Articles, lifestyle, self help

How To Create A Zero-Based Budget

So you’ve finally decided to budget, huh? If you’re anything like me, this will be the millionth budget you have made because following a plan is ridiculously difficult for some reason.

A zero-budget is a budget that assigns every dollar you earn a “name”. You put every dollar you have in a certain place with a label to ensure you spend it WISELY. After you name every dollar you earn, you will be left with $0 floating around. THIS IS YOUR GOAL.


  1. The first thing you need to do is create a rough draft of all incomes and payments.

***My monthly expenses this month do not include bills because since I am starting college in a different town and living at home and have a job in another different town, the gas price gets pretty high and so my parents said they will spot my car insurance which is $60 and my part of the phone bill which is $5. I do not pay any other bills because I still live with them, but during summer months I pay a share of the bills including my own. Because I don’t pay any bills this month I compensated by putting more money away in my different money funds.***


For each month this is my goal of money to put away.

***Gas, food, and Christmas I will take out every pay period instead of out of the first paycheck a month.***

This month I took out $50 each for my save fund and my vacation fund, leaving those set for the rest of August. Because of this, next pay period in August I will take out $50 dollars each for two other monthly funds, such as my car fund and my future-bills fund, and I will still take out money for my set pay period funds (i.e. gas, food, and Christmas). Every pay period I will alternate what monthly funds I put money into, while always taking out money for gas, food, and Christmas.


For my August 1st payday it brought my bank account to $400.84. I work at family video and my hours are always changing, schedules are made weekly, and my paychecks can range anywhere from $45 to $450. BECAUSE OF THIS I MAKE A BUDGET TO FIT EACH PAY PERIOD. If you have a set pay rate go ahead and make a monthly budget. Don’t follow my exact budget, this is tailored to the money I make, just follow the structure.

2.  You must subtract all expenses out of your total and make sure you end up with $0 left in the budget. If you have money left over, then subtract it and give it a name; stick it in another category. (Ex. how I placed the remaining money in a shopping fund on my checking account)


What’s wrong with this budget is after I take out all of my expenses for this pay period, I have $100.84 left. The point of a zero-based budget is to give EVERY dollar a name. When every dollar has a place to go then you are able to fully manage your money and spend it correctly. If you have odd dollars floating around then that can leave room for failure.


The $100.84 I had left I decided to put into my checking account as a shopping fund. I can buy whatever I please with this money as long as I do not over draw my account. After I completed this I went to the bank and I withdrew $300 in six $10 dollar bills and twelve $20 dollar bills to allow for me to place fifty dollars into each fund that I will contribute to for the month of August and for this pay period.

Next pay period, my direct deposit may only bring my account up to $200 because I haven’t had a lot of hours these past couple weeks. Because of this I will adjust my budget that still meets my pay period needs since I took care of my monthly dues right off the bat. This means my shopping money may be reduced, but that is okay. I would rather have less money to blow on whatever than to not be saving/managing any.

After I get home I instantly place $50 into my envelope funds that I assigned for this month and pay period. If you haven’t heard of what an envelope fund is, let me know if you would be interested in reading an article on how to create one! It is another great tactic on saving money and spending it wisely. If and when I create an article on envelope funds, I will have the article linked in this one.

If this article is helpful let me know, and if you have different ways of managing your money, go ahead and write it in the comments; I would be interested to hear it!


8 thoughts on “How To Create A Zero-Based Budget”

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