Finance, Get Out of Debt, Save Money

Zero-Based Budget

How to start a Zero-Based Budget

Most people are super scared of the word budget. The word budget is often a dirty word in many households because people feel like a budget is going to suck the fun out of everything. It’ll be a hardcore fun sucker. This just isn’t the case. A budget doesn’t have to remove the fun from your life but failing to plan for fun in your budget can. A Zero-based budget allows for you to plan for everything you want to do and all of your financial goals. It’s a great place to start!

What is a Zero-Based Budget?

The Zero-Based Budget is an easy to use budget where income – expenses = zero. Sounds simple right? When working with a Zero-Based Budget you take the time at the beginning of every month to plan where every single penny of your income will go. This sounds kind of daunting at first but don’t worry, it isn’t hard. It’s so easy. This budget is literally just planning where you’ll spend your income before you get your hands on it. It really helps to be able to start saving and be a better budgeter!

How does a Zero-Based Budget work?

The first step to a successful Zero-Based Budget is to estimate your total income for the month. You need to add up all income, this includes any government cheques that you will be receiving in the month, any child support that you may get. If you live on an irregular income, you plan based on your average income for the past few months and make your way down the list from most to least important.

Zero-Based Budget Categories

The next step would be to figure out which expense categories you’ll be working with. There are just a few groups of categories that can happen. You’ll have your needs which will include housing, utilities, groceries, and childcare. You’ll have your wants which will include eating out, pocket money, your cell phone bill, gift giving, etc. You’ll have a transportation category which will include your car payment, gas, insurance, a bus pass, or taxi money. Finally, you’ll have your saving and debt payment category, which includes building your emergency fund, paying back student loans or credit card payments, and savings accounts.

You’ll need to take every single thing you spend money on and put it into one of these categories! Sounds simple right?

So at the beginning of each month, you’re going to list all of your expenses for the month and assign them a monetary value. These values are going to be different for every individual person! Every month your budget is going to be adjusted because no two months are the same. One month you may have a cash increase and you’ll be able to save more. The next month you may have 5 birthdays to deal with and your gifting budget will be higher. It varies.

If your expenses are higher than your income you have two choices. You need to either increase your income or decrease your expenses. If your expenses are lower than your income you need to assign the rest of that money to something.

Benefits of a Zero-Based Budget

A Zero-Based Budget gives you complete control over where your money goes. You can change the categories at any time when your circumstances change and add in things when you need to have a little fun. You can add a travel fund and go on a trip. It’s all up to you. This budgeting system eliminates overspending and impulse purchases because every single penny has a value and a place where it goes so you can’t just go to the store and spend $15 on chocolate and ice cream even if you think you deserve it. It has to be in the budget. This budget really allows a person to prioritize their expenses and not their needs. Gets you closer to your goals! 

It’s possible to run a Zero-Based Budget on paper, or you could use the website/mobile app Every Dollar.

An Example of a Zero-Based Budget

So, Meredith Grey (Yes I’m a huge fan of Grey’s Anatomy) is a doctor who makes $5,000 a month. (Yes, I know she makes way more than that but this is an easy number to work with!) She has 2 kids and she’s a widow, so everything is on her. She decided to start a Zero-Based Budget so she doesn’t have to think about where her money goes at the end of a long workday saving lives. 

Meredith has always been scared of disaster because bad things happen around her, so she builds her emergency fund every month. She has student loan debt from medical school and some credit card debt from when her husband died. Other than that she’s pretty normal. Zero-Based Budget Example

As you can see from month to month there are small changes to the budget. One month Meredith ate out to celebrate Alex’s birthday and the next month decided not to eat out at all but she did throw a party so her groceries went up a bit. She also started carpooling with her sister’s so her gas prices went down a bit. She had a few more gifts to buy in February so she allocated more money toward Gift Giving. Every month is different and these things are going to change a bit from month to month so Meredith plans for it. 

Is a Zero-Based Budget right for you?

Chances are this type of budget will have you experiencing some growing pains in the beginning. It’s hard to start a budget when you aren’t used to thinking about your money. It’s super important to start thinking about it so you can build your future. This budget could be the key to getting you out of a paycheck to paycheck lifestyle. It will help you build a future where you’re able to organize everything and be a better spender! If you’re looking to start a new budget system it’s super important to start somewhere and this could be the key for you. 

If you’re looking for a more loose kind of budget to look into, consider the 50/30/20 budgeting system which you can read about here.

Is The Zero-Based Budget The Answer To Your FInancial Troubles? | Budgeting is so important when you learn how to become financially free. Budgeting can help you learn how to cut expenses, how to save money, and will convince you that you need to start saving more money! #Budget #money #finance

If you have any questions about how to get this process going for you, let me know in the comment section below. I’ll be sure to help you out. Thank you so so much for reading and be sure to share this post on Pinterest or Facebook so your friends can see it too! 

xo Taylor 

Hey! My name is Taylor O’Halloran and I’m a huge fan of saving money any way I can.I’m obsessed with dogs and I love all kinds of cheese even though my stomach hates it.  I’m a recent university graduate who just wanted to do her own thing and see what happens! Follow me on the journey!

Taylor O'Halloran

Hey! My name is Taylor O'Halloran and I'm a huge fan of saving money any way I can.I'm obsessed with dogs and I love all kinds of cheese even though my stomach hates it.  I'm a recent university graduate who just wanted to do her own thing and see what happens! Follow me on the journey!


  1. katerina says:

    Thanks Taylor. Great article, easy to understand and to implement. I will try it immediately, and let us hope it will help me put things in order.

    1. Taylor O'Halloran says:

      Thanks for reading!! I hope it helps

  2. This was a good read! It is an interesting way to set up a budget.

  3. Thanks for sharing! I am excited to try it out!

    1. Taylor O'Halloran says:

      I hope it works for you!

Leave a Reply

Your email address will not be published. Required fields are marked *