Zero Balance Budget


1| You have Income
2| You have Expenses
3| You do or would like to create a budget
4| You have an Accountability Partner

I often speak to prospective clients who struggle to achieve their savings or debt reduction goals, even though some of them have and stick to a budget. One of the first questions I ask when talking with prospective clients is, does your annual budget result in a surplus or deficit. I normally get one of the following responses; I don't know, I don't have a surplus or deficit. The main difference is that by responding "surplus" or "deficit" means that you have a formal process of projecting what you will earn and spend so you can prepare for what lies ahead, while "I don't know" and "I don't have one" means you are leaving it to chance.

My question is actually a trick. Most think by responding "Surplus," they are on course and ahead of the game. The realist is that they have actually failed at finalizing their budget. Your final budget should not have a surplus, it should result in a ZERO balance. Your expenses should equal your income.

Well that can't be right. If you spend it all, how do you save or pay down your debt? Great question, How are you doing it now? With my surplus. Oh yeah, your surplus. You were going to use that surplus at the end of the year to ad to savings or pay down debt. How much surplus did you have last year? Come to think of it, a lot less than it should have been.

You see, money wants to go somewhere and trust me, it will find somewhere to go. If you don't tell it where it needs to go, it will just go. That's why you have to tell every dollar where it is going. If you have a surplus, then you need to create places for the excess to go: pay some on debt, increase your retirement contributions, create purposed savings accounts to fund. You have numerous options, just make sure you direct the excess in accordance to your goals.

Brandon Haines


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