Zero-based budget
Training 155 minuteszero based budget
You are 28, a software tester earning $4,000. You do keep a budget, yet every month $300 to $400 vanishes. Let us try zero-based budgeting: every dollar gets a job in advance.
Training goal: Give every dollar a job
▶ Play this trainingSituation
- Leave it as a monthly buffer
- Add it to fun since it is left over
- Assign it: $200 to savings, $150 to a trip
- An "annual bills" line: $95 a month
- Pay in that month by cutting everything else
- Switch to monthly billing with a 12% markup
- Pay by card, leave the budget alone
- Move $90 from fun to misc
- Skip the repair, buy coffee out
- Copy last month’s plan, leave the bonus in the account
- Assign all $4,600 from scratch
- Spend the bonus, keep the old plan
What you will learn
- Income minus plan equals zero: every dollar has a job
- Divide annual bills by 12 and save ahead
- Move money between lines, but keep the zero balanced
Your real-life step
Take this month’s income and assign every last dollar: bills, food, goals, fun. The total left should be zero.
Questions and answers
What is a zero-based budget?
A method where you assign all of the month’s income to categories in advance, savings included. Income minus assigned equals zero.
Does zero-based budgeting mean $0 in my account?
No. The zero is on paper: money assigned to savings or future bills still sits in your accounts waiting for its job.
How does zero-based budgeting compare with 50/30/20?
50/30/20 sets broad proportions, zero-based budgeting assigns every dollar. The first is simpler, the second more precise.
More trainings in this module
- How to make a budget
- The 50/30/20 rule
- Expense tracking
- Envelope budgeting
- Family budget
- Irregular income budget
Numbers are illustrative. A game, not financial advice.