How To – Zero Based Budgeting

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Zero-Based Budgeting, Extra Income, Financial Freedom, Save Money, Budget, Template

Have you ever created a budget?  Zero-based budgeting, or sometimes called the zero-sum budget, is a simple to use and understand budget method if you are new to budgeting.

Do you think you need a budget?  The answer to this is a resounding YES!  Everyone needs a budget, no matter what your financial situation is!

Further, if you are trying to gain financial freedom, it is imperative that you have a realistic budget.  Moreover, if you are already debt free, you need a budget to keep you that way.

What is Zero Based Budgeting?

The premise behind this budget is pretty simple.  The goal is to give every single cent a purpose.

You want your income minus expenses to be equal to zero at the end of every month.  That doesn’t mean your bank account needs to be at zero!  It just means that every dollar you earned has a purpose — savings, mortgage, vacation fund, internet bill, etc.

For example, if you make 3,000 dollars per month, you want everything you spend or save to all add up to 3,000 dollars.  Essentially, it means that you know where your money goes. 

How To Make a Zero Based Budget

1.  Track/Know Your Monthly Income

The first thing you need to know to create a budget is how much money is available, including your paycheck, side hustle income, alimony, child support, or any cash that you bring in!

If you use the Trim App to save you some money on your cable bill, then that needs to be included in your budget!

Getting that sweet Starbucks gift card from Survey Junkie needs to be tracked in any adequate budget.  Oh, by the way, you shouldn’t be drinking that expensive coffee if you want to be debt-free.  However, if you do need to drink it, then do some surveys on Survey Junkie.  I routinely earn over 100 dollars per month just casually doing surveys!

Further, use the Ibotta app to get cashback on your everyday purchases! I am on track to get 500 dollars back in my first year! That may not seem like a lot of money but it all adds up! Above all, easy money is the best money and this is EASY!

2.  Keep a Record of Expenses

Most importantly, you need to know your expenses!  Are you one of those that have no idea where your money goes?  I used to be that way for sure!

So to start this off right, you will need to track your expenses for a few months.  So far, I have completed two months of expenditure tracking.  Knowing what you typically spend creates a framework to use going forward.  Anyways, to start a zero-based budget, you can track expenses for one month and get started.

My first month of tracking my expenditures was eye-opening!  I couldn’t believe how much money we were spending in certain areas.  Check this out to see.

Don’t forget our needs will change from month to month.  You will need to write a spending plan each month or when things change.

For your budget to be adequate, you need to account for every single dollar!  Give your money a purpose and stick to that!

I recommend allocating your expenses using the 50/30/20 rule.  That is my personal favorite.


3.  Subtract Your Expenses From Your Income for Zero Based Budgeting

In the end, you want this to equal zero.  However, nobody can get this perfect the first time.

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Budgeting in general, if you have never done it, takes some practice.  We have been doing things a certain way for years, and now we are trying something new.  Think of budgeting as muscle memory and working out!

Above all, don’t worry if the numbers aren’t matching up.  It merely means we need to adjust the figures down or up as necessary!

If your spending more than you make, you need to trim the expenses.  For example, save some money on your cable bill or cell phone bill.  Also, don’t forget to cancel unwanted subscriptions!

Further, a great way to trim more is through “5 dollar meal plan”!  You need to check this out.  Simply put, for five dollars a month, they will send you weekly meal plans with grocery lists.  They are also frugal recipes, costing roughly two dollars per person to make!  There is a free trial, so you have nothing to lose.

Most importantly, with zero-based budgeting, every single cent has a name to it, a purpose!  If you are all done with everything and you have 100 dollars left over with no use, then you aren’t done!  Give that 100 dollars a purpose, or it will spend it on unnecessary things.

Add that 100 dollars to your emergency fund.  You can pay more towards your debt, such as a credit card and pay it off!  Include those kinds of expenses in your budget.  Whatever it is you do with that 100 dollars it merely has to have a purpose, and the zero-based budget needs to go to zero!

4. Track Your Plan

Now, this is where the budget makes its money.  Throughout the month, you need to track your spending.  Compare your spending to what you budgeted.

Do the expenditures match your budget?  Were the expenses unavoidable and therefore forgotten when you made your budget?

Tracking and paying attention to where your money goes is a massive step towards financial freedom.  Engagement is key to loving your life and your bank account!

Most importantly, don’t try to track this on an envelope that sits on the kitchen table (trust me I have seen this done)! Get a good budget planner and take this seriously if you want to gain financial freedom!!

Zero Based Budgeting and Irregular Income

Yes, just like any other budget, this one will work fine.  Just make a plan based on a low-income month. 

Then, if you make more income and have leftover money, again, put this in your emergency fund or pay extra towards debt.  Even go on a date night with your significant other but make sure every dollar has a home!

If it is an unexpected lower income month, cross off the things that are least important on your budget.  Just remember to get those gift cards or cash payouts from Survey Junkie to make up for those lower income months!

Is Zero Based Budgeting Important?

Are you trying to gain financial freedom?  If yes, then having a budget is essential!

Are you trying to save up a nest egg?  You need a budget (spending plan) to achieve this goal much quicker.  Are you trying to save up at least two months of salary for an emergency fund and pay a bit extra to debt?  Then you need a budget, and I suggest at least trying to zero-based budget!

Also, keep in mind a budget doesn’t limit your freedom.  It allows you even more freedom in your spending and makes your money go further because you are NOT spending on unimportant things.  Your not spending on the things you “want” as often as you were!

Advantages and Disadvantages of Zero Based Budgeting


This budgeting system is fully customizable and fits almost any financial situation.

Zero-based budgeting, or for that matter, any budgeting method keeps you aware of where your money goes, which also prevents you from spending money you don’t have.

You can plan for stuff you want and not have to sacrifice!


Zero-based budgeting is very time consuming and requires daily monitoring!

See Cheap Tasty Meal Plans!

Variable expenses pose a problem.  Accounting for these in a zero-based budget is problematic.  The way to combat this is to create a separate savings fund strictly for those variable expenses to better plan for them in this budget.

To sum up…

Above all, try a budget out.  Try zero-based budgeting, and if it doesn’t work out, try a different budget method.  Trust me; if you budget your money effectively, it will make a world of difference.

Remember, there will be some growing pains when initially doing a budget.  Stick to it and make it a habit!

Click here to download a budget template.

YOUR TURN – Do you use a household budget?  Any advice for people that are new to budgeting?  Let us know in the comments.

Survey Junkie

4 thoughts on “How To – Zero Based Budgeting

  1. This is a great read!

    It’s similar to the strategy I used to pay off my car and credit cards.

    I agree with you that it can be a little time consuming to track every single penny you spend on a daily.

    But having a budget is what’s helped me reduced my monthly expenses down to $450 while I scale my business.

    Definitely sharing this. People need to understand that having a budget isn’t about missing out on the things you like, it’s about not overspending on unnecessary things.

  2. Amazing post and very timely for me. I came across it this morning and I had just downloaded the YNAB app! Seriously need to start accounting for all my spending so I can start saving and get out of debt!

  3. Great info. I have never considered using a zero based budgeting system. Our process has always been a more hands off approach with a high level monthly review. This might help tighten up the budget a bit.

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