A zero-sum budget is an excellent way to reduce your spending and save more. Personal finance blog Money Crashers suggests taking this to the next level by emptying your main accounts every month.
To be clear, the site doesn't suggest spending every dollar. However, it's already a good idea to keep a separate account for your savings, and obviously your retirement accounts. At the end of every month, move any unspent money to your outside accounts to avoid the temptation to spend it:
As an overspender, your mindset may be, "If I have it, I'll spend it." That's why I "zero out" my accounts each month. No, it doesn't mean I spend until it's all gone – but I find a home for every dollar in my checking account so I'm not tempted to make thoughtless purchases.
Deposit your paycheck in your checking account, and immediately start "telling" it where to go. If you're on a cash budget, withdraw the necessary amount. Then, pay your bills. To avoid the temptation of blowing the rest, move it to other accounts, such as a savings account and a retirement fund. Ensure that every dollar has a home, leaving you essentially with a $0 balance in your checking account at the end of every month.
Depending on when you get paid and when your bills are due, the first of the month may not be ideal for your personal financial schedule. It may also be a good idea to leave a small amount of money to avoid overdraft fees if you use them, but the principle still works. If you don't spend the money, move it all of it somewhere you can save it immediately. Check out Money Crashers post for more tips on how to cut overspending.
How to Stop Overspending and Get Your Budget Under Control | Money Crashers
Photo by Ken Teegardin .
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