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    Zero-based budgeting

    The tenets of personal (as opposed to business) ZBB seem to be:
    1. Income - expenses = $0 (which is nothing but a balanced budget), and
    2. every dollar has a job.


    My budget is balanced every month, and every dollar has a job (any excess gets assigned a "savings job" at EOM), but all I read about is the pain of reanalyzing your budget every month to justify every dollar which has nothing to do with having a balanced budget or giving every dollar a job (but everything to do with businesses using ZBB). OTOH, since our expenses are pretty stable, at BOM, I take a template of estimated spending and apply it to the checking account.

    Am I doing ZBB, or something else?

    #2
    The business community has pretty much abandoned ZBB because it doesn't work! Too many variables in our economy that can easily be affected by terrorist activities in Spain, military threats from N Korea or application of 'fracking' for example.

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      #3
      Originally posted by Nutria View Post
      The tenets of personal (as opposed to business) ZBB seem to be:
      1. Income - expenses = $0 (which is nothing but a balanced budget), and
      2. every dollar has a job.


      My budget is balanced every month, and every dollar has a job (any excess gets assigned a "savings job" at EOM), but all I read about is the pain of reanalyzing your budget every month to justify every dollar which has nothing to do with having a balanced budget or giving every dollar a job (but everything to do with businesses using ZBB). OTOH, since our expenses are pretty stable, at BOM, I take a template of estimated spending and apply it to the checking account.

      Am I doing ZBB, or something else?
      Nutria, in point of fact, accounting isn't my strong point, but is healthy that you are paying close attention to where your money goes.
      james.c.hendrickson@gmail.com
      202.468.6043

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        #4
        Originally posted by james.hendrickson View Post
        Nutria, in point of fact, accounting isn't my strong point, but is healthy that you are paying close attention to where your money goes.
        What's personal finance but addition, subtraction and a bit of conscientiousness?

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          #5
          I used to read up on Zero Based Budgeting for personal use, but it didn't sound like what you're talking about--maybe I was just reading someone's personal opinion--but it made sense to me.

          You start your budget with $0 money needed to live on.

          Then you start adding what you really need, not what you want.

          Rent/mortgage (in truly ZBB--do you really need to pay that much? Can you downsize?)

          Utilities--what is the minimum needed before you start adding on all the extras of leaving lights on and that 3rd refrigerator.

          Food--what you need (before you add in the junk food, Starbucks, etc.)

          The whole point of ZBB, as I saw it, was to get you to see what was really your basic costs and let you decide if all those add-ons were really worth the trade-off of not having enough left over to put away for savings or retirement.

          I thought ZBB was an interesting way to step back and honestly look at your budget. I still use it, to a degree, when I'm reviewing my yearly budget.

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            #6
            ^ The above post made sense

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