What it means
In a zero-based budget you assign all of your income to something: costs, savings, fun. When you have done this, there is nothing "left over" to disappear. The plan adds up to your income.
It does not mean you spend everything. Savings count as a job for your money.
How to do it
Do it once a month, before the month starts.
- Write down your income for the month.
- List fixed costs and give each a number.
- Add savings goals as lines.
- Share what is left across variable costs and fun.
- Check that income minus all lines is zero.
Who it suits
It suits people who like control and want to stop wondering where the money went. It takes a bit more effort than rules like 50/30/20, but gives a clearer plan. In Wollie, set a monthly amount for each category and savings goal, and see the plan against real spending.
Questions
Is a zero-based budget the same as spending everything?
No. Saving is one of the jobs you give your money. The aim is that no money is unplanned.
What if my plan does not match reality?
Adjust it. Look at what happened, change the numbers for next month, and keep going.
This guide is general information, not financial advice.