My Zero-Sum Budget, My Friend

My Zero-Sum Budget My Friend - closeup of Black man's hands using calculator with paper in other hand

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Everyone loves payday, but do you know exactly where all of your hard earned money is going?  Have you ever thought you should be saving more money, but aren’t sure where to start?

I once felt the same way.  When we started on our debt free journey a year and a half ago, we started tracking our expenses.  We began to see the cracks that our money was disappearing into – cable TV, eating out, excessive grocery shopping, etc.  This helped us out in two ways.  First, we were able to see how much money was being wasted and was unaccounted for.  Second, we were able to put an exact dollar amount on our fixed expenses which made us realize the actual amount of money we had the potential to save each month.  I have to say that I was truly amazed to see that we were spending over $1000 a month on groceries…for two adults and a baby!  How could this be so?  But yet, there it was in black and white.  My bank statements don’t lie, and I had to admit that our spending had gotten out of hand.

We decided that we must adopt a budget.  We decided to write a budget for the upcoming month then STICK TO IT.  Would this even be possible?  We didn’t know what to do, but we knew that we could not continue on the wasteful path we were on.

The Zero-Sum Budget

The budgeting method that we “created” was actually a method that was already being widely used – although we didn’t know it at the time.  It is called a “zero-sum budget.”  To start a zero-sum budget for yourself, you must first figure out a close estimate of what you are paid on any given month.  Then, write out an estimate for each bill or category that you will need to pay out that month.  From there, you can figure out what you will have the potential to save each month. The key is to make your savings a bill that you actually pay each month. Here is an example:


Hypothetical May 2012 Budget

Available Income: $5000

House Payment: $1200

Electric Bill: $150 (estimate)

Gas Bill: $75 (estimate)

Car Payment #1: $350

Car Payment #2: $400

Groceries: $450

Car Insurance: $100

Gas/Miscellaneous: $200

Daycare: $500

Gym Membership: $75

Life Insurance: $55

Internet: $55

Transfer to Savings: $1390


Notice how there is nothing left at the end of the month.  All of the money earned was thoughtfully spent.  Hence, the term zero-sum budget.  Using this concept, you are deliberately spending all of your money each month.  First, you pay your bills and then you pay yourself.  Of course, your income and categories will be different than the example that I have provided.  However, I think you get the point that I am trying to make.

Purposefully allocate where all of your money needs to go for the month.  Make a plan.  Then, execute your plan.

If you are someone whose income varies from month to month, this can still work for you.  All you have to be able to do is estimate your income and expenses for that particular month.  Some people may feel the need to have a larger part of their budget dedicated to miscellaneous expenses.  Others may need an entertainment category.  That is the great thing about using a zero-sum budget.  It is totally tailored by you, for you, in order to help you.

To this point, my zero-sum budget varies from month to month.  For instance, I pay our life insurance quarterly, so it is in the budget for some months and not others.  This upcoming month, it will be my youngest daughter’s first birthday.  So, I will allocate a certain amount of money for her party and stick to it.  Our income fluctuates somewhat so each budget is unique to the current month and its events.

As I pay each bill during the part of the month that it is due, I simply check it off.  That way on any day I can see what bills have been paid, what bills haven’t been paid, and whether our spending is on track.  You do not need expensive budgeting software or fancy spreadsheets to dramatically change your spending.  All you need is a pen, some paper, and some willpower.

Most people spend too much of their valuable time at work to be frittering away all of their income.  Make your money work for you.  Make a plan and spend your dollars thoughtfully and deliberately by using a zero-sum budget.


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  1. Currie Rose says:

    I like the simple idea presented here…. to make your savings account an actual bill that you pay. Though I don’t plan on getting incredibly serious about saving until January… I will remember this and apply it to the budget I am building and planning to implement in the new year.

    Many Thanks!

    1. Sounds like a great plan!!! Start off the new year with new financial goals =)

  2. Your life insurance is paid quarterly, so why don’t you divide this outflow by three and deposit it monthly? I indicate to you a method that I used called “You Need a Budget”. It also uses a zero-sum budget approach. Try it.

    1. I know this is ages after your post, but seriously, YNAB helps me do this with ease. Favorite part about the budget program is the cloud sync from my iDevices to my computer using Drop Box.

      Using YNAB to create a zero sum budget like you explained above lets us know exactly where all our money is going. If we overspend in some category, we chip away at some other category to make sure that our end budget sum still equals 0!

      Will be adding you to my RSS feed!

  3. You actually make it appear so easy with your presentation however I to find this topic to be actually one thing which I think I might by no means understand.
    It seems too complex and extremely large for me. I am having
    a look forward for your next publish, I will attempt
    to get the hang of it!

  4. It’s actually a great and useful piece of information.
    I’m satisfied that you shared this helpful info with us.
    Please stay us up to date like this. Thank you for sharing.

  5. There are also plenty of helpful shortcuts to facilitate your gameplay in Minion’s Paradise.

  6. “Transfer to Savings: $1390”

    We find it best to give jobs to most of this money too (semi-annual auto insurance, Christmas Club, etc), so we’re less likely to poach it for something that we want masquerading as a need.

  7. Diane taber says:

    Hi I’d like some printables for budgeting and different savings challenges please as these would come in really handy. And help us to get out of debt.

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