What Is Zero Based Budgeting


Zero-based budgeting means that any expenditure other than what is called income are not included in the budget. The budget, therefore, has no room for unplanned or unexpected expenditures. Zero-based budgeting was first described by Jim Puckett and Fred Stapel in their book, “Boom-Bust”, published in 1976. They came up with the term “zero budget” because they didn’t want their readers to think that their budget was too small. That would make it seem as though they were cutting funds, something they felt was wrong and a tendency toward “SSC” (self-schemalers).

Basically, zero budget means that there is no longer any scheduled budgeted amount for any given week. Instead, every expense is determined only by what it will cost to provide the service or product. If it is worth providing, then the service or product can be budgeted for. Otherwise, it can’t be budgeted for.

So, what is zero-based budgeting? This type of budget is more accurate than traditional weekly budgeting because expenses are already planned out ahead of time. For example, there may be a set amount for a particular expense, such as a car repair, and the person who need the service is already budgeted for this particular expense per week. In this case, the total expense for the week is the total budgeted expense for the entire month.

Zero-based budgeting gives budgeters a tool for controlling expenses much like an expense planner or expense report. Instead of writing down every single purchase, the budget will tell the person about the total amount spent on each item for the entire month. Additionally, the budget will track spending by category so that the budgeter will know where expenses should be cut.

This type of budget requires some careful record keeping, but once it is done, the whole household can benefit from the money saved. What is nice about zero-based budgeting is that each household member is actually accountable for their own spending. They are the ones who decide how much money to set aside each week and whether they should include certain services in their budget. The fact that everyone has a say in how much is spent means that there is little room for mismanagement or theft of funds.

What is nice about setting up a budget is that each member of the family has some control over where the money goes. There is no question of who is getting the money and who is spending it. It’s true that most families live on a tight budget and the monthly budget may not allow for a lot of luxuries, but this doesn’t mean that you can’t take vacations or buy extravagant items. Just be sure to plan ahead for these luxuries before they become necessary. Once a month should be plenty enough to allow everyone to live comfortably and save money at the same time.

Some families save money by only paying the minimum required insurance every month. For others, they might think about supplementing the income with some paid time off. Either way, everyone has some input into how their family budget will work. It’s up to the family as to how much is spent and how much is left over after that.

Zero-based budgeting can help all household members save money each month. You simply need to create a budget ahead of time and follow it. Keep track of your expenses and your income for a few weeks. If you find that you are living beyond your means, just review your budget and make changes that will increase your ability to pay your bills each month.