How to do a Zero Based Budget (Examples + PDF)

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Have you ever wondered how to make a zero based budget?

If you’re ready to start budgeting and get your finances organized, a zero based budget is a great place to start!

Zero based budgeting is the best way to make sure you are telling every dollar where it needs to go each month.

It can be a difficult process to learn, but with a little guidance, and a lot of practice, you can make zero based budgeting work for your family!

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    The easiest way to explain how to do a zero based budget is for me to actually share our real budget with you!

    I learn best when I can see actual examples, and what real people spend their money on each month.

    But first, let’s get in to some of the basics of zero based budgets…

    More Budgeting help:

    I also have a video walk through of how to do a zero based budget that you can watch here:

    Zero Based Budget Definition

    A zero based budget simply means that every dollar of your income is assigned to an expense item.

    Nothing is left over at the end of the month.  Zero.

    Except, instead of panicking that there’s no money left, there is nothing left over because you planned it that way!  Not because you’re crazy stressed about money and living paycheck to paycheck.

    In fact, once you start using a zero based budget correctly, you will be amazed at how you actually feel like you just got a raise.

    Zero Based Budget Template

    It’s nice to have a zero based budget template to use when you are making your budget.

    If you prefer budgeting apps, EveryDollar is a great one to use for a zero based budget.

    I have a wealth of fun budgeting printables, in my complete budget toolkit which you can grab for free here.

    RelatedBest Personal Finance Apps

    Zero Based Budget Process

    There is a very specific zero based budget process for you to follow.

    It’s really easy to do, but the problem is usually sticking to the plan, and the budget.

    1. First, you will want to list all of your sources of income for the month.
    2. Write that number at the top of the page.
    3. This is the amount of money you have to put toward expenses.  Nothing more, nothing less.
    4. Now list all of your necessary expenses, including things like mortgage/rent, utilities, food, and transportation.
    5. You definitely want to make sure you have enough in your budget for these “four walls”, or basic living expenses.
    6. Then, you will list out other standard monthly expenses like the cable bill, debt payments, internet, or other expenses that recur each month.

    Now, let’s list out expenses that are specific to the current month.

    For example sake, we will use September (because that’s when I’m writing this).

    Depending on your family situation, September budget items might include: back to school shopping, fall decorations, doctor appointments, or football tickets.

    These “miscellaneous” budget items will depend on how much is left over after paying your basic monthly bills.

    If you are trying to get out of debt, you will want to limit your miscellaneous budget items as much as possible, in order to throw a large chunk of cash on to the debt.

    More on debt:

    Zero Based Budget Example

    Here is how we did our September budget: (for our home, we also do a budget for our medical practice that is a tiny bit different)

    Debt Free Journey UpdatesJuly, August

    Income: 4929.32



    Mortgage/Rent:  $1325

    Water:  $110

    Electricity:  $120

    Food:  $550

    (This should include groceries, and could include eating out, but personally I consider that to be entertainment.  We do not eat out right now unless it’s a special occasion as we are working to get out of debt.)

    Transportation: $0

    (We don’t have car payments, and our gas comes out of our business budget, but usually you would put gas, car maintenance, or car payments here.  You need transportation to get to work and make money, so this needs to be part of your “four walls”.)

    OTHER ESSENTIALS (Could live without, but we pretty much need these to live.  haha.)-

    • Giving:  $250
    • Internet:  $65
    • TV (Playstation Vue):  $72
    • Netflix:  $14
    • Home Security:  $60
    • Child Care:  $320
    • Gym:  $22
    • Shannon Fun Money:  $100
    • Dan Fun Money:  $100
    • Contact Lenses (Hubble):  $36
    • Health insurance (Health Sharing):  $135
    • Auto insurance:  $82
    • Renter’s insurance:  $17
    • Identity theft protection: $13


    • Credit card payment:  $187
    • Student Loan payment:  $87

    (All of our other debt minimum payments are for our medical practice, so they come out of that budget)

    Okay, these are our BASE expenses every month.

    Now, we will subtract these expenses from our income.

    After subtracting $3605 of expenses we still have $1324.32 left over to budget.

    We can’t just leave that extra money sitting there and hope something great happens with it!

    That’s why we must assign every dollar to a budget item, even if that budget item is simply “transfer to savings”.

    This money can be applied to debt, or used for whatever “miscellaneous” monthly expense you have this month.

    In September, our miscellaneous money went to things like cub scouts, our dog’s medication, a trip to the circus, and doctor appointments for the kids.

    Most months, we are trying to use any extra money to go to debt.  We own our own business and pay ourselves enough to cover our necessary expenses, and a little extra to cover whatever might be going on that month.

    We make our huge debt payments that you will see in my monthly debt update posts, from our excess income that our medical practice brings in.

    It’s a little crazy trying to budget a business and a home, but we are improving each month that we stick to it.

    RelatedHow to Use a Cash Envelope Budgeting System

    Zero Based Budget Advantages and Disadvantages

    The advantages of a zero based budget are that you are in complete control of your money.

    You are finally able to tell your money where to go, instead of wondering where it went, as Dave Ramsey would say.

    The disadvantages of course, are that there is really no room for error.

    If you go over budget in one category, you will have to decrease your spending in another area in order to balance your budget back to zero.

    Zero based budgeting takes time and practice to get it right, but you’ll never improve if you don’t start!

    Try to do a zero based budget for next month.  Remember you are “spending” all of your money on paper, or in an app, before the month even begins.

    Every single dollar should have a name, a goal, and a purpose in your zero based budget.

    Grab my complete budget toolkit for free budgeting templates, and other helpful money management printables here.

    Tips to make a zero based budget. Budgeting printables and money management tips for living on a budget. Learn how to budget for beginners and create a budget that works. #daveramsey #budget #budgetingtips
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    hi! I'm shannon

    I’m a wife, mom of three, doctor, and blogger! In 2018, I decided to turn my mom blog, into a personal finance blog so others could follow along on our journey to pay off over HALF a MILLION dollars in student loan and practice start up debt. I hope you enjoy following along, and maybe even find some inspiration along the way.