How to Start a Zero Based Budget

What is a zero based budget?

A zero-based budget is a budget that runs on the principle of every dollar you earn having a purpose. Your income minus your expenses equals zero. It’s that easy. You bring in $3,000 a month? Every dollar of that $3,000 has a predetermined place to go. For my family, this type of budget makes the most sense. If every dollar has a place to go, it’s harder to waste money. It’s very simple.


Zero Based Budget Worksheet
Click to Download!

How to start your own Zero-Based Budget

Step One: Add it Up

Add up all your income. This is your take-home pay, after taxes and deductions.
This is easiest if your income stays the same month to month. If it doesn’t, fear not! Calculate for the lowest pay you anticipate receiving in a month. If your money is irregular, be sure to truly prioritize in Step Two. Add in things like child support, and money made from any side gigs. Every dollar you’ll bring in!.

Step Two: List it Out

Starting with your most important expenses like your mortgage/rent, utilities and groceries, list out everything you’ll have to pay for this month. From gasoline to your phone bill, from Netflix to debt payments. Include savings and also giving/donations if applicable. Every dime you’re going to spend, save, give away or invest.
If your income is very irregular, be sure to prioritize here. Order your expenses from most important to least important. For example, you have to pay your electricity bill. If you bring home a smaller check than you expected, you don’t have to pay for Netflix.


Step Three: Add it Up (Again!)

Next, add up your expenses. Now compare this number to your income. Is it less? Great! You’re in a good position!

If it’s more than your income, don’t panic. You probably knew this was going to happen. It’s okay! That’s what we’re here for. Take a look at your expenses to see where you can trim the fat. Do you need Hulu AND Netflix? Can you cancel your cable? Have you read my post  on saving tons of money by monthly meal planning? Make your changes, and lets keep rolling!

If you have no expenses you can cut, how can you make more money? There’s tons of things you can do as a side hustle! 

Step Four: Make it Zero!

If you have some extra money not allocated to a bill, hobby or savings account, awesome! Now you have to decide what to do with it. Make extra debt payments, stash it in your kids’ college fund, treat yourself to a monthly family pizza party and give the rest to charity. Whatever you want! Its your money. Use it how you want.
Just make it zero.

If you had to make some changes, re-assess. Recalculate your income and expenses, and balance them to zero.

Step Five: Stick to it!

If you only budgeted to spend $300 on food this month.. you better only spend $300! You set this budget for a reason. Stick to it.
I recommend linking your accounts with a free app like Mint or Every Dollar! You can enter in all the expenses we wrote down earlier, and the app will track your spending for you! 


Step Six: Evaluate

At the end of the month, check in. How did you do? If you’re using a spending tracker app, this will be easy to see. 
Did you spend more or less than you anticipated in certain areas? Make adjustments for next month, and keep it going. The key is consistency! Stick to your budget. You’re in charge of your money.

Do you have trouble sticking to your monthly budget, if you already have one? Are you planning to try a Zero Based budget?
Let me know in the comments below!

How to start a Zero Based Budget, with my free printable budget template! Learn how to save more money and start a simple, easy budget that actually works.


  1. October 18, 2018 / 7:44 am

    I don’t necessarily make the same amount each month, but I like the idea of a zero based budget. I think it would help me put more into savings every month if I’m thinking of it in terms of getting down to zero. Thanks for sharing!


    • kaylahaas
      October 18, 2018 / 8:03 am

      Saving is so important! Thanks for reading Lauren 🙂

  2. October 18, 2018 / 8:09 am

    This is exactly how we do our budget and it works great. There are times where we get a bit off track but its easy to correct and I love seeing where our money is really going.

    • kaylahaas
      October 18, 2018 / 8:33 am

      After trying so many different ways of budgeting, this has been the easiest and best for us too!

  3. Alexandra
    October 18, 2018 / 9:12 am

    Okay, I needed to come across this post – I need to start a budget like this badly! Thank you for sharing your tips – I will definitely be referring to your post as I set this up 🙂

    • kaylahaas
      October 18, 2018 / 11:38 am

      I’m so happy to help! 🙂

  4. October 18, 2018 / 9:43 am

    I like the idea of less wasted money by using this budget. Thanks for sharing!

    • kaylahaas
      October 18, 2018 / 11:38 am

      Thanks for reading Tallary! I hate wasting money!

  5. October 18, 2018 / 11:34 am

    I really like this idea! I really need to be more careful with my money and this may be the way to do it. Thanks for sharing all your tips with us 🙂

    • kaylahaas
      October 18, 2018 / 11:37 am

      Thanks for reading, Ruth! 🙂

  6. Casey
    October 18, 2018 / 11:40 am

    I’m always trying to tweak my budget to make it even better, so thanks for the specific and practical tips!

    • kaylahaas
      October 18, 2018 / 11:51 am

      That’s the one thing, your budgetting needs always grow & change! It’s neverending!

  7. Vickie
    October 18, 2018 / 12:24 pm

    Great info..I procrastinated budgeting for years, until approaching retirement. THEN I had to learn. Wish I had started sooner, I’m sure I would be better off today.

    • kaylahaas
      October 18, 2018 / 8:07 pm

      We want to retire early, so we’re super on top of our finances now while we’re still young!

  8. October 19, 2018 / 12:22 am

    such great tips! I appreciate the one that says stick to it. So important! Great tips for me to implement ASAP!!

  9. October 19, 2018 / 12:42 am

    I could see this as helpful for those struggling with their budget

  10. October 30, 2018 / 8:30 pm

    Seeing it all on paper makes all the difference for me. It really reduces impulse buying!

    • kaylahaas
      October 30, 2018 / 8:55 pm

      I’m the same way, April!

  11. Bailey
    October 31, 2018 / 10:21 am

    This is so helpful. I just started a new job and my husband and I need to go through and make a new budget.

  12. October 31, 2018 / 10:47 am

    Love the zero based budget. My husband and I budget our spending money, too.

  13. November 1, 2018 / 11:03 pm

    This sounds so easy in theory, but the reality of day to day life doesn’t always work out so neatly. It is a constant battle to keep the budget balanced! Great tips!

  14. November 2, 2018 / 9:59 am

    Love this post! It’s so easy now to get started online! Love your theme!

    • kaylahaas
      November 2, 2018 / 10:05 am

      I wish I’d known that people had step by step guides online before I struggled through this alone 😭 Haha! & thank you!! I’m obsessed with it!

  15. Jess
    January 17, 2019 / 3:50 pm

    I tend to be a spontaneous spender, so I think making a budget like this could really help. I go in spurts getting caught up on debt, then falling behind again. On a single income myself, it seems it really is “mind over matter.” Thanks for sharing, from one Michigander to another!

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