Budgeting For Dummies

Chapter 3

Zero-Based Budgeting

IN THIS CHAPTER

Establishing a zero-based budget

Exploring the advantages and disadvantages of zero-based budgeting

Determining whether a zero-based budget can work for you

A zero-based budgeting system is when you assign a job to every single dollar that comes your way. The overall goal of a zero-based budget is to leave no dollar unaccounted for. With this budgeting method, you should have a zero balance after you allocate funds to each category of your fixed and variable expenses. But that doesn’t mean that you should spend all your money. That’s not a wise move for anyone, ever. It just means that, in general, your income aligns with all your spending and doesn’t leave you in a deficit.

I love that using a zero-based budget requires you to plan. It’s a positive way to start being proactive with your money rather than reactive. When you’re reactive, you can lose considerable progress in a short amount of time, leaving you discouraged. When you train yourself to think ahead, you find the process getting more manageable as you go.

Never allow your ...