Have you ever found yourself in a situation where you’re short on funds and have no idea what you spent your money on?

Failing to manage your money leads to overspending and acquiring more debt.

This is where the zero-based budgeting comes in, which is also recommended by Dave Ramsey.

This budgeting method is beginner-friendly and will help you gain control of your finances; telling every dime where to go.

If you’re in debt, the first step to getting out is to stop adding more credit to what you already have.

With that being said, the zero-based budget will help you to live within your means and be a lot more organized.

What Is Zero-Based Budgeting?

A zero-based budget is basically all your income equals all of your expenses.

In other words, you earn $5,000 a month, so you’re going to ensure that whatever you spend, invest, or save adds up to $5,000.

This can be a bit difficult for individuals whose expenses are higher than their income.

But you shouldn’t be spending more than you earn in the first place!

With a zero budget, it will help you not to spend more than you should.

Benefits Of Zero-Based Budget?

I guess the reason why you’re reading this post is that you want to get your finances together. Right?

If you’re wondering why you need to do this specific budgeting method then consider these awesome reasons:

  1. It’s very simple and easy to do – You don’t need to have any accounting skills to do this. It’s basically you commanding your money!
  2. You’re able to manage your money more effectively – No more wondering where all that money went.
  3. To be able to track your spending without stress – You’ll experience ultimate joy when you know all your bills are pay!
  4. You’re able to pay off your debt without thinking about acquiring more debt – Say Bye-Bye to those credit cards. You’ll be spending your own cash.

How To Create a Zero-Based Budget?

Creating this type of budget shouldn’t take you a long time, neither is it hard to do. Here are the steps in creating a zero budget for beginners:

You may need a budgeting template to help you with this. A budgeting template that’s already done for you will cut back on time.

Step 1: Calculate Income

First, you need to estimate how much income you get monthly. This includes side hustles, paychecks, child support or basically money you bring in. If you’re in the middle of the month now, then you’ll do it for the next month.

Step 2: Calculate All Expense

Next, you need to calculate all your expenses for the month. Ensure to include these main expenses such as shelter, food, transportation, and utilities.

Expenses may differ month to month, this month you may buy some clothes but not necessarily next month.

This zero based budget must be done monthly since expenses may differ.

Step 3: Subtract Your Expenses From Income To Equal 0

So after you have decided how much income you earn and your expenses, you need to subtract your expenses from your income for it to equal zero.

If you have extra money left over then you can put it towards emergency savings or invest it but you need to tell that money where to go. Don’t leave it hanging!

If you’re spending more than you earn and you need to bring in extra income then start a side hustle.

To start earning money quickly, sign up to a paid survey sites like Swagbucks. Upon signing up, you’ll get a $10 bonus.

You can also reduce your expenses by cutting back on cable, using coupons and stop eating out, etc.

Here’s an example:

Suzan earning is $4,000.00 for this month. This is how she would have set up her zero based budget:

Now, first she would list out all her expenses:

Lists of her fixed expenses are:

  • Mortgage – $1,100
  • Car payment- $300
  • Giving (10% to charity)- $400
  • Student loan- $260
  • Health insurance- $100
  • Savings/retirement- $400
  • Car insurance- $130

Lists of her variables (isn’t constant and change regularly) are:

  • Utility bills- $300
  • Groceries – $500
  • Gas- $100
  • Entertainment- $200

This gives a total of $3,790.00 for her total fixed and variable expenses. Income of $4,000.00 – $3,790.00 = $210.

Now, this is great news because Suzan has $210 remaining. It’s important that she gives this remaining money a task. So she may decide to create an emergency savings:

  • Emergency savings- $210

This will then be a zero-based budget since her income minus her expenses equal to zero.

Are you ready to start your own budget!

Get your budgeting template here!

How To Pay off Your Debt Using The Zero-Based Budget?

To make the zero-based budgeting easier, I recommend using the envelope system.

With the envelope system, you’ll basically get an envelope for each personal budgeting category such as grocery and you’ll add cash to those envelopes.

To pay off debt quickly with the zero-based budget is to use the ‘snowball method’ by Dave Ramsey.

The snowball method is used to pay off your debt in the order of smallest to largest regardless of the interest rate.

So, if you’re like Suzan who has an additional income after doing the zero-based budget then add it to your smallest debt and after you have finished paying off that debt, you’ll roll that money over to the second smallest debt until you’re finished.

Simple as that!


Many people can pay off their debt in 1-3 years while some take 5+ years.

This all depends on how much money you’re willing to put towards your debt and the method you choose to use. 

But whichever the case, the zero-based budget alongside the snowball method will help you become debt-free without stress.

Related Post: 10 Dave Ramsey Tips For Being Debt- Free