One of the advantages of a zero-based budget is that it’s a great way to track where your money is going, helps you to control your spending, and see the areas where you may be spending too much. What are the Pros & Cons of a Zero-based Budget? The Pros This method of budgeting became so popular because households realised that they needed a way to allocate their money to different envelopes in order to avoid any duplicated costs, unaffordable purchases, and successfully pay back any loans. This was before debit cards and digital banking even existed. The zero-based budgeting process became popular in the ’70s and was invented by a man named Peter Phyrr. Plus, if you come under budget and have money left over, then you can easily move it to another category such as your rainy day/emergency fund or holiday savings. This method of budgeting allows you to easily adapt your budget each month if your expenses change. The aim of a zero-based budget is to make sure that your income, minus all your overheads, equals zero ( income – expenses = zero). This includes things like your bills, groceries, savings, debt repayments, and luxury items. What is Zero-Based Budgeting?Ī zero-based budget involves you allocating all of your money to different categories. Read on to see why this may be the best budgeting solution for you and your financial future. In this blog post, we’re delving into the world of zero-based budgeting (ZBB), which is one of the most common methods used by people to manage their finances. You may think that budgeting leads to a life of restriction and the mere thought of keeping track of a budget will cause you a headache? Well, we’re here to tell you that although budgeting will take a little bit of time and effort, being financially organised will help to reduce the stress across other areas of your life and if done properly, by no means leads to you missing out on anything. By following a budget, you’ll be able to get a complete overview of your money so you can make better financial decisions. A budget can also help to prevent you from getting into debt but can aid you in escaping it. Why does Suits Me® charge for its services?īudgeting is a useful way to keep track of your outgoings, your spending, and your savings for the future.
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