty on groceries and assigned
Speaker 3: twenty dollars towards my emergency fund or twenty dollars towards
Speaker 3: debt payoffs. So it's being more specific with the numbers
Speaker 3: and finagling it a little bit more to be able
Speaker 3: to achieve some of those goals. Yeah, and assessing month
Speaker 3: to month. Yeah that made sense last month, but does
Speaker 3: it still make sense this month?
Speaker 1: Yeah. I think a trap we can fall into in
Speaker 1: zero based budgeting is that we will give ourselves maybe
Speaker 1: too many categories or the specificity of it will be
Speaker 1: making us or leading us to spend money that we
Speaker 1: don't necessarily need to. So clothing is a common budget
Speaker 1: category that many people suggest having every month, But do
Speaker 1: you need a clothing category? And would you be buying
Speaker 1: clothing because it's normal to have a clothing category and
Speaker 1: it's zero based, so we have to start at zero
Speaker 1: every month, whereas a traditional budget would not always include that,
Speaker 1: but maybe have a larger slush fund that clothing could
Speaker 1: fall into, or we could create our own flexibility in
Speaker 1: creating a clothing sinking fund that does not have to
Speaker 1: be spent every month, but still creates a zero based budget.
Speaker 1: And maybe we're only buying clothing like four or five
Speaker 1: six times a year.
Speaker 3: Yeah, And I think with traditional budgeting we might not
Speaker 3: always be aware of any excess dollar that we have
Speaker 3: that like, okay, if I spent, you know, four ninety
Speaker 3: on groceries instead of five hundred, Like where did that
Speaker 3: ten dollars end up going?
Speaker 4: What are we doing with this? Now?
Speaker 3: I will say I'll skip ahead of myself a bit
Speaker 3: and say, if this is the method we're taking, I
Speaker 3: do think an app would be the best with this methodology,
Speaker 3: so that we don't have to be so intense about like, Okay, well,
Speaker 3: how much to the penny did I end up spending here?
Speaker 4: And where can I put that money?
Speaker 3: Like there is a way that we can become so
Speaker 3: engrossed in this particular method that I don't want us
Speaker 3: to get so sucked in that it's consuming.
Speaker 1: And this is where the problem lies with couples is
Speaker 1: that one person's going to be very into the zero
Speaker 1: based budget because it's something concrete you can hang your
Speaker 1: hat on. Every dollar has a job, and the other
Speaker 1: person is going to want to be less rigid, a
Speaker 1: little more loosey goosey.
Speaker 4: Yeah.
Speaker 1: And so this is something you definitely have to be
Speaker 1: aware of if you are finding that your partner is
Speaker 1: not as interested in the budget, or maybe you're listening
Speaker 1: and you want to be as excited about the budget
Speaker 1: as your partner. Is, but you're just not getting it,
Speaker 1: and so this is some times the reasoning behind that.
Speaker 1: All right, let's walk through how to make a zero
Speaker 1: based budget and the different ways that you can customize it.
Speaker 1: So one of the main characteristics of the zero based
Speaker 1: budget is that you start fresh every month. Each month
Speaker 1: is a clean slate, regardless of whether you were under
Speaker 1: or over in any category the last month. You start
Speaker 1: anew And that's a really great benefit of a zero
Speaker 1: based budget because you are never You're never going to
Speaker 1: make a perfect budget and perfectly stick to it, and
Speaker 1: so our mind bias for being all or nothing can
Speaker 1: sometimes lead us to quit and try to start again
Speaker 1: fresh the next month, which the zero based budget kind
Speaker 1: of lends itself to. But if you are moving more
Speaker 1: towards a balanced approach to budgeting, where you're taking in
Speaker 1: your inconsistencies and your quote unquote mistakes and trying to
Speaker 1: live with those, you you kind of do get this
Speaker 1: like fresh start in the month. So I'll say the
Speaker 1: first part that I like to customize on a zero
Speaker 1: based budget is I like to take a wine ab
Speaker 1: approach to saving a month's worth of either income or
Speaker 1: expenses and having that saved in your checking account ready
Speaker 1: for the next month, so you're not necessarily starting at
Speaker 1: zero in your in your bank account, because that's a
Speaker 1: that's a dangerous thing to do with a zero based budget.
Speaker 1: When you're quote unquote spending every dollar and part of
Speaker 1: that is going to savings outside your checking account, you
Speaker 1: can get really low in your checking account, and if
Speaker 1: you've got bills coming in on the first if you
Speaker 1: don't get paid on like just the right day, that
Speaker 1: could be dangerous. So what I really and I have
Speaker 1: always done to prevent this, and what I recommend, is
Speaker 1: that you save a month's worth of expenses, like whether
Speaker 1: that is you want to do your whole income, because
Speaker 1: you also consider your savings and investments, your expenses, whatever feels
Speaker 1: right to you. But you need to have a foundation
Speaker 1: to start the month off of, even if your budget
Speaker 1: is starting fresh at zero.
Speaker 3: And wine app is you need a budget, and that
Speaker 3: is a budgeting app who bases their app on zero
Speaker 3: based budgeting. And so that's one of the things that
Speaker 3: they say. You don't want to make a budget off
Speaker 3: of what's about to be earned, but what you've already earned,
Speaker 3: what you already have. And I think this approach is
Speaker 3: especially great for people with variable incomes. You don't totally
Speaker 3: know what's going to come in month to month, and
Speaker 3: so being able to approach it with what do we
Speaker 3: already have in the bank account and making sure that
Speaker 3: we always have a month's worth of cushion in our
Speaker 3: checking account that we are making plans for with that money.
Speaker 3: And then from there you're going to be identifying all
Speaker 3: of your monthly expenses, the things that you absolutely have
Speaker 3: to be paying for, your big ticket items, rent, mortgage,
Speaker 3: utilities bills, your cell phone bill, all these things. Then
Speaker 3: you can think of your subscriptions and memberships, and of
Speaker 3: how much you spend on entertainment and activities and dinner out.
Speaker 3: Those are the categories that can be massaged. Those are
Speaker 3: not fixed categories. And you can look at bank statements
Speaker 3: to kind this is your ninety day transaction inventory that
Speaker 3: you can look back at to kind of understand what
Speaker 3: is the average amount that I've spent, so that you
Speaker 3: can start with an idea, but again month to month
Speaker 3: we can show to this, and then from there you're
Speaker 3: assigning where every dollar.
Speaker 4: Did you talk about income?
Speaker 1: I think okay, okay, so yeah, we've got our start
Speaker 1: fresh assess all of your income, so freelance, work side gigs.
Speaker 1: This is even like child support, alimony, all of those
Speaker 1: different things than expenses. And now we are massaging. So
Speaker 1: for a lot of people you will be in a
Speaker 1: like kind of a traditional budget sort of place where
Speaker 1: now you have this extra money that you get to
Speaker 1: decide where it goes. For some people that will be
Speaker 1: a substantial amount of money, and for some people it
Speaker 1: will be very little. It's all okay. The amount of
Speaker 1: expenses you have does not dictate how good you are
Speaker 1: with money or how capable you are at reaching financial goals.
Speaker 1: One of the things that I love about the zero
Speaker 1: based budget is that it is a very powerful tool
Speaker 1: when you have a specific financial goal that you are
Speaker 1: looking to achieve as quickly as possible. So that I
Speaker 1: think is the zero based budget's real like diamond quality,
Speaker 1: is that it is very good for reaching particular financial
Speaker 1: goals as quickly as possible. And it's this step right
Speaker 1: here is designating every dollar. So if you have if
Speaker 1: you feel good about where your expenses have gone, and
Speaker 1: now you have this extra, now we get to assign
Speaker 1: it to other places. So if you've already prioritized your
Speaker 1: goals first. Then maybe we get to add more to
Speaker 1: fun places or to sinking funds for fun things if
Speaker 1: you prioritized your fun first. Now we get to designate
Speaker 1: this to different goals, and honestly, I think we would
Speaker 1: I both say let's talk about let's designate goals first.
Speaker 1: We're looking at our bills obviously our foundational expenses, and
Speaker 1: then looking at goals because we can get in this
Speaker 1: very maybe like toxic cycle of this I deserve mentality.
Speaker 1: And we've talked about this before, We've done a whole
Speaker 1: episode on it. But we don't believe that we deserve
Speaker 1: or are capable of doing big things financially, whether it's
Speaker 1: because we never have the people around us haven't the
Speaker 1: people who we do see doing these things we might
Speaker 1: judge for some reason, and we don't want to be
Speaker 1: judged by others in turn, and so we will settle
Speaker 1: for smaller things because we're like, yeah, I definitely deserve
Speaker 1: these fun things, these small fun things, dinners out coffee.
Speaker 1: You know, I know I have enough self worth to
Speaker 1: think I deserve the things. But we don't know what
Speaker 1: it's like always to get these bigger things that you
Speaker 1: have to save for or invest for And so I
Speaker 1: would encourage everyone to, if you're not putting money towards
Speaker 1: your financial goals first, to start their first and after
Speaker 1: a while, you'll the more you save and the closer
Speaker 1: you get to reaching these goals, the more you will
Speaker 1: believe that you deserve and are capable of bigger things
Speaker 1: than you realized. And so we can't do that without
Speaker 1: creating this action based habit, like these are the actions
Speaker 1: that we have to do every month, sometimes every week
Speaker 1: to form these mental beliefs. Like you can't just say, like, oh,
Speaker 1: you deserve to be able to take a family vacation
Speaker 1: every year and then you believe it. That's not the
Speaker 1: way it works. If I tell you something about yourself,
Speaker 1: you're not going to just believe it. You have to
Speaker 1: You have to take actions every month to start to
Speaker 1: believe these things about yourself. And these are one this
Speaker 1: in this budgeting, the order in which you designate your
Speaker 1: dollars is one of those small actions that you can
Speaker 1: do every month to gain that self confidence.
Speaker 3: Yeah, I think it's why it is such a good
Speaker 3: approach for people who are beginning or like we've already said,
Speaker 3: have these very specific goals that you want to get
Speaker 3: after because you can see progress towards it pretty quickly
Speaker 3: when you're so involved with where your money is going
Speaker 3: and being able to adjust and kind of get excited
Speaker 3: if you see that, oh, I've actually underspent in this category,
Speaker 3: which means I've got these few extra dollars I can
Speaker 3: put towards this thing that I've said that I want
Speaker 3: to be investing in. And it also gives room for
Speaker 3: if we overspent in a category, that we can look
Speaker 3: at other categories and say, okay, well, then what can
Speaker 3: I decrease as a result. I might have spent more
Speaker 3: on groceries this month, but I haven't spent all of
Speaker 3: my miscellaneous budget. So I'm going to decrease that a
Speaker 3: little bit and just be aware of, you know, not
Speaker 3: buying as much in that category for this month, and
Speaker 3: then we reset again next month.
Speaker 4: Yeah.
Speaker 1: And I also want to talk to the other half
Speaker 1: of our audience that now has put all their money
Speaker 1: towards their savings goals, their debt, payoff all of this,
Speaker 1: and now are feeling guilty about the money in these
Speaker 1: smaller categories, these fun categories. You don't want to put
Speaker 1: your extra money towards fun things. You want to just
Speaker 1: put more of it towards debt payoff. And so in
Speaker 1: a season, that is good. If you're looking to pay
Speaker 1: off your high interest debt in this season, that's a
Speaker 1: really good mentality. It's hard to tell when you've gotten
Speaker 1: out of that season, though, because there's always another financial
Speaker 1: goal to reach, and frugal people, for some reason are
Speaker 1: always looking to be as efficient with their money as possible,
Speaker 1: to the point where we fear spending money on small luxuries.
Speaker 1: We fear putting more money into the clothing budget so
Speaker 1: that we can buy more sustainable goods or higher quality
Speaker 1: secondhand goods, because what if I need that money in
Speaker 1: my retirement account. I don't know what my medical bills
Speaker 1: are going to be like in my sixties, and what
Speaker 1: if I need this money to be saved, right, And
Speaker 1: so so now I'm talking to you. Now you feel seen,
Speaker 1: all right? We really don't know how much time we're
Speaker 1: going to get on this earth, right, And so the
Speaker 1: beautiful thing about a budget is that you get to
Speaker 1: make the most of every month. Life isn't happening to you.
Speaker 1: You you are happening to life. So how do you
Speaker 1: want to show up for life in this one month
Speaker 1: that you get, you will never get this month back.
Speaker 1: How do you want to live it? Because if you've
Speaker 1: set these really good foundations into place, and if you've
Speaker 1: created these really good habits, you can be sure that
Speaker 1: everything will fall into place as it should be in
Speaker 1: the future. But what are you going to do about
Speaker 1: this month? So these are I'm talking to two different
Speaker 1: camps in our audience, So don't get it twisted. You
Speaker 1: know where you are, you know which camp you need
Speaker 1: to you know you need to be in.
Speaker 4: Yeah.
Speaker 3: I had this conversation recently with a friend about kind
Speaker 3: of identifying enough and how hard that can be to know.
Speaker 3: We might have set a goal, we reached that goal,
Speaker 3: but then the goalpost can move. Yeah, it feels as though, well,
Speaker 3: was I accurate about that? Now I've got all of
Speaker 3: these other possibilities that I'm concerning, concerned about out and
Speaker 3: want to risk, assess and adjust for, and it can
Speaker 3: be really hard to not continue to move that goal
Speaker 3: post and sit in what we have previously identified is
Speaker 3: our enough. But that's also tough to say because these
Speaker 3: things do shift. What was enough to budget for eggs
Speaker 3: five years ago is not enough now we do have
Speaker 3: to create space to shift these things, but also have
Speaker 3: a really good pulse on this is going to be
Speaker 3: satisfactory for this category. I have maxed out what I
Speaker 3: need to be putting there, and I can move on
Speaker 3: to the next goal that I have. And the next
Speaker 3: goal doesn't have to be the wisest, most efficient thing.
Speaker 3: It can be that I do really want to spend
Speaker 3: on this quality product that is going to make my
Speaker 3: cooking in the kitchen better more effective, or this thing
Speaker 3: that I want to invest in my business, or this
Speaker 3: trip that I want to take with family if we're
Speaker 3: not going into debt for it. We have accounted for
Speaker 3: some of these other goals. We've been able to identify
Speaker 3: where is enough, where is our contentment that there is
Speaker 3: permission to, like, not be the most frugal, the most
Speaker 3: efficient with every single dollar as well. So they go
Speaker 3: on to give an example of zero based budgeting. I
Speaker 3: think we kind of get it at this point, but
Speaker 3: just to drive it home, let's say that we've got
Speaker 3: a monthly income of four thousand dollars take home. That
Speaker 3: would mean that we are assigning the different categories. So
Speaker 3: in this example, this person's rent is twelve hundred dollars.
Speaker 3: They've set groceries at four hundred, utilities at one fifty,
Speaker 3: entertainment dining out and shopping at three hundred, transportation at
Speaker 3: two hundred, student loan repayments at five hundred, emergency saving
Speaker 3: contributions to fifty, and just regular savings a thousand. Maybe
Speaker 3: that's investing all of that, Yes, does equal four thousand dollars.
Speaker 3: Now that's a nice clean example. Chances are we bring
Speaker 3: home a much more uneven number than that and change.
Speaker 3: And so even with that, we are going to be
Speaker 3: very specific to the dollar with how much goes into
Speaker 3: each of these categories, and again month over month and
Speaker 3: even within the month, assessing okay, maybe we're getting close
Speaker 3: to the end of the month and we're seeing we
Speaker 3: only spent fifty dollars of our one hundred dollars dining
Speaker 3: out category. What is going to be the plan with
Speaker 3: that extra fifty dollars. Is it just going to go
Speaker 3: to another category or is it going to go to
Speaker 3: one of these more mid to long term financial goals.
Speaker 3: But again, keeping that steady pulse on it to be
Speaker 3: able to assess where it's going to go. And as
Speaker 3: you've seen, there's pros and cons here.
Speaker 1: M So some of the pros. We've got full financial awareness,
Speaker 1: so this is really good if you are just starting out.
Speaker 1: Even if you don't want to zero based budget long term,
Speaker 1: it is a very good method for people starting out
Speaker 1: because you get a full financial awareness. So we've talked
Speaker 1: a lot about the zero based budget and we haven't
Speaker 1: mentioned the ninety day transaction inventory by some miracle, but oh.
Speaker 3: You did talk about it. It made its way in here.
Speaker 3: Jen's been also multitasking. We'll tying run does we'll talk
Speaker 3: about it later.
Speaker 1: We'll talk about it later, Okay, full financial awareness. Once
Speaker 1: you do the ninety day transaction inventory, you will get
Speaker 1: a picture of where you have been and what has
Speaker 1: created your habits, and while you are zero based budgeting,
Speaker 1: you will get to see those habits in action. And
Speaker 1: I recommend when you're starting out at least maybe for
Speaker 1: the first month. Probably doesn't make sense to do it
Speaker 1: longer than this, but tracking your transactions in real time
Speaker 1: day so maybe not in real time, but keeping track
Speaker 1: of your transactions every day manually. So I love Monarch.
Speaker 1: It keeps track of my transactions automatically, but it's not
Speaker 1: what I would recommend if you are just starting out today.
Speaker 1: You need to be really fully aware of everything that's
Speaker 1: going on. Do this for a month and it'll give
Speaker 1: you a lot more clarity. Another one of the pros,
Speaker 1: it says flexibility. So the monthly reset allows for adaptability.
Speaker 1: Lean into that flexibility, because sometimes we can make it
Speaker 1: rigid when it's actually designed to be flexible. I would
Speaker 1: say the flexibility you feel on the first of the
Speaker 1: month when you're making the budget, keep that with you
Speaker 1: for the whole month. So when you need to change,
Speaker 1: when you need to put some more into one category
Speaker 1: and take away from another, don't feel like you're doing
Speaker 1: that out of inadequacy or failure, but believe that you
Speaker 1: are being fluid with the budget as life is fluid.
Speaker 1: And create a larger slush fund, a larger miscellaneous fund.
Speaker 1: Don't be so rigid with the categories either, because that
Speaker 1: will help you not have to change over as much
Speaker 1: money between categories throughout the month. And then again, it's
Speaker 1: goal oriented. You've got a clear picture of your income
Speaker 1: and expenses and you can more easily set and reach
Speaker 1: your financial goals.
Speaker 3: And like we've said, some of the cons can be
Speaker 3: how time intensive it is. This is certainly not a
Speaker 3: set it and forget it type of budgeting approach. It
Speaker 3: requires a good deal of oversight and adjustment, again, which
Speaker 3: is why we recommend it for people starting out or
Speaker 3: who have intensive money goals, and there is the potential
Speaker 3: for overdoing it. When you are placing an emphasis on
Speaker 3: literally every singular dollar, you can become quite preoccupied with
Speaker 3: the details, and that can be really mentally taxing in
Speaker 3: the long run. So this isn't even necessarily what needs
Speaker 3: to be done long term. It could be what the
Speaker 3: approach that's taken initially to really get a good handle
Speaker 3: on budgeting so that we can then incorporate even greater
Speaker 3: levels of flexibility in the future. But you know what,
Speaker 3: doesn't have any cons to it?
Speaker 1: What single the con? The only con is that it ends.
Speaker 3: It's the bill of the week.
Speaker 2: That's right, It's time for the best minute of your
Speaker 2: entire week. Maybe a baby was born and his name
Speaker 2: is Williams. Maybe you've paid off your mortgage, maybe your
Speaker 2: car died and you're happy to not have to pay
Speaker 2: that bill anymore. Duck bills, Buffalo bills, Bill Clinton, this
Speaker 2: is the bill of the week.
Speaker 5: Hi ladies, my name is Brenna. I live in Ohio.
Speaker 5: I'm a fairly new listener to the podcast, but I've
Speaker 5: been catching up very quickly on all of your episodes
Speaker 5: and I absolutely loved the show. I wanted to share
Speaker 5: my Bill of the week today. I'm super excited because
Speaker 5: I get a total high out of saving money and
Speaker 5: finding really good deals. My husband tells me that's my superpower.
Speaker 5: So today I was able to pick up my son's
Speaker 5: dream toy for Christmas, which is a Jurassic World mosa
Speaker 5: Saurus brand. Knew this toy would cost sixty five dollars. However,
Speaker 5: I was able to find it on Facebook Marketplace from
Speaker 5: a local woman who was just cleaning out toys that
Speaker 5: her kids didn't play with anymore. I was able to
Speaker 5: score it for fifteen bucks. Not only did I get
Speaker 5: the Mosasaurus, but I also got the giant Indominus res
Speaker 5: which any other moms out there have kids who are
Speaker 5: obsessed with dinos would note that this giant Indominus Rex
Speaker 5: cost one hundred and seventy five dollars new So I
Speaker 5: got the mos saurus and the Indominus Rex and two
Speaker 5: t rexes all for fear of teen bucks. Super excited.
Speaker 5: My son is gonna absolutely love his Mosesaurus and the
Speaker 5: Abdominus Rex I'm setting aside to give to him for
Speaker 5: his birthday next year. So that's my big bill of
Speaker 5: the week and my mom win that I'm flying high
Speaker 5: off of today because I saved so much money on
Speaker 5: getting these toys.
Speaker 1: Brenna also like pro mom saving one of the toys
Speaker 1: for the birthday, So pro that is.
Speaker 4: Such a pro move.
Speaker 3: There can be the temptation to just give it all
Speaker 3: all at once, but to realize we don't need it
Speaker 3: all at once. Parameters are good for us. Limitations are
Speaker 3: good for us in budgeting and in play, And it.
Speaker 1: Makes the one thing that you're getting more special. The
Speaker 1: more things you get, the less special each thing is individually.
Speaker 1: And so if we want something to be more special,
Speaker 1: we cannot surround it by more stuff. So good job, Brenna.
Speaker 3: You saved hundreds and we're here for it. And you
Speaker 3: bought used and we're here with that too. If you
Speaker 3: all listening have a bill that you want to submit
Speaker 3: to us, if it has to do with pro mom
Speaker 3: moves or your superpower of paying less or buying secondhand
Speaker 3: or spreading out gift giving throughout the year, or your
Speaker 3: name is Bill and you want to tell us what
Speaker 3: your life is like. Frugal friendspodcast dot com slash Bill
Speaker 3: can't wait to hear it. And now it's time for.
Speaker 4: The lightning round.
Speaker 1: What's the best thing you've ever budgeted? Form Jill Travel?
Speaker 1: Of course know it.
Speaker 4: I'm a millennial, but it is true for me. I
Speaker 4: love it.
Speaker 3: I just bought last minute tickets to Puerto Rico. Friends
Speaker 3: of ours texted us saying that they have an airbnb
Speaker 3: for the whole month and if we want to come
Speaker 3: visit them, we'd have a free place to stay and
Speaker 3: plane tickets were inexpensive. But I also have a sinking
Speaker 3: fund for travel that I can just use at my
Speaker 3: leisure and we were able to say yes because we
Speaker 3: had the money. And I loved spending the money on that.
Speaker 3: As much as I don't love seeing an account with
Speaker 3: money in it drop, knowing what it's going towards. It
Speaker 3: is a category. I feel shamefree, guilt free about nice.
Speaker 4: How about you?
Speaker 1: I would say The first thing that comes to my
Speaker 1: mind was when we saved to buy the house that
Speaker 1: we live in now. We had originally saved to buy
Speaker 1: an investment property and just did not We're not competitive
Speaker 1: with all the cash buyers. So what we had to
Speaker 1: do was buy a house and then and live in it.
Speaker 1: And now we rent out our original house, which was
Speaker 1: not what I wanted, but I can see that the
Speaker 1: two miserable years of renovations and the moving and it
Speaker 1: will pay off financially. It kind of just came to
Speaker 1: that conclusion because the house we bought is large, so
Speaker 1: we've been renting out a back portion, and it's also
Speaker 1: on a double lot, so we have a vacant like
Speaker 1: also land, so we essentially have where our house that
Speaker 1: we live in, two rentals and vacant land. So that
Speaker 1: was really a good financial move. I am putting it
Speaker 1: into perspective now as much as I actually don't like
Speaker 1: being a landlord, eventually it will pay off.
Speaker 3: So you're saying, when you had budgeted for this additional property.
Speaker 1: Yes, yeah, we budgeted and we saved up for it
Speaker 1: for I think two years to put a down payment
Speaker 1: on essentially, So yeah, I'm going to say that it's
Speaker 1: not exciting, but it is like relevant right now.
Speaker 3: Well and in the long term, that's that's a big deal.
Speaker 3: Like not only did you receive something that you have
Speaker 3: value for now, but it's kind of that, what's one
Speaker 3: thing you can do now that makes other things easier
Speaker 3: on this the future, Like having budgeted for that is
Speaker 3: massive for your overall kind of like retirement.
Speaker 1: Yeah, especially now because we're making a lot less than
Speaker 1: what we were when we saved for that house. We
Speaker 1: could not do that now a because we're making less
Speaker 1: and because the homes are the interest rates are just
Speaker 1: too high. But we did buy at the top of
Speaker 1: the market. But still we're going to make out okay.
Speaker 1: So that I think is the thing that it's not sexy,
Speaker 1: but I think in a few more years i'll be.
Speaker 3: I mean, I think happy idea real estate investing is sexy.
Speaker 3: It's one of the most sexy things that people are
Speaker 3: doing in the personal finance space.
Speaker 1: I guess it's not correct though. Yeah, no, no, you
Speaker 1: won't hear that from me. All right, Thank you so
Speaker 1: much for listening. We love, love love reading your kind
Speaker 1: reviews of the show and of our book by What
Speaker 1: you Love Without Going Broke, And this one is about
Speaker 1: the book. It's from Stephanie five stars What I Love
Speaker 1: About The Frugal Friends podcast also shines through and buy
Speaker 1: What you Love Without Going Broke it's sitting around with
Speaker 1: a group of friends who are passionate about financial wellbeing,
Speaker 1: but you are excited to listen. Let's face it, reading
Speaker 1: about finances sounds a little dry, but Jen and Jill
Speaker 1: have a way of making it relatable while driving your
Speaker 1: curiosity to really delve into understanding how to better manage
Speaker 1: your money to fit the values you've prioritized your life.
Speaker 1: I was blessed with an Advanced reader copy, but sometimes
Speaker 1: the ADHD wins, so grab the audible version of the
Speaker 1: on the release date and walked around my yard and
Speaker 1: the grocery store until I finished the fact that I
Speaker 1: picked up and put down a planner in the aisle
Speaker 1: of shame at Aldie, only later to reach the passage
Speaker 1: about well intentioned but unused planners is not lost on me.
Speaker 1: I'd recommend this book to anyone who's trying to wrap
Speaker 1: their head around their finances, wants to get there with
Speaker 1: your every day and wants to get there with your
Speaker 1: everyday kind of people who may never be billionaires, but
Speaker 1: may want to fund a billion memories instead.
Speaker 4: Happy reading.
Speaker 1: Oh that's good, that's shute, Stephanie.
Speaker 3: Thank you a thoughtful review, and thank you for also
Speaker 3: getting the audio book.
Speaker 4: We've been getting a.
Speaker 3: Lot of good feedback about the audio book. I mean,
Speaker 3: I think people are accustomed to hearing your voices, so
Speaker 3: being able to hear us read the book in our
Speaker 3: own words, we're getting some fun feedback on that, so
Speaker 3: we'll love it. If you you also have not picked
Speaker 3: up a copy, please do so. Wherever you get the book,
Speaker 3: we hope that it will help you in similar ways
Speaker 3: as it helped Stephanie, and probably in your own individualized ways.
Speaker 3: So thanks for reading, thanks for listening, if you like both.
Speaker 3: If you like either, please take a minute to leave
Speaker 3: a rating and review of the show wherever you're listening
Speaker 3: and wherever you purchase the book. It helps new potential
Speaker 3: listeners and readers figure out if this is going to
Speaker 3: be for them, and just grow our community with more
Speaker 3: of you people who loves this shamefulle fun, approachable take on.
Speaker 4: See you next time.
Speaker 1: Gorugle Friends is produced by Eric Sirianni.
Speaker 4: All right, come clean, Jen.
Speaker 1: Okay, I'll just say I didn't want to record this
Speaker 1: episode till I was done, and Jill essentially forced me to.
Speaker 1: So if I was a little divided in my attention,
Speaker 1: it's not my fault. Okay. This morning was Wine and
Speaker 1: Dine registration for the Run Disney Wine and Dine half
Speaker 1: marathon at the end of October. And if you've ever
Speaker 1: registered for a Run Disney race, you know you have
Speaker 1: to be there twenty minutes before it opens, and you
Speaker 1: get into the waiting room and then you just wait
Speaker 1: until they let you in to buy the registration. And
Speaker 1: it was you know, as soon as they give you
Speaker 1: a number, it's never going to take that long. So
Speaker 1: they gave me my you know, fifty nine minutes, and
Speaker 1: then it just went down and about a half hour.
Speaker 4: Later it had opened up.
Speaker 1: But Jill didn't want to wait to record, and so
Speaker 1: I had to keep the thing up on my laptop
Speaker 1: across the and wait, and finally when my time was up,
Speaker 1: I put down the microphone and I went over and
Speaker 1: registered for the half marathon and I got.
Speaker 4: In Are you done? I am done? Okay, here's my
Speaker 4: side of things.
Speaker 3: It said that it was going to be I think
Speaker 3: when we pressed record it was thirty six more minutes.
Speaker 3: Like that's worth it to start recording because we've got
Speaker 3: to record two episodes today and you only have so
Speaker 3: much time before you have to go pick up your kids,
Speaker 3: so it's worth of it.
Speaker 4: We'll just stop.
Speaker 3: Whenever you need to go purchase your own Disney tickets NBD,
Speaker 3: we have editors. But you know what's interesting to me though,
Speaker 3: is you were the most distracted Actually after you had
Speaker 3: purchased the tickets. I did not notice dual attentions. So
Speaker 3: she actually to get real nitty gritty because whatever we're
Speaker 3: just we're here talking to our real fans. You purchased
Speaker 3: the tickets at our first ad break, so we were
Speaker 3: about thirteen minutes in, right. It was after that ad
Speaker 3: break that you weren't sure if I had mentioned the
Speaker 3: ninety day transaction inventory that you didn't know whether or
Speaker 3: not I had already talked about.
Speaker 1: Well, I had a pattern interrupt, you know, like I
Speaker 1: was in and then I had to go buy the
Speaker 1: tickets and then I had to like mentally get back
Speaker 1: into the episode, and it was hard and I didn't
Speaker 1: want to do it.
Speaker 4: You did do it, though, But see that's the thing.
Speaker 3: I don't know if it would have been any different
Speaker 3: if you just if we had waited to record, you
Speaker 3: might have still been distracted by this.
Speaker 4: I wouldn't have I would have sase tickets.
Speaker 3: I would not have because I wouldn't after the purchase, after.
Speaker 1: I had to get up and walk over to my
Speaker 1: laptop and go fill something out and then come back
Speaker 1: and rejoin the mind flow that is the episode. And
Speaker 1: that was difficult for me to interrupt the pattern.
Speaker 3: Oh, I mean, I think it was a great episode.
Speaker 3: I'm still glad that we did it. I'm not I'm
Speaker 3: not mad about this. I'm just making observations and being curious.
Speaker 1: Yeah, my, my. The whole time, my attention was in
Speaker 1: two different places. And luckily I've talked about zero based
Speaker 1: budgets enough that I could talk about them in my sleep.
Speaker 3: So you're going to do this in October with my
Speaker 3: friend Sarah. And what are you most looking forward to
Speaker 3: about this? This is a this is something that you've
Speaker 3: you've planned for. You've been talking about doing this for
Speaker 3: a long time. I don't know if you've been setting
Speaker 3: money aside or what the budget.
Speaker 1: I do what I want when I want.
Speaker 4: Joe. Joe was looking forward to about this race.
Speaker 1: Getting to train with with a friend. I usually do
Speaker 1: them alone. So yeah, I get to run with a
Speaker 1: friend for this one.
Speaker 4: Well, you guys trained together too.
Speaker 1: Sometimes, She lives in Clearwater, so like we might like
Speaker 1: maybe meet up between Saint Pete and Clearwater a couple
Speaker 1: of times to train together. But we are similar pace
Speaker 1: similarly paste already nice?
Speaker 4: Are you on Strava? I am? Are you impressed that
Speaker 4: I know what that is?
Speaker 1: You just I'm sure Sharon told you I don't know before.
Speaker 4: Let loose.
Speaker 1: I'm sure now you know a lot about Strava. What
Speaker 1: did she say about her Strava?
Speaker 4: Oh, I don't know.
Speaker 3: She's just always on it, like updating stuff in Strava?
Speaker 1: What is there to update?
Speaker 4: Well, you me. Isn't it where runners go and you
Speaker 4: like put your info in? Isn't it like good Reads?
Speaker 4: But for runner? No?
Speaker 1: No, I mean you track your runs, so like at
Speaker 1: the start of a run you press start and at
Speaker 1: the end of the run you press stop.
Speaker 4: And there's nothing else you do in Strava.
Speaker 1: There, I have gotten kudos before from random people, like
Speaker 1: we'll say good run.
Speaker 4: Uh huh?
Speaker 3: Can you like like you I think she might have
Speaker 3: put in like that she did a race, or like
Speaker 3: maybe she has something.
Speaker 1: Maybe, yes, you can add that to your after it's
Speaker 1: start stopped, you can make notes.
Speaker 4: Yeah, maybe that's what.
Speaker 1: Yeah, there are no like games or anything.
Speaker 4: See if you can catch them all.
Speaker 1: That would be fun. That would be probably more fun.
Speaker 4: Wow, exciting.
Speaker 3: So glad you're gonna do the wine and dine. You
Speaker 3: didn't lose out on your spot in line.
Speaker 1: Yeah, thank you, that's I'm excited. It's a lot of money,
Speaker 1: but I am not.
Speaker 3: Broke gone now it's gonna get it back now. No
Speaker 3: refunds for Disney.
Speaker 1: There aren't. Actually you can't get a refine. Know that.