Zero-sum Budgets, and Finding Your Balance

By Mitch

When we started this blog, Khin and I had recently moved into our new home. It was also less than 6 months after I had left work at Coles and begun working from home. We made quite a few plans and had quite a few ideas about where we would be in several year’s time. It hasn’t been a year yet, and our plans have already changed quite a bit!

In one of our previous posts, What we spend monthly, we talked about paying off our mortgage in a little over 2 years. This was working quite well for us for the most part, but we wanted to take some of the pressure off, and also to refocus. We have recently reduced the payment amount, and our current date is around 7 years away instead. Still not bad compared to the original 17 years!


What are we doing instead?

Over the last couple of months, we have been slowly working out budgets for every aspect of our money. Instead of just winging it with our budget (our old method), we have set up zero-sum budgets for each category of our spending.

Groceries: $700
Fun money: $400
Mitch’s money: $200
Khin’s money: $600 (just kidding! it’s $200 too)
Travel: $800
Invested savings: $2200
Mortgage: $2000

We also set aside money for tax in its own account, since we are self-employed. And instead of relying on the home loan’s redraw feature, we have our own emergency fund worth 6 months of living expenses.

If we have anything over this amount, we’ll still put it into the mortgage! This means that 7 year mortgage might end up being much shorter, depending on how our business and spending goes.


Why did we make these changes?


Firstly, there are some obvious benefits to sorting out our money like this, with zero-sum budgets for everything. When we come up with these numbers, we put a limit on how much we spend. This means no worrying about how high our spend is going to be this month.

Secondly, we know we can spend this money! Khin and I have a frugal nature when it comes to purchasing things for ourselves, and setting a budget means that we don’t beat ourselves up over any purchases that we make. As long as we don’t overspend, we are fine!

Our favourite things to do are travelling, eating and gardening (this last one is mostly Khin, but I enjoy it too). Whenever we go to our local nursery (Virginia Nursery) or Japanese restaurant (Mobara), we get a friendly hello and a “You’re back again!”.

By having our fun money, our individual money, and our travel money, we allow ourselves to make the purchases that make us truly happy. This doesn’t mean we splurge or spend above our means; we’re still saving quite a bit! But it means that when there’s something we truly want to do, we make it happen.

Speaking of making our dreams happen, I have an announcement or two to make in my next post regarding travel! Click on Follow if you want to hear about it – and as a bonus, every click will make this author smile.

So, that about ‘sums’ it up! I hope you enjoyed the article, and if you want to talk about budgets, or life, leave a comment below. Do you have a budget, or do you wing it? What are your vices? Mine is definitely the karaage chicken from Mobara.

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