Determine Your Income:

The first step to ZBB is to determine your total income for the month. This includes your salary, any side hustle money, and any other sources of income. 

What if you have irregular income? You can still apply this method by taking the lowest income you had in like – past 6 months, and use it as a rough estimate. Once the payments start to kick in, you can adjust the outcome later.

List Your Expenses:

The next step, which is also one of the least favorable part of the process, is to list out all of your monthly expenses. This includes necessities (bills, groceries, transportation, etc.), savings, essentials (childcare, health care, etc.), leisure and more – simply every single way you envision your money to go.

It can be time-consuming, tedious, and tiring. But once you’re done, you’ll be glad you did it in the first place.

What about unexpected expenses? The easiest way to handle that is by allocating it under ‘emergency expenses’ or ‘miscellaneous’, and in terms of how much to spend, you  can take the average amount of unexpected expenses you had in the past few months and put it as your benchmark.

Allocate Your Money:

Now it’s time to allocate your money to each expense. Be sure to prioritize necessary expenses like rent and utilities before allocating money to less important expenses. If you have leftovers, allocate some for unexpected expenses and investments.

Review and Adjust:

At the end of the month, review your budget and adjust it as necessary. This way, you can make changes and improvements for the following month.

Repeat:

By the beginning of each month, you will have to start fresh again, calculate your income, draw your expenses, put the money where it belongs, review, adjust, and repeat!