How to use a zero-sum budget

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Zero-sum budgeting means giving every pound you earn a purpose – whether that’s paying the bills, buying groceries or boosting your savings. The aim is to have no ‘extra’ money to fritter away on unnecessary stuff.

A zero-sum budget is useful if you:

  • Need to get your spending under control

  • Want to stop wasting money

  • Get surprised by changes in your monthly expenses

  • Have an irregular income

How to create a zero-sum budget

Have your income ready

Before you can make a zero-sum budget, you need to have a month’s earnings in your bank account. That way, you know exactly how much you have to play with.

List your expenses

Find out what costs you need to plan for. It can be useful to review your regular bills and spending habits. If you use Monzo, you can find the information in your app. You should also think about any one-off expenses that are coming up, such as birthday presents or holidays.

Add up the total cost of your planned expenses. You’ll need to find ways to cut costs (or earn more) if your expenses outweigh your income. You can also move money around, e.g. you might decide to spend less on luxuries and put more into savings.

Give every pound a purpose

Keep finding ways to use your money until it’s all accounted for. That can include paying off debt, putting it in savings or even treating yourself to a spa day – whatever's right for you.

Here’s a simple example of a zero-sum budget:

Earnings (after tax)£1,700
Planned spendingRent – £750
Loan repayment – £100
Gas and electricity – £30
Insurance – £20
Groceries – £150
Travel – £150
Entertainment – £150
Eating out – £150
Shopping – £50
Savings – £150

As you can see, every pound has a job to do. You can’t overspend in one area without stealing from another.

Review it monthly

You’ll normally adjust your zero-sum budget every month by adding new expenses and taking away old ones. Say you budgeted £100 for Christmas presents in December. Once the festive season is over, you’ll need to find a new purpose for that amount – such as January sales shopping or savings.

You may need to make bigger changes if your income is different each month, like if you’re self-employed.

How to stick to a zero-sum budget

A budget is only as good as your commitment to it! Luckily, we’ve got some solid tips to keep you on the straight and narrow:

  • Go into detail if you’re new to zero-sum budgeting – you may want to set a spending amount for every grocery shop, train journey and night out

  • Be realistic about what you need and how much things cost

  • Cover your essential expenses first, such as rent, bills and basic food

  • Create spending budgets for different categories with Monzo

  • Set up direct debits to pay bills on your payday, so you have fewer categories to think about

  • If you’ve included savings in your budget, transfer the money to a savings account as soon as you’re paid. If you use Monzo, you can schedule a payment to a Pot or Savings Pot

  • Consider locking your Pots in case you have a moment of weakness

To help you budget (and actually stick to it!) try Monzo today👇

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