Why You Need to Start a Zero-Sum Budget

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What if I told you there was a budgeting secret that would allow you to save more money, pay off debt, and finally be free of that horrible feeling of dread when you check your bank balance?  You would probably think I was crazy…or selling something.

I would have agreed with you a month ago before my husband and I started Financial Peace University.  Since we have started, we learned that we had been doing our budget wrong for years, and it was the reason why money just seemed to fly out of our bank account.   We now use a zero-sum budget, and we have saved over $100 in the first month alone!

So what on earth is a zero-sum budget?  It is a budgeting method where you make sure that your income minus your expenses equals zero.  I know, it feels counterintuitive—when I first heard this, I thought to myself, “I don’t want a $0 balance!”  But we decided to give it a try, and it made a huge impact on our finances right away!

I want to share with you why a zero-sum budget is effective, and how it made such a big difference for my family.

“Extra” money is wasteful.

Every pay period, my husband and I would pay the bills that were due, and then we would set aside money for groceries and gas.  There was always a balance left over, usually around $150-200 depending on whether it was the first of the month or the 15th.   We would do a little payday dance and thank God that we had “extra” money.

Then we would spend it.  We were never quite sure where this money went every month, but it was spent—and quickly—every single pay period.  I went back through our bank statements and discovered that we usually spent this “extra” money eating out and buying treats.

The money was “extra!”  To us, this meant it was mad money and could be spent willy-nilly.  We believed that we were doing great because we had some extra cash on hand for restaurants or fun activities.   

This is a backward way of thinking about money, and it blew up in our faces every single month.  We would scratch our heads wondering where the extra money went, and if an unexpected expense came up, we were in trouble.   We were stressed about money, had trouble saving, and our goals to pay off the car and house became a pipe dream.

When you think about money as extra, you will spend it—probably on junk.  The only way to get out of this cycle is to start a zero-sum budget, where that “extra” is put into the budget as an expense.

A zero-sum budget makes you be intentional with your money.

When you assign that “extra” money to an expense category, it is no longer extra—it is doing something helpful for your finances instead of burning a hole in your pocket.  We divided our “extra” between emergency savings, tithing, and a clothing budget.  Now, as soon as we get a paycheck, we immediately take out cash for our tithe and clothes, and then we move money into our savings account.  The extra is gone.

You can put your money in whichever budget category you want.  By not allowing your money to sit in your pocket, you have the power to be intentional with how it is spent.  If you want a restaurant budget, add one!  You can decide where your money goes and apply it to reaching your financial goals instead of mindlessly wasting it.

Essentially, you now are telling your money what to do…instead of letting your balance decide what you can do.

A zero-sum budget frees you from the money worry cycle.

When you use a zero-sum system to specifically budget how you want your money to be spent, you don’t have to think about it anymore.  You don’t have to worry about the balance in your account—you simply stick to what you already planned!

There is no question of whether or not you can afford to grab a bite to eat—no frantic logging into your bank app to decide if you can go to Chipotle.  Did you put it in the budget?  If so, then go for it!

When you control where your money goes, it’s the ultimate financial freedom.  It frees you from being a slave to your balance, and it enables you to have a real plan to reach your goals by putting money where you want it to go instead of impulsively spending it because it is “extra.”

We have only been doing this for a month, and we have already seen results—we are able to tithe for the first time in a while, we have started building up our savings account, and I was even able to get a new pair of jeans without feeling guilty about it!  When you start a zero-sum budget, you can regain control of your finances.  It’s an incredibly powerful budget system—it gets rid of impulsive spending, lets you be intentional with your money to reach your financial goals, and frees you from worrying about your bank balance.

Are you ready to start writing your zero-sum budget?  Let’s do it! 

Do you use a zero-sum budget?  What financial goals has it allowed you to reach?

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