Zero-Based Budgeting
Zero-Based Budgeting (ZBB) gives every dollar a job. Instead of planning around the income you expect, you start from the money that's actually in your accounts and assign every cent to a category until nothing is left. It takes a little more effort, but every dollar is planned, which cuts unnecessary spending.
Why use it?
- More control: you only allocate money you actually have, which helps a lot with an irregular income or unexpected expenses.
- Proactive planning: you decide what each dollar is for as it arrives, putting your priorities and savings first.
In zero-based budgeting, every dollar you earn is assigned to a category, savings included. Allocate money to your savings categories on purpose, for an emergency fund or a big purchase, rather than saving whatever happens to be left. Even savings have a job in your budget!
Getting started
- Add your accounts: add the accounts you spend from and save in, such as checking, savings and credit cards. See Account types.
- Enter their current balances: the app adds up the money you have and shows it as Ready to allocate.
- Allocate it: on the Budget tab, assign that money to your categories (rent, groceries, utilities, savings…) until Ready to allocate reaches zero.
- Keep it up to date: when new income arrives, it shows up in Ready to allocate, ready for you to give it a job. Adjust your allocations as the month goes on.
Zero-Based Budgeting gives you great control, but it's hands-on. You'll need to keep your accounts up to date and adjust your allocations as income and expenses change during the month. If you're willing to stay engaged, nothing beats the clarity it gives you over every dollar.
Quick example
You start the month with $3,500 in your checking account. You allocate it like this:
| Category | Allocated |
|---|---|
| Rent | $1,200 |
| Groceries | $400 |
| Utilities | $300 |
| Debt repayment | $500 |
| Entertainment | $300 |
| Savings | $600 |
| Miscellaneous | $200 |
| Total | $3,500 |
Your whole $3,500 now has a purpose. When more income arrives during the month, it's added to Ready to allocate, ready to be distributed.
Steps in the app
- Enter your starting balance: add your checking account with its $3,500 balance. Ready to allocate shows $3,500.
- Allocate to categories: tap each category on the Budget tab and enter its amount ($1,200 to rent, $400 to groceries and so on) until Ready to allocate is zero.
- Keep going: as new income arrives, allocate it to the categories that need it.
The Budget health check tells you when there's money left to allocate, when you've overspent a category, or when you've allocated more than you have.
You can change your categories at any time from the side menu: Groups and categories. See Groups and categories.
A budget's type is chosen when you create it. To try classic budgeting, create a new budget and copy your categories into it. See How to switch from classic to zero-based budgeting.