Top Tips to Saving Money with Zero-Sum Budgeting


We Brits aren’t the best at saving money at the best of times. There were 6.5 million adults living in the UK who had no cash savings during 2017. But with the economy heading for its biggest slump for over a century, how we manage our finances now has become more important than ever. This means living by a strict budget. But budgets are a lot like diets – there are hundreds of them out there and most of them don’t work. At iThink Finance, many of our clients found themselves in hard times after following a bad budget plan. It’s not just people who don’t budget at all who run into difficulty!

So, what’s the best way to budget? There’s one method which stands above all others – zero-sum budgeting. A popular way of managing money since the 1970s, zero-sum budgeting is thought by its many practitioners to be transformative. It’s a great way to manage your money right down to the last penny as well as wrapping your head around what is required of you psychologically to budget.


What is Zero-Sum Budgeting?

A zero-sum budget assigns each and every penny of your income to something. By doing so, you ensure that there’s no money left to waste on careless spending. The entire concept of this budget is to make your income total, minus your expenses, come to zero. You shouldn’t have any money that isn’t assigned to some kind of expense. This doesn’t mean that you should have no money left in your bank account. Rather, it simply means that all the money you have has a purpose and can only be spent according to the limitations of your budget.

Below are four ways in which zero-sum budgeting can help you to save:


You will trim down on expenses

Drawing up a zero-sum budget requires close examination of your spending habits. And people can be shocked by what they find. Use this time to seek out ways to cut back on expenses. Perhaps you aren’t using the cheapest central heating service provider, or maybe you can reduce your mobile phone costs by migrating to a different service provider. Take the time and put in the effort to trim down your expenses and save. 


You will pay down debts quicker

Let’s face it; debt is expensive. It’s nice to pay off the minimum amount due each month comfortably, but that doesn’t really save you money in the long run. Paying off your debts quicker will help you to save money in terms of interest. When you draw up a zero-sum budget, each and every penny is assigned to something, meaning that you will make provisions for your debt payments and can actually add a little extra to your credit card and loan repayments. Regardless of the minimum amount requested by the credit card company or loan provider, having a set amount to pay off on those accounts according to your budget will help you to pay these off quicker and save more.


You will allocate money to “savings” as an expense

Saving money isn’t easy. Some people do have savings, but it’s often not a permanent and ongoing thing. Modern day consumers have a here-and-now mind set, which means that they stash extra cash when they have it. This is the wrong mindset to have and something that can be mitigated by a zero-sum budget. When creating your zero-sum budget, you will assign chunks of your income to certain expense categories, such as: food shopping, rent, utilities, and mortgage payments. Savings should appear on that list as an expense. Treating savings as an expense makes it much easier to consistently put money away.


You won’t allow excess money to linger “unspent”

It’s dangerous to have “extra” money at the end of the month. A zero-sum budget assigns all money to a particular budget category. This means that if you get extra income one month, it must be assigned somewhere. You can choose to put some into your entertainment account, some into your savings account, or even push some through to your debt accounts. Money with a purpose is money that is better spent. If you have money that doesn’t have a purpose, it will undoubtedly be wasted or spent carelessly.


Last Word

Thousands of people around the world are currently using the zero-sum budget to get their finances under control and to actually save more money each month. Try it and see if it’s the solution for your money management problems too. 






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