The Zero Sum Budget Principle

Zero Sum Budget. Budgeting Method.

The Zero Sum Budget Method.

One of the most effective and fundamental budgeting principles I live by is commonly known as the “Zero Sum Budget”. In essence, you give every euro of income a job. So every euro you earn is either allocated to expenditure, savings/investments or debt. Your income less all your outgoings should equal zero (hence the name Zero Sum). This way you have no random spending. Everything is accounted for and put to use. You have a plan for every euro. Your budget can be anything you want but the important thing is that there is a plan and that your budget is intentional.

This principle is really simple to apply. It will teach you discipline with your budget because you have no left over amount each month to dip into if you overspend on one of your budget categories. Awareness and intention are essential to managing your money effectively.

You can read some more of my thoughts on budgeting here and here.

1 Comment

  1. […] Do you use sinking funds? Or a variation of this idea? Let me know how it works for you. You might also like to read my thoughts on budgeting here and zero sum budgeting method here. […]

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