Wants – Includes new clothes, dine-outs, subscriptions, hobbies, entertainment, memberships, travel, dates, and vacations.Needs – They include rent/mortgage, transport, food, groceries, household products, medication, insurance, utility bills (electricity, gas, water, and phone/internet costs), and loan repayments.The expenses section, on the other hand, features these five sections: The income section on the left of your spreadsheet should include the following: It allows you to make adjustments every month to suit your money goals.īefore I can explain the ZBB process, let me clarify what needs to go in the income and expenses section so that you can balance the two.
You usually have dissimilar money goals every upcoming period – If you often have a different financial goal every month or after every three months, ZBB will work for you.
You don’t like restrictive category budgeting – If you don’t like anyone to dictate how much to spend (in terms of percentage) on a given category, such as needs, wants, and savings, ZBB will work for you. Whether starting an emergency fund, tackling debt, or taking up a new personal finance course, you can create a room with ZBB. You’ve short-term money goals – If you want to achieve a particular financial goal in a month or two, a ZBB can help you. You want to give a job to every coin you make (stay accountable) – It’s not easy to account for every coin you make without a budget, but a ZBB makes that possible. All you’ve to do is ensure you give a job to every coin you make, and the difference between take-home income and expenses should be zero. You are very new to personal budgeting – a ZBB works best for guys who’ve never budgeted or are in the early stages because it’s pretty straightforward. Generally, a Zero Based Budget is good for you if: Here’s a simple formula for making a Zero Based Budget, also known as a Zero-Sum Budget:Īll income (after tax income + bonuses) – All expenses (fixed & variable +savings) = Zero Who’s Zero Based Budgeting for? And when you deduct the expenses from the take-home, the difference should be zero. With it, you spread your income across expenses, savings, investments, debt repayments, and every other category that requires you to spend money.Īt no particular time does any of your shilling lack a purpose. Zero Based Budgeting is a budgeting method that requires you to give a job for every shilling and cent you make. Let’s jump into it! What Is Zero Based Budgeting? Here’s what to expect to learn about this budgeting system:
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