How Do You Create a Zero Based Budget?

Creating a zero based budget can be an easy way to budget your money for personal or business expenses. This type of budgeting method is one of the most accurate and simple methods available. Here are the basics of how to create a zero based budget.

Income

Start out by adding up all of your sources of income. If you are an employee and you have a fixed salary, this step will simply involve writing down your salary. If you are self-employed or have a variable income, you should create an average of your income over the last four to six months to get an idea of what to expect.

Expenses

Then sit down and add up all of your expenses. Divide your expenses up into variable and fixed expenses. Try to be as thorough as possible with this step so that you do not miss anything.

Assign

Once you have your income and expenses figured, you need to assign every dollar that you have to some category. If you have a surplus of money after you have paid all of your expenses, you need to assign that money to something such as paying off debt or putting it into a savings account.

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