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A budget is crucial to your financial success. A lack of a budget is the equivalent to taking a road trip and not having a map. In the way a map tells you where to go, a budget will tell your money where to go. If you don’t get in the habit of telling your money where to go, it will typically disappear with nothing to show for it.

Contrary to stigma, a budget is for everyone. If you live paycheck to paycheck, you need a budget. If you are a 6 or 7 figure earner, you need a budget.

A budget is a way to break poverty cycles or leave a significant inheritance for your kids.

A zero-based budget is just one budgeting method to consider.

When you work through a zero-based budget, your goal is to have your income minus expenses equal to zero. You need to assign every dollar to a category in your budget.



Zero-Based Budget

1. Start With Your Income

Grab a pen and paper or use an app like EveryDollar if you prefer technology. Opting for the pen and paper in the first few months of your budget will force you to pay closer attention to your money. Apps are great, but with automation, the details can get lost.

Start by writing down every dollar that comes into your household. You want to add up the income from your job, small business, side hustle, residual income, and child support.

2. Monthly Expenses

Next, you will want to list all your monthly expenses. Here’s what that may look like for you:

  • Rent
  • Groceries
  • Transportation (Vehicle Loans + Gas)
  • Utilities
  • Cell Phone

These expenses can be subject to change. For example, if you have a weekend trip planned you might need more of your budget allocated to gas for your vehicle. Or if you happen to use more cell phone data, your bill may be larger due to upcharges. You will need to calculate your expenses every month.

How To Create A Budget: The Ultimate Guide

Clueless when it comes to setting up a budget and sticking to it? This guide to budgeting will help you figure out what you should be budgeting for and gives you no-brainer methods for tracking your monthly expenses.

3. Seasonal Expenses

After you list all your monthly expenses, you will want to move on to your seasonal costs.

Here are a few examples of seasonal expenses:


  • Property Taxes (if not escrowed into your mortgage)
  • Vehicle Registration
  • Vehicle Maintenance (oil changes, tire rotations, etc.)
  • Housing Maintenance (furnace or gutter cleaning, etc.)
  • Insurance Premiums (if not paid monthly or escrowed into your mortgage)

4. Subtract Income From Expenses

Now that you know what money is coming into your household and you know what money is going out in expenses you will need to subtract the two. When you deduct your income from your payments, you will see if you have any money left over or nothing at all.

The goal is to get your calculation equal to zero.


5. Track & Go

When you have budget categories set up, you will need to track your expenses to be sure not to overspend in a group. If you happen to overspend in one category, you will need to take funds from another category to keep your final budget balance at $0. An easy way to track your expenses is with an app like Mint or EveryDollar.

You are tracking your expenses because it is an important step that will help you stay on track. You may think that you can set your budget and forget it, but it takes a little more work than that. Tracking spending gives you valuable insights into where your money is going. You may find you are spending a lot more in certain areas than you ever imagined. This observation will set you up to make adjustments in the following month that align with your end goals.

Irregular Income

If you are curious if you can use a zero-based budget with your irregular income you will find that it’s completely doable. Merely use a low-income generating month as your baseline. Make it a priority only to pay your necessities first. These would include the expenses like keeping the roof over your head, food on your table, clothing on your back and transportation to get you around. Pay remaining bills with any other income that comes in.

More Money At The End Of The Month?

If you have money left you will need to decide where you want that money to go. Take a look at your financial goals. Does it make sense for you to use the extra cash to pay down debt faster? Or maybe you would like to save for your kids. The extra money could go into a savings account.

Why Is A Zero-Based Budget So Important?

A budget is the quickest way to reach your financial goals. A budget gives you more freedom to eliminate debt or save more for a nest egg and retirement. Most people believe a budget to be a restricting burden that will take the fun out of life. However, having one will help ditch the poverty mentality that keeps most people broke for generations.



Owner @ Freestyle Boho