1) Yes, that is the same as ZBB. I think where ZBB is different is in how you proceed through the month. Generally with a budget, once it is set, it is firm. With ZBB, you modify the budget to fit how the money actually goes out as the month progresses. Overspend on groceries? Don’t say “oh well, better luck next month”, instead adjust something else in order to make up for your overspending. Your budget is more of a living thing, rather than a guideline that may end up only bearing a slight resemblance to what actually happened that month.

2) I think you can still have a misc fund, you just need to be very clear about what you’re putting in there, and adjusting your budget accordingly. Personally, I like being more granular than that, so I’d stick summer camp under Educational Expenses or perhaps Entertainment and just budget more in the month when that fee would be due. Since you’re only budgeting out a month in advance rather than the whole year at a time like Quicken encourages you to do, it isn’t that hard to put that in. As for unexpected expenses, with ZBB you’re encouraged to set up some funds to help pay for that sort of thing. You’d be setting aside some set amount each month that would go for car repairs, health care bills, property taxes, or whatever so that when faced with an unexpected expense, you’d have some money to draw from. Of course if that isn’t enough, you’d need to either reduce spending in other areas or tap your savings to handle it (which would either be added to the budget at supplemental income if the savings account is outside of the budget, or as a transfer if the savings account is in the budget) In my experience at least, there are very few, if any, completely unexpected expenses - you have some idea that your car would need to be repaired, your house fixed, or that their might be a health problem or something - it is just a matter of not knowing the timing rather than not knowing that it is coming at all.

3) YNAB does that too, but like I said in point 1 when you’re comparing your spending to your budget, you can and should be making adjustments as you go so that you can better reflect the reality of your spending. Otherwise you end up (like we generally did) looking at the budget and saying “oh well, we’re over on this category this month, but we’ll make it up later” when in reality, later would never happen and reality would continue to drift further and further off from budgeted amounts. Of course, you can adjust the Quicken budget for future month’s spending to try and make reality match the budget, but it seems like it is too little, too late at that point.

I think one of the greatest strengths of ZBB is that it keeps you honest, and keeps you focused on what’s happening now. You can’t just look at your budget, think “well, it all seems reasonable - we should be able to make it work with these amounts” and continue on with what you’re doing, vowing that you’ll match your numbers next month and somehow things will all work out. As you can probably tell, this was my biggest failing in the whole budgeting area - and perhaps it isn’t a problem you suffer from so all this seems rather unnecessary. But ZBB has made a big difference for me, and has really helped me understand the concept that a dollar spent in one place is a dollar that can’t be spent somewhere else. (I know, duh, but still I’ve proved remarkably resistant to internalizing this basic fact over the years)

I hope this helps!

I would be forever indebted to you if you could answer a couple questions for me:

1. I guess I am doing “regular budgeting,” where I make a list of what I think we should spend on various categories and write it down. Of course, the total is higher than our income I cut back on certain categories. How is this different than zero-based budgeting?

2. I’ve heard that you don’t have a “misc.” category with ZBB. What do you do about unexpected or one-time expenses such as car repairs, summer camp registration, etc.?

3. To use Quicken as an example: in Quicken you can type in what you want to spend in each category, then do your data entry of what you actually spent, and run a report that compares what you actually spent to your budget. How is YNAB different than that?

O wise Oracle of Zero-Based Budgeting, please enlighten me, a budgeting moron!

Anyways, what I like about it is that it is a very straightforward way to create a budget and to see how your spending matches up to what you’ve budgeted. It also really makes you look at what you have available and makes it pretty obvious if you’re spending beyond what you have coming in. It is easy to tweak as you progress in the month, so that you are only spending the dollars you have.

None of this is exactly rocket science, of course, but I found with Quicken and my previous attempts at budgeting that it was too easy to think “well, we went over in that last month, but we’ll catch up in future months”. Occasionally this would happen, but it was the exception rather than the rule. Also, with a variable income, budgeting out for the whole year becomes rather difficult - and it is hard to make sure the money is being managed well. It is too easy to say “well, there’s a little extra this month, so let’s go ahead and buy X” while ignoring all the various budget category overages that need to be covered somehow. We’ve always managed to stay out of debt (non-house debt, at least) but sometimes it feels like it is only by the grace of God and the skin of our teeth that we’ve managed to do so. It seems like having a tool that makes sure each dollar of expense meets up with a dollar of income makes us be more honest and realistic in our spending and our budgeting.

I saw this program mentioned on a comment on Jennifer’s blog awhile back and decided to look into it because I’m always curious about this sort of thing. I’m not sure this is the most user-friendly sort of software for zero-based budgeting (SimpleMom.net likes Pear Budget, but I balk at paying a monthly fee for a software program) but it is working well for me so far.