How to Do a Zero-Based Budget: Step-by-Step Guide

Are you tired of feeling like your money disappears every month? A Zero-Based Budget could be the answer. Unlike traditional budgeting, this method gives every dollar (or ringgit!) a job so you always know where your money is going. The result? No more “mystery spending” and better control of your finances.

Let’s break down how you can create a Zero-Based Budget in just a few simple steps.

What is a Zero-Based Budget?

A Zero-Based Budget means that your income minus your expenses equals zero. This doesn’t mean you have no money left, it means every ringgit is allocated to a purpose, whether that’s bills, savings, investments, or fun.

Think of it like this: instead of letting money sit around waiting to be spent, you give it a plan.

💡 Example: If you earn RM3,000, you’ll plan exactly RM3,000 in expenses, savings, and debt repayment combined.

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Why Use a Zero-Based Budget?

Here’s why people love this method:

• Total control – You’ll always know where your money goes.
• No wasted income – Every cent has a purpose.
• Boosts savings – You plan for savings first, not last.
• Debt payoff friendly – Perfect for tracking extra payments.

Wouldn’t it feel great to know your money is working as hard as you do?

Step 1: List Your Monthly Income

Start with your total take-home pay. Include:

• Salary
• Side hustles
• Freelance income
• Passive income

👉 Write down everything so you don’t miss a source.

Step 2: Write Down All Expenses

Next, list every monthly expense. Separate them into categories like:

• Fixed expenses: Rent, mortgage, utilities, insurance.
• Variable expenses: Food, gas, entertainment.
• Financial goals: Savings, investments, debt repayment.

💡 Tip: Don’t forget irregular expenses (e.g., yearly car insurance). Break them down into monthly amounts.

Step 3: Assign Every Ringgit a Job

Here’s where the Zero-Based Budget shines. Take your income and assign it to expenses until your balance equals zero.

Example:

• Income: RM3,000
• Rent: RM1,000
• Food: RM700
• Transport: RM300
• Savings: RM500
• Debt repayment: RM300
• Fun: RM200

✅ Total = RM3,000 → Zero left unassigned.

Step 4: Track Spending Throughout the Month

A budget only works if you follow it. Track expenses using:

• Apps (like YNAB, GoodBudget, or Excel)
• Pen and paper
• Google Sheets

Ask yourself: Am I sticking to the plan, or overspending in some areas?

Step 5: Adjust and Improve

Life isn’t static, budgets shouldn’t be either. Review your budget monthly and adjust. Got a raise? Increase savings. Unexpected expense? Reassign funds.

The key is flexibility while keeping the Zero-Based Budget principle intact.

Tips to Succeed with a Zero-Based Budget

• Start small: Don’t overcomplicate.
• Be honest: Record real spending, not ideal spending.
• Plan fun money: Budgets shouldn’t feel like punishment.
• Automate savings and debt payments.

Zero-Based Budget vs Traditional Budget

• Traditional Budget: Tracks spending but doesn’t always allocate all money.
• Zero-Based Budget: Every dollar is planned upfront.

Which one gives you more control? Clearly, the zero-based method wins.

Conclusion: Take Charge with a Zero-Based Budget

If you’re serious about financial freedom, the Zero-Based Budget is one of the easiest ways to get there. By giving every ringgit a job, you’ll stop wondering where your money went—and start telling it where to go.

So, are you ready to take control of your money with a Zero-Based Budget today?