Zero-based budgeting is an approach where you account for every dollar earned and earmark it for a specific purpose. Also known as a zero-sum budget, it is designed to leave no money to float in your bank account monthly. Zero-based budgeting starts from zero, rather than a traditional budget that is based on previous budgets. With this budgeting approach, you need to justify each and every expense before adding it to the actual budget. To make a zero-based budget, list your income, plan your expenses, make sure income minus expenses equals zero, track expenses, and create a new budget every month. What is zero-based budgeting? ZBB is a budgeting process where, on a very granular level, you go through a company’s spending and determine what resources various business units require. That means looking at individual cost categories across all business units.
