Mastering Zero-Based Budgeting with Monarch Money
Are you tired of living paycheck to paycheck? Do you struggle to keep track of your income and expenses? Zero-based budgeting with Monarch Money can help you take control of your finances and achieve financial stability.
Understanding the Budget Structure
The foundation of zero-based budgeting is a clear understanding of your income, expenses, and contributions. In Monarch Money, your budget is structured into three main categories:
- Income: Any money earned in a month from checking, savings, and manual accounts.
- Expenses: Any spending during the month from checking and manual accounts only.
- Contributions: Transfers to savings accounts and manual accounts only.
Account Page and Budget Categories
The Account Page in Monarch Money allows you to sync your accounts, import transactions, and track your bank balances. You can also create manual accounts for investments, retirement accounts, or other funds that aren't automatically tracked.
Monarch Money provides a range of pre-set budget categories, including:
- Income:
- Paychecks
- Rollover (amount left over in account from previous month)
- Interest (from high-yield savings accounts)
- Expenses:
- Needs (rent, utilities, groceries, etc.)
- Transportation
- Wants (health and wellness, personal subscriptions, etc.)
- Wealth:
- Debts
- Loans
- Investments
- Extra debt payments
- Contributions (placeholder category for contributions)
Tags: A Deeper Level of Categorization
Tags are a powerful feature in Monarch Money that allow you to categorize transactions further. You can create tags for specific expenses, such as moving expenses, and track them across multiple categories. Tags can be grouped into categories, such as Work, Family, and Friends, or Moving Plans.
Tracking Investment and Retirement Accounts
While Monarch Money doesn't automatically track investment and retirement accounts, you can create workarounds to include them in your budget. You can either create a placeholder category and manually enter the contribution amount or create a manual account and attach a goal to it.
Automating Transactions and Rollovers
Automating transactions in Monarch Money can save you time and effort. You can create rules to track specific transactions, such as those related to retirement accounts, and automatically link them to the corresponding goal. Rollovers are also an essential feature in Monarch Money, allowing you to track unspent money at the end of the month and roll it over to the next month's budget.
Accounting for Every Dollar
Accurate accounting for every dollar is crucial in zero-based budgeting. Rollover categories are essential for tracking the balance left in the account at the beginning and end of the month. Managing leftover money involves reviewing expenses, transfers, and interest to identify where the money can be allocated.
Conclusion
Zero-based budgeting with Monarch Money requires careful planning, tracking, and management of income and expenses. By following the steps outlined in this guide, you can achieve financial stability, accuracy, and control over your finances. Remember to regularly review and adjust your budget to ensure it remains effective and accurate.