A budgeting method where every dollar of income is assigned a purpose.
Zero-based budgeting is a budgeting method where you allocate every dollar of income to a specific category (savings, rent, utilities, groceries, entertainment, etc.) until you reach zero. The "zero" refers to income minus expenses equaling zero, not leaving money unaccounted for. Zero-based budgeting forces intentional spending and prevents money from disappearing. Steps: list all income, subtract all expenses in priority order (needs first, then wants, then savings), ensure the total equals zero. This method helps identify overspending, ensures savings goals are met, and makes you think about every dollar. Zero-based budgeting is more time-intensive than percentage-based methods (like 50/30/20) but offers precise control. Apps like YNAB (You Need A Budget) facilitate zero-based budgeting tracking.