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What is a zero sum budget?

Most people hate budgeting, but love having control. They haven’t realized that budgeting is all about having control….just over your money instead of where your partner puts the bowls in the dishwasher. Learn about the most controlling budget of all – the zero sum budget – and how to use it to gain money success.

Spend your way to money success.

A zero sum budget is a budgeting strategy that requires you to put every dollar you receive into a spending category. Hold on, Spenders! It’s not exactly what you might think.

Developed by Pete Phyrr in the U.S., a zero sum budget doesn’t allow for money to sit in your bank account without deciding where it’s going to go and what purpose it’ll have. This means at the end of your budgeting exercise you won’t have any miscellaneous/nameless cash floating in your account and your balance sheet will total $0.

The good news is you can name every dollar whatever you want. So if you want $500 to go to your shoe category and $200 to go to your savings each week, you can do that. The zero sum budget doesn’t tell you which spending category your money should go into – you do.


Reach your financial goals while spending money on what you want.

Let’s face it. Most of us have a weakness for spending too much money on something. For many of us our excessive spending habits prevent us from reaching our financial goals.

With a zero sum budget you decide in advance what you will spend your money on and can choose to put some money off-limits. This will allow you to experience freedom to spend within limits while setting aside money to build wealth.

folded twenty dollar bill

Get control of your money with a zero sum budget.

Follow these 12 steps to create your zero sum budget today:

  • List your income for the next month and add it together.
  • In another column, list your expenses/spending for the same month and add them together.
  • Make sure you include expense categories that require you to set aside money each month to spend later, like savings, car replacement fund, home maintenance fund, car registration, birthdays, etc.
  • Highlight or mark each expense category with green that is a ‘need’ (food, clothing, rent/mortgage payments, transportation, and utilities).
  • Highlight or mark each expense category with yellow that is a ‘priority’ (charitable giving, savings, extra repayment on debt, self-care expenses, etc).
  • Highlight or mark each expense category with red that is a ‘want’ (eating out, entertainment, pocket money, Netflix, etc).
  • Start subtracting each expense from your income starting with your needs.
  • Then, subtract your priority expense categories.
  • Last, subtract your want categories.
  • If your total is a positive number, you haven’t given every dollar a name. Add more money to your needs, priorities then wants.
  • If your total is a negative number, you’re spending more than you make. Subtract the negative amount from your wants, priorities, then needs categories.
  • You’re done when the total is $0 (your income total equals your total expenses).

OR Download our free zero sum budget spreadsheet. You’ll get video tutorials to help you build your budget.

Free Zero Sum Budget Dowbload
Free Zero Sum Budget Download


Adjusting your zero sum budget

If you aren’t happy with your zero sum budget the first time around, try these changes:

  • Move money from wants to needs and/or priorities – A very common trend is after the first attempt to make a zero sum budget, there is too little money in the needs and/or priorities. This means you probably spend too much on wants and could be spending less in these categories.
  • Eliminate wants – You might decide some wants categories you are currently spending in aren’t worth it. In this case cancel the service or just stop spending money at that shop. This frees up money for categories that move your finances towards your goals.
  • Increase your income – If you want more money to spend in any categories, increase your income by getting a second job or side hustle. You’ll reach your financial goals much faster.
  • Move money from priorities to needs – When you’ve lost or don’t have enough income, your first objective should be to cover your needs. Once your income increases, you can start allocating money to your priorities and then wants, as your income allows.


Remember, moving money from your needs and/or priorities to your wants is never suggested. This is irresponsible money practices and should be avoided at all costs.