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How Do You Create a Zero-Sum Budget…?

March 26, 2013

Yeah, I get it.  EVERYONE is scared of the word budget.  So much so that families change the name to “Financial Plan” or “Household Costs” or whatever.  It’s still a budget people, don’t be stupid.  There’s no need to get all stressed out about this.  A zero-sum budget has got to be the easiest way to do this.  Don’t believe me? Keep reading.

First off, I’ll assume that you don’t even know what I’m talking about, so let me give you a quick breakdown.

The Rundown

A zero-sum budget is when you make a list with your monthly income at the top of the column, and then you write every monthly expense you can think of under that.  If you have any left over at the bottom, you can either budget it for spending money or budget it to go into a savings account.  Regardless, your bottom number should come out to $0.  If you come out negative, this automatically tells you that you need to either

A. Cut back on some of your expenses.  And now that you have what all you spend per month laid out right in front of you, you can proceed with knowledge and cut away at that negative until it gets to $0.

B. Change your income.  Get a second job delivering pizzas at night if you have to or go stock shelves at a grocery store or something.  Anything helps at this point and you can’t get out of debt if you keep spending more than you’re making every month!

Here is a mock draft of a zero sum budget. (Your’s should look something like this, just change the dollar amount)

Monthly Income
$2,000

Monthly Expenses 
Rent-$500
Utilities-$100
Water-$40
Internet-$40
Cell Phone-$90
Car Note-$300
Auto Insurance-$90
Gas-$100
Groceries/Dining-$350
Savings Deposit-$100
Entertainment-$100
Emergency Fund-$100
Credit Card Debt-$100

If you add up all those expenses, it equals the $2,000 that you originally made.  This won’t be perfect from the start and you will need to tweak it every month but after 6 months of focus, you should know about where things should be.  If you consistently budget $100 for gas and you find you’re only spending $80, take that $20 and add it to something else.  You could even split it up and add an extra $10 to your credit card debt and $10 to the emergency fund if you want, but don’t just let it sit there burning a hole through your pocket.

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From → Budgeting

2 Comments
  1. That’s pretty much what we do and anything that is left goes straight to our emergency savings account since we have no debt. Great example.

  2. Really it really is really beneficial post and
    that i select to read these techniques and in addition I will probably be having a go and
    many thanks sharing such kind of techniques please ensure that it stays sharing.

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