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Lauren and I had really been getting after our budget and for a couple months, it was balanced. We were spending less than or equal to the amount we were bringing home each month. But there was always that lingering question of if we would have enough money in our checking when our bills pulled every month.
Instead of putting money into my savings account, I put money into my checking account to kind of “cushion” it.
Having a cushion in my checking seemed like a good idea, but because I didn’t remember how much extra I had put in, it just felt like I had extra money to spend. I’d be at the store and before too long, I started thinking to myself, “Well, I have the money. It wouldn’t hurt if I just got this one extra thing outside of the budget.” Have you ever done that? Am I alone here or can you relate? When we have a little extra money, aren’t we sometimes tempted to spend it?
After depleting my checking account cushion, I realized I needed a different way to think about this. I needed clarity on what that cushion was and what it was not. And so I tricked myself.
I decided to save up one month of my expenses and told myself that when I saw that number in my checking account, I was broke. That number, that one month of expenses number, was what I called my New Zero.
Now when I saw it, in my head I would see zero. I never wanted to see an actual zero in my checking again and I didn’t want to keep spending my cushion. So I made a New Zero, one month of my expenses, that would signal to me I was broke as a joke. I didn’t have any money in my account, and there was no money to spend. The new couch would have to wait. The extra trip for tasty takeout would need to wait. As soon as I saw my New Zero which was about $3,000 at the time, the bank was closed, and there was no money to be spent.
Years later, Lauren and I still have a New Zero in our checking account, but as our expenses have increased, so too has our New Zero. And so every couple of months, I am always evaluating my New Checking Zero. Does that New Zero still cover one month of my expenses? Because I’m a conservative budgeter, I always round up to the nearest thousand, and you should as well.
How much do you spend on average on a monthly basis? Find that number right now and then round it UP to the nearest thousand. Are your monthly expenses $4,526? Great! Your New Checking Zero target is $5,000.
If you don’t want to every see a real zero in your checking account again, consider tricking yourself like I did and establish a New Zero in your checking account. Before long, you’ll never worry about an actual zero again.
Zach Santmier is the owner of Trumble Agency, Inc. and the author of the personal financial course, Increase. He focuses on helping families escape paycheck to paycheck living so they can freely pursue their ideal future.
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