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Learn how this budgeting strategy can change your life.

If you’ve been googling about finances, I am sure you already came across the Dave Ramsey zero-based budget.

I first learned about zero-based budgeting when I read this amazing book, which has changed my outlook on finances. The lessons I’ve learned from this book, Dave Ramsey’s budget spreadsheet, made us more in tune with our money.

So after reading the book, I used the Dave Ramsey budget worksheet as a guide and started budgeting using the zero-based budget. Given that I was a beginner back then, it worked pretty well with our family finances. It helped us with our debt payoff journey.

Until now, it is still the method that I am using, with some little tweaks here and there.

So today, you will learn everything that you need about this budgeting method; what is it all about and how you can start using it. So, Let’s dive in.

If you are curious about Dave Ramsey zero-based budget, here are thing that you need to know.


The Dave Ramsey zero-based budget is simply income minus expenses equals zero. The idea behind this concept means that all of the money that you receive from month to month should be accounted for and has a purpose.

For example, if you make $3000 a month, then all of that amount should be spread appropriately among your monthly expenses.

However, if, for some reason, after you allocated all the appropriate amount to all of your budgeting categories, you end up with $200 extra, you then jump with excitement and head to the mall.

Uhm, NO.

You will then go back to your financial goals and check your number one priority. If for example, you want to get out of debt, then use that extra $200 to pay down your debt.

The same is true when your primary goal to increase your safety net, you will add the $200 to your emergency fund.

So you see that in the Dave Ramsey zero-based budget, not a single dollar will be “wasted.”


My favorite way to keep track of our finances is by using Personal Capital. With Personal Capital, I can visualize our spending and savings, get insights into our cash flow, see the transactions we’re making, analyze our net worth, and more.

It is an absolutely FREE tool to use, and if you sign up through our link, you and I will get $20 each!


The zero-based budget is the best method because:

1) Beginner Friendly

If you are new to budgeting, then this is the best method for you. This method allows you to get to know your finances and your financial habits. When I was new to budgeting, I started with this method, and I’m so glad I did.

2) Every Dollar Has A Purpose

When you use a zero-based budget, you will be confident that no dollar will go astray. Each dollar will have a job, and you know exactly where it will go. Nothing is worse than having money, and suddenly you don’t know where you spent it on.

3) Helps You Reach Your Financial Goals Sooner

When we started using the Dave Ramsey zero-based budget, we usually ended up in the negatives. And it was frustrating at times.

However, as we got into the groove of managing our expenses better, we started seeing leftover money on our monthly budget.

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    And since our primary goal is to pay off our debts, we dumped it all into debt. As a result, we were able to stay ahead in our debt payment plan.

    4) Makes You Justify Your Expenses

    As you start allocating appropriate amounts to your budget category, you will be thinking and justifying every amount that you put into it.

    For example, do you really need $500 on dining out expenses? Or could you increase your utility bill payment this month because you will have family visiting for a week?

    Or maybe increase fun money this month since kids are out of school for the summer? Or maybe no need for a gym fund this summer since you can run outside?

    5) Keeps Your Expenses In Check

    This goes hand in hand with justifying your expenses. When you have a zero-based budget, you will be more aware of your spending habits.

    By knowing how much you have in a certain expense category, you can’t help but think twice whenever you make a purchase.

    6) You’ve Got Total Control Of Your Budget

    With zero-based budgeting, you’ve got total control over your budget. You have the flexibility to move each dollar around depending on your situation at that time. Therefore, setting up a realistic budget.

    At some point, your life will change and so is your finances so if you need to make a change on your budget, you can.

    Here are the things you need to know about the Dave Ramsey zero-based budgeting method.

    How To Set Up A Zero Based Budget

    Starting a zero-based budget is simple; however, you need to make time. You need to make time to set it up and stay on top of it every month. Here are some budgeting tips on how you can set up a zero-based budget. These are also part of the Dave Ramsey budget form from the book.

    1) Track And Add All Your Income

    Your monthly income includes all income sources that you receive every month. This can be your salary, side hustle income, dividend, investment income, etc. Take the total, and that will be your monthly income.

    But what if you have an irregular income?

    When you have an irregular income, take the lowest income month that you’ve had, and use that amount for your budget.

    2) List Down Your Expenses

    To make it easier, gather all your bank statements, including a credit card statement from the previous month, and list down all the expenses that you’ve had.

    If you were using cash, try to brainstorm on the things that you have purchased.

    3) Assign Appropriate Budget Amount On Each Expense Category

    Add up all the amount that you’ve spent on a certain category and make that your budget amount.

    For example, if you spent $489 on groceries last month, then you will assign a $500 budget for groceries. I usually round the number for ease of calculations.

    4) Add Up All Expenses

    After assigning all budget amounts to each expense category, add them all up, and that will be your total monthly expenses.

    5) Subtract Your Expenses From Income


    The concept of a zero-based budget is to actually have zero after you deduct all your total expenses from your total income.

    However, it does not always happen that way. There are other two results from this equation.

    Either you will end up with extra money, or you’ll end up with a negative result.

    Negative Difference

    A negative difference is a result when your expenses are higher than your income. Simply put, you are living beyond your means. You are spending more than what you are actually making.

    When this happens, go back to your expenses and re-evaluate. Trim down or eliminate unnecessary expenses.

    Maybe, you do not need to spend $500 on dining out, maybe your grocery budget is too high, or you don’t need those extra channels on your cable, or don’t need a cable at all.

    You might think it’s impossible to reduce your expenses, but as you go through each of them, you will find that there are a lot of areas where you are overspending.

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    If you are interested in lowering your bills but don’t have the time and confidence to negotiate with bill companies, you can use a service like Billcutterz to do it for you.

    You only pay them a minimal amount if they were able to save you money. If not then it’s FREE.

    Positive Difference

    On the other hand, a positive difference is when your income is higher than your expenses. You actually have leftover money after accounting for all expenses.

    And as I have mentioned earlier, you do not drop everything and go to the mall immediately just because you found out you have extra money.

    Instead, you will use the leftover money to take care of your primary financial goal, be it paying off debt or funding your emergency fund.

    6) Track Your Expenses

    Now that you have your spending plan in place, the only thing that is left to do now is to track your expenses.

    You can use the plain old’ paper, or cash envelope system, or if you are into technology, use budgeting apps.

    No matter what you choose, just stay consistent in tracking your expenses. Tracking plays an important role in the success of your budget.


    My favorite way to keep track of our finances is by using Personal Capital. With Personal Capital, I can visualize our spending and savings, get insights into our cash flow, see the transactions we’re making, analyze our net worth, and more.

    It is an absolutely FREE tool to use, and if you sign up through our link, you and I will get $20 each!

    Zero Based Budget App

    I used to do plain old paper budgeting and the cash envelope budget system in my early budgeting days. However, I found that it’s more convenient to use budgeting apps.

    Don’t get me wrong, the paper-based and cash envelope budget system is awesome, and they absolutely work.

    It’s just that as time went by and I got more comfortable with our budgeting, I needed something techier.

    You see, I do everything on my phone, like EVERYTHING. If something happens to my phone (knock on wood!), I will TOTALLY be lost.


    Besides the Personal Capital app, Everydollar is the zero-based budgeting app that I still use nowadays. I am still on the FREE version, and it still works for our budget.

    I like it because I can just plug in our expenses as I go. I don’t have to worry about losing the receipt or forgetting to track.

    The free Everydollar app also lets you customize your budget each and every month, which helps a lot because our budget changes every single month.

    There are a lot of budgeting apps out there, but Everydollar is what I found that works with our family finances.


    What does it mean to have a zero-based budget?

    When you have a zero-based budget, it means that the difference between your income and expenses is “zero,” no more, no less. In other words, your take-home pay is equal to your expenses. If not, then you have to make adjustments.

    Why is zero-based budgeting the best method?

    The zero-based budget is the best method because you are giving every dollar that’s coming in a job to do. It will motivate you to make sure your expenses match your income every single month.

    Does Dave Ramsey have a budget app?

    Yes, Dave Ramsey does have a budget app. It is called the EveryDollar app, and it is FREE. If you want more functionality, you can upgrade to the paid plan, which is called Ramsey+

    Final Thoughts On The Dave Ramsey Zero-Based Budget

    Starting a budget is easy, but the hardest part is making it work and sticking to it.

    However, if you keep your focus on your financial plan, you’ll eventually reach your money goals. You’ve got this!

    Are you using Dave Ramsey zero-based budget method?

    If you want a simplified explanation of the Dave Ramsey zero based budget, this post is for you.

    Simplifying Dave Ramsey Zero Based Budget