Setting up a budget can feel overwhelming, especially if you’re starting from scratch. But with Common Sense Budgeting (CSB), we guide you through each step to build a zero-based budget that actually works for your life.
Set up your first budget in minutes
After downloading the app and accepting the terms of services and privacy policy, you will get the choice to skip the onboarding introduction or actually doing the onboarding. To guide you through the process it’s important to start with onboarding.
Step 1: Onboarding
Start by clicking on the “Let’s start” button. You will see a screen giving an example on how your budget will be categorized. It’s important to know the differences of your costs. By differentiating the cost it gives you insight into what costs can be reduced and what costs are recurrent.
The next step is creating your account. In this step you will give your account a name, such as personal or household income. You can also make your budget weekly, monthly or yearly. We do recommend a budget based on 30 days even when your income is paid on a weekly basis, this is because your bills are typically set to be paid every 30 days.
Next you choose a starting date in which you are paid your income, this is because the system will keep track of your spending habits on a 30 day basis. And lastly you can budget based on the currency of your nation.
Step 2: Add your income
It’s important to know the difference between your gross income and your net income. Your gross income is your income before taxes and your net income is your income after taxes. This is the income you actually receive net on your bank account or cash.
By clicking on either add budget subcategory or the Incomes head category you get to choose what income type you want to work with. There can also be multiple types of income. If it’s salary through a job you can click on it and add your amount and press save. This income amount has to be allocated until your amount of funds reaches 0.
Step 3: Add your bills and expenses
The difference between your bills and expenses is the type of costs. Bills are regular, recurring payments for a prolonged period such as rent, utilities and local taxes. And expenses are other types of costs such as groceries that can vary each month, entertainment and one-time purchases. You can add these in the same way you did your income.
Step 4: Add your savings
Saving is money set aside for future use. What separates the haves and have not, is your ability to plan for the future. Think of big expenses that can happen due to sickness, or something breaking of significant cost or wanting to retire early. These can all be potential things that can happen for a person which makes it even more important to plan and create savings accounts to act as a buffer or protection to not get into financial difficulties.
As our founder always says, it’s better to have a large emergency fund than owing debts. This you can add the same way you did your previous categories.
Step 5: Add your loans and debts
Loans are borrowed money that need to be repaid, think of student loans or mortgages. And a debt occurs when you have large outstanding amounts owed that you have not budgeted for and needs to be repaid in a set period. Examples are unpaid bills or loans that you missed one or more payments on.
At the end of the setup, you’ll see a clear snapshot of where your money is going. You’re ready to start tracking!
This is the heart of zero-based budgeting. Assign every euro a job, until your “Left to Budget” amount hits zero. No money left behind, no confusion
This is the heart of zero-based budgeting. Assign every euro a job, until your “Left to Budget” amount hits zero. No money left behind, no confusion.