How I use a zero-based budgeting spreadsheet to maximize savings and budget life as a digital nomad

As I sit here in my Denver Airbnb, cooled by the breeze of the ceiling fan, I am writing this just after I edited my budget spreadsheet to account for a change in my travel itinerary.

A selfie of me sitting on the Matthew Shepard memorial bench at the University of Wyoming.
The Matthew Shepard Memorial – University of Wyoming

For those new to the topic, I first want to introduce you to what zero-based budgeting is (if you're already familiar, skip down to the next section).

What is Zero-based Budgeting?

The Investopedia definition of zero-based budgeting is:

Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. The process of zero-based budgeting starts from a "zero base," and every function within an organization is analyzed for its needs and costs. The budgets are then built around what is needed for the upcoming period, regardless of whether each budget is higher or lower than the previous one.

That definition is a mouthful, so let me help provide an example of how I use it to help reach my budgeting goals, save more money, and live life as a digital nomad...

How I use Zero-based Budgeting to live as a digital nomad

As I sit here in my Denver Airbnb, cooled by the breeze of the ceiling fan, I am writing this just after I edited my budget spreadsheet to account for a change in my travel itinerary. I've decided to cancel my week in Knoxville and find an Airbnb closer to Dollywood (the main reason for my trip to eastern Tennessee).

The new location ended up costing me more money than the previously location, unfortunately, but it also came with some perks that will reduce costs in other areas in the future.

The three ways the new location will save me time, money and stress:

  1. The proximity is closer to where I will be travelling the most often, so I won't be spending as much time and money on travel
  2. The rental has a freezer, which helps reduce stress because I don't have to worry as much about storing frozen food (having a dog that's a picky eater requires special food accommodations, and I'd rather not have to deal with the stress of changing both of my dogs' diet on the trip)
  3. The Airbnb host offers two free tickets to Dollywood with a week-long stay, so I that will reduce my entertainment costs during my trip

How I use zero-based budgeting to maximize my savings and investments

The new accommodations in Sevierville might have increased my costs for this month, but my zero-based budgeting spreadsheet allowed me to adjust and reduce future housing costs.

By crunching my numbers in real time, I am able to plan an end of year target for each of my savings buckets (retirement accounts, down payment, an after-tax brokerage, and an emergency fund). Each time I edit my spreadsheet to account for actual expenses versus planned expenses, I get a real-time look at my current end-of-year plan for each bucket.

Sounds complicated? Well, I didn't get to this point over night. I have probably put in over 1,000 hours into editing and evolving my spreadsheet over the years. I have created a template with categories for known expenses (monthly billing statements), categories for more flexible expenses (entertainment, dining out, groceries, transportation, etc.), and investment/savings categories.

My spreadsheet is a living beast that provides me with too much information and not enough at the same time. Each time my income and expenses change, and as my target dates, goals and risk tolerance change... I edit the beast.

I try to keep myself from adjusting the number too much, because it can be time consuming, but I also don't always stop myself when the inspiration hits.

Using Zero-based Budgeting to save more money for a down payment to buy a rental property

The biggest change to my budget spreadsheet recently was my desire to save more money for a down payment.

I am hoping to save $40,000 by the end of the year for a down payment on a house hack (more details on that in a future post, but to put it simply: I want to take out a mortgage for a multi-family property so I can live in one unit and rent out the other(s)).

In deciding to put more money into my down payment bucket, I needed to find areas to reduce costs or increase income. For now, I've chosen the "easy" route and have reduced my monthly contributions to my brokerage account.

Because each dollar has a purpose on my spreadsheet, I am easily able to see how close I am to reaching my goals, and I can choose to either adjust my expenses or income to ensure I reach my targets. It allows me to react in real-time.

Would you be interested in getting a custom budget template?

I have a variety of budget spreadsheet templates that are different iterations of my personal budget. They're the type of document that requires a bit of configuration out of the box.

To my friends and family, and to any new readers I have have yet to meet, shoot me a message if it's still 2022 and you're interested in getting access to one of those spreadsheets. I'd be happy to chat about your goals and which spreadsheet version is right for you.

Until next time...

A selfie photo of me and two friends sitting at a black table. We are each holding our tiki cups up and smiling.
Adrift Tiki Bar - Denver, CO

Hi, I'm Tim Winfred. I'm a digital nomad on a six-month trip across the United States. I paid off $60,000 worth of debt in two years and am working towards financial independence. I am constantly working to optimize how I use my time and energy in order to afford a better lifestyle and spend time doing the things I love most. Thanks for joining me on this journey!

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