Budgets & Categories
Learn how to organize your budget with categories and category groups. Understand how to budget money, move it between categories, and handle overspending.
Understanding Categories#
Categories are the building blocks of your budget. Each category represents a specific purpose for your money – whether it's paying rent, buying groceries, or saving for a vacation.
Category Basics
Every category in Zerosum tracks three key amounts:
Budgeted
The amount you've budgeted for this category this month. This is money you're committing to this purpose.
Activity
The sum of all transactions in this category this month. Spending shows as negative, income as positive.
Available
The money you have left to spend. Calculated as: Carryover + Budgeted + Activity. This is what matters most for day-to-day spending decisions.
Tip
Focus on the "Available" amount when making spending decisions. It tells you exactly how much you can spend in this category right now.
Recommended Categories
Not sure what categories to create? Here are some common ones to get you started:
Fixed Expenses
- Rent/Mortgage
- Utilities
- Insurance
- Phone/Internet
- Subscriptions
Variable Expenses
- Groceries
- Transportation/Gas
- Dining Out
- Entertainment
- Personal Care
Savings Goals
- Emergency Fund
- Vacation
- New Car
- Home Down Payment
- Holiday Gifts
Debt Payments
- Extra Debt Payments
- Student Loans
- Car Payment
- Medical Bills
- Personal Loans
Category Groups#
Category groups help you organize related categories together. They make your budget easier to navigate and give you a high-level view of your spending areas.
How Groups Work
Groups are collapsible containers for categories. They show the total budgeted and available amounts for all categories within them, making it easy to see your budget at a glance.
Example Group Structure
Info
You can collapse groups you don't need to see often. This is great for categories that are set-and-forget, like annual insurance payments.
Creating and Managing Groups
- Create a group by clicking the "Add Group" button in the budget view
- Add categories to a group when creating them, or drag existing categories into groups
- Reorder categories within groups by dragging them to your preferred position
- Move categories between groups by dragging or editing the category
Budgeting Money#
Budgeting money is the core action in zero-based budgeting. When you budget money to a category, you're deciding how to use your available funds.
How to Budget Money#
- Check your Ready to Budget – This shows how much money is waiting to be budgeted
- Click on a category's Budgeted field – Enter the amount you want to budget
- Press Enter or click away – The change is saved and your Available updates automatically
Smart Budgeting Tips#
Prioritize Essentials
Fund your needs first: housing, utilities, food, transportation. These should be fully funded before moving to wants.
Use Goals as Guides
Set up goals on categories to see how much you need to budget each month to stay on track.
Budget What You Have
Only budget money that's actually in your Ready to Budget. Don't budget future paychecks until they arrive.
Leave a Buffer
Consider a small "Miscellaneous" or "Buffer" category for unexpected small expenses.
Moving Money Between Categories#
Life doesn't always go according to plan. When you need to spend more in one category, you can move money from another. This flexibility is a key feature of zero-based budgeting.
Entertainment
$100 → $50
Groceries
$400 → $450
How to Move Money
- Reduce the source category – Lower the Budgeted amount in the category you're taking from
- Increase the destination – Add that same amount to the category you're moving to
When to Move Money
- Unexpected expenses – Car repair, medical bill, or home maintenance
- Overspending – When you've spent more than planned in a category
- Changed priorities – Deciding to save more or spend differently this month
- Price increases – When regular expenses cost more than expected
Auto Budget#
The Auto Budget feature helps you quickly budget money to categories using various strategies. Instead of manually entering amounts for each category, you can apply budgeting rules with a single click.
Budget Money Strategies
Underfunded Goals
Budgets money to categories with goals that haven't been fully funded yet this month. Processes categories in order until your Ready to Budget reaches zero.
Budgeted Last Month
Copies the budgeted amounts from the previous month. Great for categories with consistent monthly budgets.
Spent Last Month
Budgets based on what you actually spent in each category last month. Useful for adjusting your budget to match real spending patterns.
Average Spent (3 mo)
Budgets the average of your spending over the past 3 months. Smooths out month-to-month variations in variable expenses.
Cover Overspending
Adds enough to any category with a negative available balance to bring it back to zero. Quickly fixes overspent categories.
Reduce Overbudgeted
For categories where you've budgeted more than your goal requires, this removes the excess and returns it to Ready to Budget.
Reset Strategies
Reset Budgeted
Sets all budgeted amounts to zero for the current month. Use this to start fresh with your budget.
Reset Available
Adjusts budgeted amounts to bring all available balances to zero. This moves excess money back to Ready to Budget.
Tip
Auto Budget strategies respect your Ready to Budget amount. If you don't have enough money to fully fund all underfunded goals, it will budget as much as possible in category order.
Carryover & Overspending#
Understanding how money carries over between months and what happens when you overspend is crucial for managing your budget effectively.
Positive Carryover#
When a category ends the month with a positive Available balance, that money automatically carries over to the next month. This is great for:
- Savings categories – Money accumulates toward your goal
- Variable expenses – Unused grocery money rolls over to next month
- Annual expenses – Build up funds for yearly bills like car registration
January: Budgeted $400, Spent $350 → Available $50
February starts with: $50 carryover + $400 budgeted = $450 available
Handling Overspending#
When you spend more than what's available in a category, the category goes negative (overspent). This affects your budget in specific ways:
- The category shows a negative Available amount
- The negative balance does NOT carry to next month – it resets to $0
- Instead, the overspent amount reduces next month's Ready to Budget
- This reflects reality: you spent money you didn't have budgeted
Cover Overspending
It's best to cover overspending within the same month by moving money from other categories. This keeps your budget accurate and prevents surprises in future months.
Overspending Example#
January:
Groceries: Budgeted $400, Spent $450
Available: -$50 (overspent)
February:
Groceries starts at $0 (negative doesn't carry)
Ready to Budget is reduced by $50 (the overspending)
The key insight: overspending in one month means you have $50 less to budget in the next month. The money was already spent, so your future budget reflects that reality.
Next: Recording Transactions
Now that you understand categories, learn how to record your spending and income to keep your budget accurate.