Zero-Based Budget
A budgeting method where every dollar of income is assigned a specific purpose
What You Need to Know
Zero-based budgeting requires you to justify every expense and assign every dollar of income to a specific category. Unlike traditional budgeting that starts with previous spending, zero-based budgeting starts from zero and builds up based on current needs and goals.
Key Principles:
- Start from zero each month
- Justify every expense
- Assign every dollar
- Focus on current needs, not past spending
Benefits:
- Eliminates wasteful spending
- Forces you to evaluate every expense
- Aligns spending with current priorities
- Prevents budget creep
Example: Instead of assuming $200 for dining out, you decide each month whether you need that amount based on current goals and priorities.
Sources & References
This information is sourced from authoritative government and academic institutions:
- consumerfinance.gov
https://www.consumerfinance.gov/consumer-tools/money-as-you-grow/
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50/30/20 Rule
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Budget
A spending plan that tracks income and expenses to ensure you're living within your means and working toward financial goals.