Zero-Based Budget
BudgetingGlossary term
Definition
A budgeting method where every dollar of income is assigned a specific purpose, so income minus expenses equals zero. This approach forces intentional decisions about every category of spending and saving, eliminating untracked money.
Related terms
- BudgetA financial plan that outlines expected income and expenses over a specific period. Creating and following a budget is essential for managing money and achieving financial goals.
- Envelope MethodA cash-based budgeting system where you place allocated amounts of cash into labeled envelopes for each spending category. When an envelope is empty, spending in that category stops. Modern versions use digital apps to simulate the same concept.
- Pay Yourself FirstA budgeting philosophy where you prioritize saving and investing by automatically directing a portion of income to savings before paying any other bills or expenses. This approach ensures saving happens consistently regardless of spending habits.
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