So I follow a zero-based envelope-esque budget and really find it is the best way to keep everything on track. One clarification is a zero-based budget means every dollar of income is assigned to do something ( spend or save) its not about the spending. So I would modify your initial equation (income-expenses-savings = 0) The other rule would be, you don’t spend the dollars you have not received yet. Or in my case, I can only spend the amount I have in my envelopes today.
A few thoughts based on your initial scenarios.
Scenario 1: You will absolutely have months that you go over your planned budget and or envelope amount. that’s just the real world. However, instead of just figuring it will work itself out over the year, I find the difference from another envelope or category to cover the amount. Leaving it for future dollars is a way to get your future self in trouble. At the end of the month ( or sooner) just find a other category and move it to gas to get yourself to zero. if you have extra n gas next month, move it to another category ( like savings, vacation fund, or investment)
Scenario 2 - As I said, settling up at the end of the year is too late. you can put yourself in a world of hurt over 12 months.
Scenario 3 - if you have unplanned income or one-time unplanned expenses, you just need to adjust it form somewhere. In my mind it is the same as Scenario 1. I do have an envelope with $1000 assigned for unplanned stuff.
Scenario 4- I agree that the Tiller sheet is a bit confusing when it comes to savings and allocating savings vs true expenses. But at the end of the day if you follow (income-expenses-savings = 0) then it all works out. Think of transfers as just that a transfer from one account to another. They should always zero out and thus should be part of your (income-expenses-savings = 0) equation.
Like I said I find the Tiller Sheet doesn’t work for me in this area. This is why I have build a different sheet for Zero based Envelope that I have posted before on on Tiller. New Envelope Budget v. 2.0 Released for review
Here I have adjusted the sheet to meet a true envelope style zero-based budget. However, it still works with all other Tiller Foundation Sheets.
However, I am about to release brand new version that make everything even better. I will post link below where you can download the sheet for Free. But you can view the past version to see the current release and the documentation.
For Scenario 5 - Think it is smart to have some money for unplanned stuff. however, I think budgeting $1000 each month is a bit excessive. My concern is it will give you the impression that you can just spend more and know you can cover it. This may take away form the whole reason to budget anyways. Instead, I do this. Keep $1000 in an unplanned category. use it if you need to cover unplanned expenses , but… make yourself a deal that your going to take any left over money and save it for Mexico or your apple watch or whatever you want. At least you will have an incentive not to over-spend. Honestly having a reason for not having that Latte is a great way to save.
Like I mentioned earlier, I have rebuilt my Envelope Sheet to meet a true zero-based envelope system. I have posted several version on Tiller and I know that many users still use it as we talk about it regularly I have recently rebuilt the whole system and am excited to do a pre-launch right now. Here is the link to it.
Ultimate Envelopes v2.2 (gumroad.com)
You just need to register with your name and email and the link will be sent to you. 100% free I promise. It will meet your needs for both envelope and zero based budgeting. Here are a few screen shots.
Please take a look and let me know your thoughts.
Rich