A couple weeks ago I got a question about how much money we have left over from our budget at the end of the month. We have a zero based budget, so we don't have any money left over. A zero based budget means we tell every single dollar where to go, so there's nothing left over.
Our goal for creating a budget was to come up with a savings plan. I don't think of our budget as the way we spend money. Our budget is a guide for our future plans. We know we want to buy a house, a car, go on vacations, and retire well. In order to accomplish those things, we needed a plan, so we created a budget.
There are so many articles out there explaining how to start a budget. Most of the articles I've read say to track your spending before coming up with a budget. Another traditional way to budget is to subtract your bills and expenses from your paycheck. We actually didn't use either of these methods when we started our budget.
First, we decided to save everything I make and live off Sam's salary. Then we came up with our savings plan for how we would divide up the money. After our savings plan was in place, we budgeted our regular monthly expenses. After our budget is laid out, we have zero dollars left over.
I remember reading somewhere that people who automate their savings, end up saving more over their lifetime than those who don't. My credit union (I'm pretty sure most banks have this option) automatically takes money out of my paycheck and puts it into my savings accounts. Since I never see that money in my checking account, I never miss it. I started automating my savings way before I met Sam, and we do the same thing with our money.
We currently have 5 different savings accounts and 1 checking account. Right now the bulk of our money is going towards saving for a down payment on a house. We're also saving for vacations, a new car, car expenses (mostly insurance), and building up our emergency fund. The image below is from our Mint.com account that shows our progress in our accounts.
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