Zero-based budgeting means you plan where every dollar goes and your monthly income plus your monthly expenses equal zero. Once you know your monthly net income, you list out all your expenses, debts and saving goals and assign them amounts. We’d advise looking at your bank statements from the past several months to figure out how much you need to spend on each expense. Once you deduct your listed items from your pay, you should have a zero balance, not showing any money over or under. If you have any money left over, you can move it to another category.

It can take time to get your expenses assigned and the budget created, but this system can help you focus on financial goals and maximize your net income. The zero-based budget works best for those with set or predictable incomes as they are easier to plan for.