Zero Sum Budgeting and Investing with Betterment.com

Today I decided to dip my toes into the world of zero-sum budgeting. Meaning, I have created a budget AND transfer system that uses every dollar of my paycheck. Every single dollar is accounted for.

For years I took a more free flowing approach. My paycheck was deposited into my spending checking account. A portion was automatically transferred into my bills checking account, and different amounts would go into various savings, with a portion remaining in my checking. That way, I could adjust how much extra I was going to save or spend as necessary. But I realized that my financial management system was lacking by not making every dollar have a purpose.

So tonight I decided to revamp my budget. I wanted to change how much I was saving in different categories and add some new ones. I have to say I felt a little loss of control with my zero-sum budget. It will be much harder for me to justify moving money out of my savings account to my checking, as opposed to just keeping money in my checking and not moving it to my savings. But I think I’ve kicked my savings and investing game into a new gear!

And speaking of investing, I have had an account with Betterment.com since October 2014 but I never deposited any money! For those not in the know, Betterment.com is an online investment site that allows customers to build a portfolio “designed to achieve optimal returns at every level of risk.” I have been so good with fully funding my Roth IRA and I enrolled in my retirement plan at work, but when it comes to straight up investing, my record has been less than stellar.

I have a habit of either picking duds or selling winners before they’ve won! 

I’ll now have a portfolio of ETFs that will be diversified and rebalanced as necessary without any work from me. No more staring at stocks wondering if they’ll do well based on zero knowledge of anything. Plus, they are Vanguard ETFs so they are low cost.

So as part of my new zero-sum budget, a whopping 23% of my post-tax income will be invested every month. I can’t wait to see how my investing with Betterment.com goes over the next few months.

Wish me luck!

To see a detailed review of Betterment.com, check out this review I found here from Cash Cow Couple. 

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