What is Zero Based Budgeting and How Our Free Tool Can Help

What is zero based budgeting?

Zero based budgeting is a budget technique in which you start with your total income, subtract all of your expenses and end up with zero remaining. The idea is that instead of allowing time and your money to decide where to go, you make the decisions where to spend it. This is a wonderful technique for family or personal budgeting. It may sound strict at first, but give zero based budgeting a chance and you won’t believe how freeing budgeting feels.

How our free tool can help…

So let’s get started! The night before your pay check arrives; you sit down and make a plan for how to use that pay. You get on your favorite internet device and head over to Free Zero Based Budgeting’s free budget tool.

It’s important that you make your plan before, or in the case of variable income, as soon as, your income arrives. The nice thing about our budget tool is that you can pick any date as the start date of your current pay period. I know that there are so many variances in how and when people get paid. Our simple tool handles this as plain as it gets. Pick a pay period start date and go from there.


For income, add up all income that you know is going to come during this pay period. So if you get paid on every other Friday but also get a rent check in on the next Monday, count both as income for this pay period.

Friday get pay check for $1798.41
Monday get rent check for $950
Total Income for Pay Period = $2748.41


Now to the fun part, spending all your money! Well not exactly. When I say expenses I mean everything and I’m including saving for retirement, a new car, or your kid’s education. Saving is integral to every financial plan so it’s important that you are conscious of saving and include it into the budget along with everything else.

Currently our budget tool includes some default spending categories. I know that not all categories apply to every person. We wanted to start with a good basic set that would work for most people. In the future we are going to add the ability to customize your categories for all our registered users.

Instead of talking through how our example expenses might go, I’ll let the following screen print do the talking.

If you look at the expenses, you will see that I have set aside savings for retirement, emergency fund and home repairs. The rest of my expenses such as mortgage payment, cable, electricity, phone, etc. are also included. Remember, the idea in zero based budgeting is tally up everything and end up with zero at the bottom. By doing this before our money arrives, there is little thinking involved the rest of the pay period. You already know where your money should go.


After all entering all expenses, we can look at our totals. The Money Remaining should equal zero. If it’s less than zero, you need to cut something back. If it’s more than zero, add more to your emergency fund or retirement. Or add it to a savings account for new furniture. Or simply add it to your spending money or “blow” money as Dave Ramsey calls it.

The point of all of this is that you are now consciously deciding where every cent of your money should go. If you decide to spend 100% of it on golf balls and beer, you can do it. I don’t recommend it personally, but you can. It’s up to you.

In The End

I’m not going to pretend that zero based budgeting is an easy concept to understand at first. It seems so strict and inflexible. I’m here to show you that it’s not. It’s the opposite of everything you are thinking. Since my wife and I started using this technique, we are free of all the instant decision-making about spending money. The decisions are already made. So now rarely do we ever think about money after making our budget.

There are times where the budget adjusts mid-stream and our actuals do not always match cent for cent. That is ok. The main thing is that we have a plan to start with.

In upcoming posts, we are going to discuss in more detail issues such as variable income, variable expenses, how to adjust and adapt mid-stream, etc. Look for these articles to help teach you more about zero based budgeting and how it can work for you.

As a last note, know that it can take a while to get used to the concept. It took my wife and I at least 3 months to figure out exactly how this technique could work for us and now we wouldn’t have it any other way. Give it a shot. It can’t be worse than what you are doing now, and even if it is, you can always go back to the old way.

Have a good day, make good money decisions and come back for future education about zero based budgeting!

About Kevin Jones

I am the owner of KJW3, LLC and the producer of Free Zero Based Budgeting. I enjoy learning and spreading knowledge about personal finances and zero based budgeting. Please enjoy our blog and zero based budget tool.
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6 Responses to What is Zero Based Budgeting and How Our Free Tool Can Help

  1. Pingback: Variable Income | Free Zero Based Budgeting Blog

  2. Terri says:

    Thanks a TON! :-)

  3. Dan says:

    Hope this isn’t your real budget… $80 to out to eat and $20 to tithes???

    • Kevin Jones says:

      While this isn’t exactly my budget, it is at least similar. I have 3 young kids and a single income. We don’t go out to eat much at all. Mostly cook food at home.

      As for tithing/charity, I would love to give away more. We give what we can for now. Really what we do is save up over several months and then donate a larger amount to a charity of our choice.

  4. lorena929 says:

    This look great-just want to delete catagories or add categories. I’ll check back later. Thanks for doing this!

    • Kevin Jones says:

      Thanks for the feedback. You can edit your categories by creating a login for the site. Then when you login, you’ll see a settings options which allows the customization of categories.

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