What is zero-based budgeting? How can I use it?

Learn how to give every dollar a job with zero based budgeting.

Zero based budgeting assigns every available dollar to a particular program or project — and it’s become popular for personal budgeting for that reason. Allocate every dollar to a spending or saving category with zero based budgeting and work toward your financial goals.

Zero based budgeting 101: getting started.

With a zero based budget, your income must equal your expenses every budgeting cycle — no leftover money or deficits allowed. Follow these steps to build your zero based budget:

  1. Calculate your monthly income. Your monthly income is what you build your zero based budget off of. Knowing how much is coming in each month tells you how much you need to allocate.
  2. Log your monthly expenses. Add everything you spend in a month. It’s helpful to categorize this, and then subcategorize. For example, start with fixed monthly expenses: rent/mortgage, car payment/insurance, subscriptions, loans, phone bill, utilities, internet, etc. Then, your living expenses: groceries, pet expenses, gas, and so on. Keep going by category, until you’ve categorized everything you’re spending on. Allocate your income to these categories.
  3. Move on to your long-term expenses. What upcoming expenses can you start planning for now? Holiday shopping in December? A vacation in February? A house down payment in five years? Write down how much you plan to spend on these upcoming expenses, divide by the amount of time you have until then, and that’s your monthly budget allocation.

Set your zero based budget.

Allocate your income to all of your established categories until you get it down to zero. The goal is to fill your categories so that you can plan and allocate ahead. Build your zero based budget with a PDF template in Excel, by hand, or with the assistance of a budgeting app to get on track.

And discover what more you can do with Adobe Acrobat and Acrobat online services to build your most effective budget with digital tools.