If you like to plan down to the penny, a zero-based budget may be just the ticket! Let’s get you going on your own “give every dollar a job” money-management mastery.
Use our simple zero-based budget spreadsheet to enter your monthly income and expenses—it’s all set up to do the math for you.
Your download will be an Excel file—you can also upload it to your Google Drive and convert it to a Google sheet if you prefer!
Take a look at the info and examples below for ideas on customizing your zero-budget template.
The breakdown on zero-based budgeting
The idea behind each strategy is to plan how you’ll spend every single bit of your income, down to the dollar (which is why it’s sometimes called “give every dollar a job” budgeting). The goal is to have your income minus all your combined spending/saving-up plans equal zero every month.
It’s simple to set up: calculate your total monthly take-home pay, then list out all your expenses, savings goals, and anything else you plan to spend money on. Then you add it all up and make adjustments until every dollar has a job to do!
Create a zero-based budget in 5 steps
- Total up your monthly income: Tally all your take-home pay (what you earn after taxes), and include any money that comes in from other sources, like a side gig, child support, or government benefits.
- Figure out your expenses: Include everything you plan to spend money on—bills and essentials as well as discretionary spending—and money you want to put into savings. Remember to account for less frequent expenses; for instance, if you pay for car insurance every six months, divide that cost by six to get the monthly cost.
- Add, subtract, and adjust: Total your income, total your expenses, and compare the numbers. If you get a positive number, that means you have dollars that need a job! Allocate them to line items in your budget (perhaps a savings goal!). If the number is negative, though, you’re planning to spend more than you earn, so look for places to trim. Remember the goal is: income - expenses (and savings, etc.) = zero.
- Set up a tracking system. Zero-based budgeting calls for a careful eye on your spending to make sure you get as close as possible to zero every month. If you’ve got a soft spot for manual data entry, you can go the spreadsheet route. Or you can automate your tracking with a budgeting app (if you use Simple, you’ve got one right in your Simple Account).
- Put it into action and tweak. Keep an eye on your spending to see if what you actually spend lines up with what you’d planned. At the end of the month, see how close you got to zero—and then tweak your next month’s budget based on what you’ve learned.
Zero-based budget examples
Everyone’s budget is different, and what you put into your zero-based budget spreadsheet will be as unique as you are! Below are some fictional folks (based on real-world situations) and samples from their budgets to give you an idea of how this budgeting strategy might look in real life.
Example 1: Meet Naoki
Naoki lives in a mid-sized city. He works a day job as an administrative assistant, and he pursues his passion as a DJ on the weekends. He has a studio apartment overflowing with his records and DJ equipment, and gets around town on his bike (which he also has to fit into his apartment). He’s focused on saving up for a security deposit on a bigger apartment as soon as he can afford to pay more in rent. He also wants to upgrade his turntables and lower the balances on his credit cards. Here’s a peek into how he sets up his zero-based budget.
Monthly income = $2575
- Salary of $1975 after deductions
- $600 from DJ gigs (varies)
Monthly expenses = $2690
- Rent and utilities: $700
- Groceries: $160
- Eating out: $300
- Music purchases: $80
- Extra payments on credit cards: $50
- Savings for bigger apartment: $100
- Savings for new turntables: $200
- Budget cushion: $200
Naoki looks at everything he usually spends money on and makes a line item for each kind of expense. Then he adds up his monthly income and total expenses, and compares the numbers. Looks like he’s spending more than he earns—which will add to his credit card debt instead of reducing it! So he adjusts his discretionary spending (deciding to eat at home more instead of going out) until the income and expenses are the same. Because what he earns as a DJ varies from month to month, he decides to add a budget cushion in case his income is less than expected: a clever way to adjust the zero-based budget template to work for his circumstances. Next, he sets up his budget in an app to automatically track spending and keep a close eye on things to see if he needs to make adjustments during the month.
Example 2: Meet Jean and Alex
Jean and Alex live in a small college town with their teenager, Ramy. Jean is a retired union electrician, and Alex works as an independent business consultant. They don’t have insurance from an employer or Medicare, so they pay out of pocket for their health insurance plan. They hope there’s enough in Ramy’s college fund, but want to add more to it just in case. They’re also eager to pay off their mortgage as soon as possible and build up their savings so they won’t be reliant solely on Jean’s union pension when the time comes for Alex to retire. Here’s a snapshot of how they create a zero-based budget.
Monthly income = $5300
- Jean’s pension of $2000
- Alex’s take-home pay of $3300 (after setting aside the money to pay quarterly taxes)
Monthly expenses = $5170
- Mortgage payment: $1750
- Groceries: $500
- Health insurance premium: $900
- Family YMCA membership: $80
- Jean’s CPAP supplies: $35
- Extra payments toward mortgage principal: $150
- College fund: $100
- Savings for retirement: $200
When Jean and Alex subtract their total planned expenses from their total monthly income, they’ve got a positive number! They decide which budget line items to allocate that money to so that every dollar has a job. Because they like to plan family activities during the summers, they know that they’ll probably allocate more to entertainment when Ramy’s out of school, and put more into their savings during winter. To make sure they stay on track, they set a family budgeting date once a month to check their progress and plan ahead, and they make sure Ramy’s included so they’re passing on good money-management habits. And to make it a fun night, they always order takeout from their favorite Thai restaurant—which, of course, they include in their budget!
Make it work for you
Here are some tips for making a zero-based budget of your own:
- Budgeting down to the dollar calls for an eagle-eyed approach to tracking your spending. An automated budgeting app makes that a lot easier.
- It’s extra important to plan ahead for less-frequent expenses (like annual vehicle registration or quarterly gas bills). You’ll want to figure the monthly cost for those expenses and include it in your budget—the money you set aside each month will build up so it’s there when those big bills hit.
- If you see that you’re likely to go over your budget on some expenses during the month, you’ll want to make adjustments so you’re not in the red—you may need to tighten up in some areas or pull money from your savings if possible.
- This budget philosophy can be trickier if your income is highly variable or if keeping track of every dollar isn’t for you. You can adapt the zero-budget template to meet your needs (like Naoki did), but if it doesn’t work for you, no worries! You can try other budget strategies instead.
How to make a zero-based budget in your Simple Account
Tracking your spending day-to-day is important when sticking to a zero-based budget, and your Simple Account makes it a lot easier! Set up an Expense for every planned expenditure in your budget and a Goal for every savings line item. Simple will categorize every transaction automatically!
And with instant alerts for every transaction, you’ll always be aware when money comes out of your account—debit card purchases, auto-debits, etc. If you have a Shared Account, this is especially handy for making sure each partner is in the know on shared financial plans.
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