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Everything You Need To Know About Zero Based Budgeting

Updated: Mar 27, 2022

This guide will tell you everything you need to know about ZBB (zero based budgeting).

$10 bills


+ What is Zero Based Budgeting?
+ How does Zero Based Budgeting work?
+ How do you complete a Zero Based Budget?
+ What are the advantages and disadvantages of Zero Based Budgeting?
+ Where can I find a Zero Based Budgeting template?

What is Zero Based Budgeting?

Let's start with the definition. What is zero based budgeting or ZBB for short? It is a type of budgeting method where every dollar is accounted for. Think of it as you assigning a job to every dollar in your budget. This allows you to better back your expenses and to help you save money each month.

How does Zero Based Budgeting work?

At the end of each month, your after tax income should equal expenses + savings + investments (if you count this separately from savings). That means you're left with $0 at the end of each month, hence the name Zero Based Budgeting. If you notice that as you're doing this exercise, you have dollars left over at the end of the month, put those leftover dollars in a savings or investments account to ensure your money is working for you (more on this at a later time).