When is zero not zero?

When you set a zero number in your checking account! This week we’re talking about what a zero number is and why you need one.

Setting a balance that you treat as if it were zero can add tons of peace of mind and flexibility to your life, and keep you from ever watching your money get siphoned away by dreaded insufficient funds fees. It’s a rare time when adding zero to your life can really make you feel great!


I started keeping a zero number soon after I first got a checking account when I was 17. That winter, I used my debit card to buy a pair of gloves at a shop. When I got home, there was a message on the answering machine (pre cell phone days) that I didn’t have the cash in the bank, so now  I owed the bank 35 bucks (way more than the gloves cost, by the way).

I was appalled – I got that hot-faced, tight-stomached combination of ashamed and pissed off. Not to mention my whole family got to hear about my financial blunder over the answering machine.

How could I have been so negligent?

I immediately returned the gloves for a refund, searched my room for loose change and birthday money, and paid my fee with the resolution to NEVER let that happen again.

My hands may have been cold that winter, but my heart was burning hot for financial security!

Since then, I’ve always kept a designated bit of money in my checking account to absorb an unexpectedly high expense or a lack of oversight like the gloves incident. I would treat that designated balance as if it were zero, hence zero number. It’s been adjusted over the years as needs, expenses, and income change, but I’ve always been committed to never allowing my balance to dip below a certain threshold. If I did, I’d feel that same hot-faced feeling, but at least I wouldn’t have to pay a fee.

Incidentally, I’ve since always turned off overdraft protection on my accounts (where the bank draws from your savings or floats you a loan to cover a purchase), but having a zero number makes overdrafts irrelevant anyway. It also takes a lot of pressure off. No more micromanaging your balance – sweet!

When I was first starting out, it was $100. In college, I increased it to around $700. Now, married with a new baby, we like to keep $10,000 as zero.

Zero to Hero

So why do you need a zero number and how do you set one?

First, a zero number keeps you on track. It makes you consciously build a cushion in to your banking and your mind. It also makes you remember how much work went into building it, and therefore helps you stay on top of your account balances. It makes the numbers on your balance sheet feel more real and tangible.

Second, keeping zero number banishes a lot of anxiety. When Zero’s not zero, you’re not flat-out broke if you “run out of money.” That leads to easier decisions, less stress, and better nights’ sleep.

Finally, a zero number gives you a feeling of preparedness – you can handle a little turbulence without facing financial ruin.
I like to treat setting your zero number and fattening that cushion as the first step to making a security fund (a set-aside chunk of money equal to 3+ months’ worth of expenses). Because it trains you to not spend money, and re-orients your finances in a tangible way, it’s great practice for filling up the security fund.

Seeing the cushion grow over time is also really satisfying.

So how to set a zero number. Take a look at your last few bank statements. What was the biggest expense? Take that as a guideline – how much would you need to have to handle another expense of that magnitude? I

n 2016, the Federal Reserve Board found that 47% of Americans can’t cover a $400 emergency. That’s a little scary. I don’t want you to have the stress of being a mere $400 away from flat broke. With a zero number set and a security fund in place, you’ll have way more than $400 between you and financial disaster.

Like I mentioned, when I was 17, my zero number was $100. My biggest expense at that time was probably a $75 tux rental for winter formal, so I figured a hundred bucks would be enough to cover my back if I got a little carried away. Later, when car maintenance, college bills, and pizza night became more pressing, $1,000 made sense. Now, if I had to replace a vehicle overnight, pay big health insurance deductibles, or make a major home repair before insurance got around to ponying up the cash, $10K makes sense.

The zero number is your hedge against uncertainty, but its not the same as saved money, like your security fund or other set-aside savings. I read an article called “the power of zero” where the author asks “how many zeros would it take to stress you out?”Would $10 going missing from your account cause your plans to crumble? Would a gas station putting a hold on $100 bring you to ruin? Or would it take a crazed $1,000 issue to keep you from resting at night?

The more zeros it takes to shake your peace of mind, the more financially stable you are, and the less stress you’ll carry around. This is where the zero number comes in, giving you more leeway, flexibility, and agility with your money.

Your zero number is an added layer of security. It lets your budget be more accommodating of fluctuating prices and events. When my wife and I were tracking every dime, furiously line-iteming everything in our cash-flow plan, we would lament when the price of carrots suddenly spiked from one week to the next.

With the added flexibility in your cash-flow plan the zero number provides, the stress over an expensive carrot busting your budget goes away. You can absorb those kinds of costs without a freakout, being mindful that you can easily adjust your spending in the coming week to replenish your zero number. It’s a more fluid and practical way of dealing with budgeting and cash flow management, because life’s little hiccups makes it difficult to know with certainty if your projected budget will do the trick.

Saving Vs. Not Spending

Remember, though, that a high zero number is not your emergency fund. There’s a difference between saved money and not-spent money. Saved money is on purpose, but not-spent money is extra. It may seem like semantics, but I believe there is a clear difference.

I like to think of it this way: Money you save on purpose is already spent – it has a goal, it’s for something specific. It could be for a vacation, a yearly insurance premium, or for car repairs – it’s earmarked for a particular thing. Emergency fund money, for example is earmarked for dire circumstances that warrant extra protection – like your own self-insurance policy. In that sense, saved money is already spent, even if the event that causes it to be spent hasn’t happened yet. It’s like the accelerator in your car. It takes a conscious effort to apply it if you want to stay on the road. Saved money requires conscious application to keep you moving

Not-spent money on the other hand, is money that doesn’t have a specific goal in mind other than absorbing the typical ups and downs of life. Like the suspension on your car, it provides you with a smoother ride through life. It makes the peaks seem higher and the valleys seem shallower. You don’t know what you’ll need it for, and it comes into play unconsciously. You don’t need to think about the suspension for it to do it’s job correctly like you would with the accelerator.

For example, when you save up for a new vehicle that money is designated for a specific thing, and you know that when you reach the time to buy, that money will be gone. That’s why I always recommend moving saved money out of  your checking account (saving requires action, which requires a transaction). You make a transaction to move it, signifying it’s left your pool of available money. Not-spent money stays in your checking account and remains part of your pool of available money.

In that sense, saved money is formally regulated by where you put it, while not-spent money is self-regulated.

Adding to Zero

So, in order to avoid stress, overdraft fee nonsense, and facing being broke over a pair of gloves, a zero number is great way to view your money in a secure and prepared way.

This week I encourage you to take some time, look over your bank statements, and set a zero number for yourself. In the coming months, make an effort to build that number up to a point where it could absorb an unforeseen event, making your ride smoother. Also continue allocating money to your security fund, putting you even farther away from disaster.

As your needs and expenses change over time, re-evaluate if your zero number is doing it’s job, and make adjustments when necessary.

Let me know what you think of zero numbers in the comments. I’d love to hear your ideas about saved vs not-spent money as well.

Until next time,
Do Brave Deeds and Endure!
– Ben

If you’re looking for a hand building up your zero number, freeing up your income by paying off debts, or beefing up your security fund so you can do more of what you love without stress, I invite you to consider personalized financial coaching. I’ll be your guide on how to best allocate your hard-earned money as you go from setting a zero to financial hero. Click the button to learn more about how we can accomplish some amazing financial feats together!

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