New Year’s budget resolution? Try zero-sum budgeting

If your goal is to make 2017, a better financial year, try Zero-Sum Budgeting, a simple idea that can bring big results.

According to FamilyFinancier.com, Zero-Sum Budgeting revolves around two main ideas: Budgeting to zero and paying for next month’s expenses with this month’s income.

What is budgeting to zero?

Budgeting to zero means spending every single dollar on a specific goal.
You could have goals like paying a bill, savings toward a holiday or adding to an investment.

Over time you can identify overspending in one or multiple categories and make adjustments. Slowly you can create a reliable growth in savings.

How to Pay for Next Month’s Expenses Today

The second main goal for the zero-sum method is to pay for the month ahead with the current month’s income. This allows for two benefits:
* No issues paying bills on time
* Safety net of at least one month’s income in case of emergency

Accomplishing these two goals would put someone far ahead of the average American. According to a recent Federal Reserve survey, 46 percent of Americans said that they would have to borrow or sell something to pay for a $400 emergency.

Given this reality, paying bills a month ahead can take time unless a person already has savings. Once accomplished, this goal can provide substantial financial security and peace of mind.

Tips for Implementing the Zero-sum Budget

Start with your monthly bank statement in hand. Make a list of spending categories. Assign expenditures to one of these categories. This helps you see what you actually spend and where.

Now, decide where you can cut spending and where you can add spending, to suit goals such as paying off bills. Make sure every single dollar you bring in has a ‘home’ in your budget.

A few recommendations for someone trying this, or any other, budgeting method:
* Use an app, tool, or spreadsheet to help stay organized and accurate. This makes the process so much easier.
* Find an accountability partner.
* If overspending is a problem, roll with the punches and work to get back on track.