Zero-based budgeting (ZBB) is a budgeting approach where every dollar of income is assigned a specific purpose aka “every dollar is given a job” and the point of using a ZBB is to ensure that total income minus total expenses(including savings) equals zero.  This can be a very effective way to manage your money especially if you’re trying to pay off debt.  Here’s essentially how it works.

​1. Income:

• Start by determining your total income for the month. This includes all sources of income, such as salary, bonuses, side hustles, and any other earnings.

2. List Expenses:

• Create a list of all your expenses. Categorize them as fixed (rent/mortgage, car payment) or variable (groceries, entertainment, utilities). 

3. Assign Every Dollar a Job:

• Allocate your income to cover each expense category until you reach a balance of zero. You can prioritize essential expenses first and then allocate the remaining funds to discretionary spending, savings, debt repayment, or other goals.

4. Review and Adjust:

• It’s crucial for success that you regularly review your actual spending against the planned spending. If there’s any left over you can decide to put it towards savings or debt repayment. If expenses are more than your income, here is your opportunity to make adjustments, such as cutting discretionary spending or finding ways to increase income.

5. Track and Monitor:

• Keep track of your spending throughout the budget period. Monitoring your expenses helps you stay accountable, it creates awareness and you can make adjustments as needed and this sets you up for success. Many people use budgeting tools, apps, or spreadsheets to make this tracking process easier.
• If you’re ready to start a renewed sense of purposeful money management join us for our FREE in-person Budget Mastermind Class where we will take you through step by step how to create your own ZBB!