zero based budget

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I really like the idea of a zero based budget. It would be nice if you can at least set it up to show you your budget balance on the budget screen which would just start as the balance of your account and then have it deduct as you add to your budget so you can see when you get to zero and give every dollar a job.
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jumbojs

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Posted 1 month ago

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GiveAnAccount

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It sounds like maybe you have a lump some of money that you need to allocate until it is all gone, and you do NOT have any new money coming in regularly (like a paycheck). If that is the case, I don't have the answer.

But if you DO get money coming in regularly:

The way I get a 0 at the bottom of the budget is budget both the INCOME and the Expenses. If I expect to earn $2000/month, that is at the very top as a positive number. Then I start "giving each dollar a job" and it is subtracted bit by bit from the top number(s). Looking at the very bottom of the budget, you will see a 0 when you've allocated all your expected income for that month.

(Please click Helpful above, if this was helpful.)


(Edited)
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QPW

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Here is the definition of that system:
https://www.daveramsey.com/blog/zero-based-budget-what-why

And I agree with GiveAnAccount that the current system can pretty much do this.

I will also add that Dave Ramsey is also known for Envelop Budgeting, which is similar, and Quicken Windows budgeting isn't current setup to do.  The difference is that one and move money around in different "envelops/categories" during the month when they find that they have money in one, but ran out in another.

I'm going to add to GiveAnAccount's answer for the cases where you aren't dealing with a lump sum, and where you want the balance to stay zero for the month.

First off setup.

I would start on the annual view, and only show the budget numbers.

Select all the categories that you use for your income and expenses, including a transfer to savings.  Note that if you use the Paycheck "special category" you are budgeting the net amount and as such you don't have to put the tax expense categories in your budget.

Clearly you should be able to get the number at the bottom to zero.

The balance is tougher to keep zero.  Note that the balance is the budget vs actual comparison.  If you are looking at actuals it could be zero, but it might not match your budget at all.

The key to seeing zero in the balance is understanding that you can add reminders to the budget (it is the default).  It is easy to see that if I budgeted $2000 for the month and I get paid weekly at the start of the month I would have a balance of -$2000. But if I have reminders setup that give me $500 per week then I will get a balance of zero.

Income for most people is pretty easy to get balanced because they know how much they are going to get paid, and probably have already setup reminders for it.

Expenses that are pretty much fixed also are pretty easy, for instance paying your property tax or car insurance.  Same thing the key is a reminder.

Variable expenses is where it gets tricky.

In truth I don't really budget, but I do play with this kind of thing and what I do is run reports and figure what the average I spend on a given variable expense category (do the same for my variable income) and then I setup a weekly reminder for it.  Note I actually use one reminder that is split with a line per each variable expense and just put it in some cash account.  Each week as I get to that reminder I just skip it.  I don't want to enter it because the real expenses have already filled in what really happened.

Clearly there is going to be overlap between the real expenses and the reminder during the week.  But at the end of the week just after you have skipped this reminder you would have an exact picture of if you are "zeroed" or not.
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jumbojs

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Every dollar a job is what I was looking for. I was using YNAB for budgeting and this is how it was setup. I do have regular income coming in that I want to get down to zero. Thanks for your tips
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SimonSezSo

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I like the idea of a zero based budget.  I have been doing this with Quicken for many years and if I get the time, I will write out a detailed explanation of how I do I on Quicken.  It's been the "secret of my success".  I've tried to explain it, and how I do it on Quicken, but it falls on deaf ears.  It is simple, yet very effective.  Every dollar is accounted for, and all spending accounts net to zero, except checking has a preset range that I determine, and savings accounts hold the remainder.  Savings then happens automatically. The key it to account for all income and expenses and set them up as reminders, then future post them 30, or 90 days ahead, or what ever time frame you want to budget for.  I then "zero out" on a daily basis.  This may seem like a lot of work, but it really isn't because I auto reconcile all accounts daily, and automate all that I can on Quicken.
(Edited)
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QPW

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then future post them 30, or 90 days ahead
I don't see why you would future post them.

First off the budget view works with either actual transactions or reminders.
And in the register you can have it show your reminders and it will affect the balances just like an "entered transaction" would.

But if you pre enter them and then change your mind on something you have to go into the register and delete those transactions.

By keeping them as reminders until you at least close to when they actually come up, you can change your mind both in what the reminder amount might be and if you want to see it in a give register.

Back before they allowed showing the reminders in the register it made sense to pre enter them, but these days I think you are better off leaving them as reminders.
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SimonSezSo

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QPW the reason why I future post rather than show reminders is that I can adjust posted transactions, but I can't adjust "show reminders" in the account register.  I never have to delete a transaction.  Just change the amounts to either the real amounts, or to "zero balance".  I've kept them as reminders but it doesn't seem to work as smoothly.  Reminders are not easily changed as posted transactions are. 
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QPW

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Well you can adjust the next reminder amount if you don't set it to automatic entry.  But I see your point.