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Because even when mountains move, bills still come due!
Crafting a budget that aligns your spending with your values is an important step in your financial formation. The best part? It's not has hard or scary as you might think.
Find Your Style
Percentage-Based Budgeting
Percentage-Based budgeting is a budgeting method that allocates income into categories based on set percentages rather than fixed amounts. This approach offers more flexibility in spending habits while staying intentional about saving goals and debt repayment.
Zero-Based Budgeting
Zero-Based budgeting is a method where every dollar of income is assigned a specific purpose, ensuring that income minus expenses equals zero. This approach helps individuals stay intentional with their money by giving every dollar a job.
Building a Percentage-Based Budget
Calculate your total monthly income, including wages, freelance work, side hustles, or any other consistent sources. If your income varies, we recommend using an average of the past 3-6 months.
Select a budgeting rule that fits your lifestyle and goals. A common one is the 50/30/20 rule:
- 50% for Needs (housing, utilities, groceries, transportation, insurance)
- 30% for Wants (dining out, entertainment, travel, hobbies)
- 20% for Savings/Debt Repayment (emergency fund, retirement, extra debt payments)
Did You Know? The 50/30/20 rule was popularized by Senator Elizabeth Warren through her book All Your Worth. While the most common breakdown, you can adjust these percentages based on your circumstances (i.e. 60/20/20 or 40/30/20/10).
List all your expenses and assign them to their respective categories (Needs, Wants, Savings/Debt). If an expense doesn’t fit neatly, consider whether it's truly essential or discretionary.
Multiply your income by each percentage to determine how much you should allocate to each category. For example, if your take-home income is $4,000 a month and you were using the 50/30/20 breakdown, you would allocate it as follows
- 50% Needs: $2,000
- 30% Wants: $1,200
- 20% Savings/Debt: $800
Use a budgeting app, spreadsheet, or journal to monitor your expenses and ensure they align with your percentage allocations. Adjust as needed if you’re overspending or underspending in a category.
Your financial situation will evolve, so revisit your percentages periodically to ensure they still align with your goals and priorities. If debt payoff is a priority, you might shift more toward savings and less toward discretionary spending.
Building a Zero-Based Budget
Calculate your total monthly income, including wages, freelance work, side hustles, or any other consistent sources. If your income varies, we recommend using an average of the past 3-6 months.
Write down all your expected expenses, including fixed costs (rent, utilities, insurance) and variable costs (groceries, entertainment, transportation). When we say all, we mean all. This budget gives every dollar a job, so you need to know everything you are spending money on.
Allocate your income to expenses, savings, debt payments, and discretionary spending until your income minus expenses equals zero—ensuring every dollar has a purpose. Some people track this via a spreadsheet or budgeting app while others prefer to track these categories through the envelope method - a cash-based budgeting system where you divide your income into physical envelopes labeled for different spending categories (e.g., groceries, dining, entertainment).
Start with essential expenses (housing, food, transportation, insurance), then allocate money toward savings, debt repayment, and non-essentials like dining out or entertainment.
Monitor your spending to ensure you’re staying within your planned amounts. If expenses shift, adjust other categories to maintain a zero balance.
At the start of each month, reassess your budget based on new income, upcoming expenses, and financial goals, making adjustments as needed.
Budgeting Tools & Resources
Download A Budget Template (Free)
Sometimes you just need a little something to get you started. Follow the link below to get a printable one-page PDF template for a Zero-Based Budget and a Percentage-Based Budget delivered right to your inbox.
Join Our Online Community (Free)
The Reverend Money Collective is our free online community of faith-inspired leaders committed to increasing their financial fluency while pursuing economic justice. Join today to get connected to a growing community of leaders building a better relationship with money.
Schedule A Budget Review ($35)
Felling stuck or unsure about your budget? In this one-on-one 30-minute session, we'll take a fresh look at your budget together. Whether you need help refining your budget, identifying spending patterns, or aligning your money with your values, this session will provide practical insights and tailored recommendations. Walk away with clarity, confidence, and actionable next steps to make your budget work for you.