The short answer: list your income for the month, then give every pound a job in categories such as bills, everyday spending, debt, saving and fun, until your income minus everything you have assigned equals zero. Then track what you actually spend against each job through the month.
If you're new to the idea, start with our guide to what zero-based budgeting is. This guide shows how to set one up in a spreadsheet, step by step.
Step 1: Write down your income for the month
Use your take-home pay after tax, plus any regular side income. If your pay changes from month to month, many people plan with a cautious figure based on a lower month.
Step 2: Group your jobs
Groups keep a zero-based budget readable. A simple set is:
- Bills: rent or mortgage, council tax, energy, water, phone, insurance, subscriptions
- Everyday: groceries, transport, personal care, household bits
- Debt: credit cards and loans
- Saving: an emergency fund and goals such as a holiday or Christmas
- Irregular costs: things that don't happen every month, like car repairs, gifts and clothing
- Fun: eating out, hobbies and treats
- Buffer: a small amount for the unexpected
Step 3: Give every pound a job
Start with bills, then everyday costs, then debt, saving and irregular costs, and finally fun. Keep going until the "left to give a job" figure reaches exactly zero.
A worked example
| Job | Planned |
|---|---|
| Bills (rent, council tax, energy, water, phone, insurance, subscriptions) | £1,370 |
| Everyday (groceries, transport, personal care, household) | £500 |
| Debt (credit card) | £100 |
| Saving (emergency fund, holiday, Christmas) | £300 |
| Irregular costs (car, gifts, clothing) | £100 |
| Fun (eating out, hobbies) | £150 |
| Buffer | £30 |
| Total given a job | £2,550 |
| Income | £2,550 |
| Left to give a job | £0 |
Made-up example for one person with £2,550 take-home income.
Step 4: Plan the whole year, not just one month
Some months cost more than others. Christmas, birthdays, car insurance renewals and holidays all land at different times. Planning twelve months side by side lets you give December a bigger gifts line and still hit zero.
Step 5: Track spending against each job
Log what you spend and tag it to a job. Checking planned vs spent once or twice a week shows early when a category is running hot, so you can move money from another job before the month ends.
Frequently asked questions
How is a zero-based budget different from a normal budget?
A normal budget often plans the main costs and leaves the rest unplanned. A zero-based budget gives every pound of income a job, including savings and a buffer, so income minus everything you assign equals zero.
What if my plan doesn't reach zero?
If money is left over, give it a job, for example savings, a sinking fund or the buffer. If you've planned more than you earn, trim a flexible category like eating out until the total comes back to zero.
What happens if I overspend in one category?
Move money from another category in the same month to cover it, so the plan still adds up. Over time this shows which amounts need adjusting.
Can I use a zero-based budget with an irregular income?
Many people plan with their lowest expected monthly income, then give any extra a job when it arrives.
Does the spreadsheet work in Google Sheets?
Yes. The Zero-Based Budget Planner works in Microsoft Excel and in free Google Sheets.
Keep reading
- Zero-based budgeting explained: new to the idea? Start here.
- Sinking funds: how to plan for irregular costs: give irregular costs a job every month.
- How to track your spending without an app: log what you spend against each job.
Use a ready-made zero-based budget spreadsheet
Our Zero-Based Budget Planner has a 12-month plan with a "Left to give a job" line that turns green at zero, a This Month dashboard showing planned vs spent for every job, and a transactions log. Want to see how much to save for a goal first? Try our free savings goal calculator.
Important: This article is general information to help you organise your money. It is not financial advice and doesn't take your personal circumstances into account. Any figures are made-up examples. For free, impartial guidance, visit MoneyHelper. If you're worried about debt, contact StepChange or Citizens Advice.