How to Create a Zero-Sum Budget (Free PDF Download)

Zero-Sum Budget Worksheet
I first came across the Zero-Sum Budget while reading the Total Money Makeover by Dave Ramsey. Before then, my idea of a “budget” consisted of checking my bank account to make sure I had enough money to cover my next purchase. Now that I create a monthly budget,  I have better control of my finances and feel great knowing my money is put to use in the most efficient way. Before we move on to how to create a zero-sum budget let’s first discuss what it is.


What is a Zero-Sum Budget?

Here is how a zero-sum budget works according to personal finance author Dave Ramsey:

“The point of a zero-based budget is to make income minus the outgo equal zero. If you cover all your expenses during the month and have $500 left over, you aren’t done with the budget yet. You must tell that 500 bucks where to go. If you don’t, you lose the chance to make it work for you in the areas of getting out of debt, saving for an emergency, investing, paying off the house, or growing wealth. Tell every dollar where to go.”

In other words, add up all of your after-tax income for the month and all of your expenses. Subtract your expenses from your income and the total should come out to zero.  If you still have money left over after this calculation, allocate any leftover money to a category (i.e. it could be put towards a savings goal or debt payoff plan).  If you have a negative number, take a close look at your budget and see where you can make some cuts.

By following this method and budgeting your money every month, you will know exactly where each of your dollars is going. Before I started budgeting, I hadn’t realized how much money slips through the cracks.  A few “small” purchases here and there really add up at the end of the month. 


How do you create a Zero-Sum Budget?

I’ve created a worksheet with steps to help you get started on a Zero-Sum Budget. You can download it by clicking on the image below and subscribing to my newsletter.

Zero-Sum Budget Download

Step 1: List all income sources

The first step towards creating a Zero-Sum Budget is to add up your income for the month. Once you have that number, you can begin to decide where the money is going. This is where we move onto the expense categories.

Step 2: List and categorize all your expenses

Now you are going to list all of your expenses. Your expenses include all your bills, the money you will need to buy groceries, gas, birthday presents, debt repayments etc. If you are new to budgeting, it might help to track your spending for a couple of months so you can get an idea and start paying attention to how much money you typically spend in each category.

When allocating money to each category, you want to make sure the essentials are covered first. Make sure that you have a place to stay, food to eat, a way to get to work and your utilities working. From there you can assign the rest of the money towards your other categories.

If you need help figuring out what some of those expenses might be I have a few suggestions below:

  • Giving
  • Saving
  • Rent
  • Mortgage
  • Homeowner’s Insurance
  • Renter’s Insurance
  • Utilities
  • Car Payment
  • Car Insurance
  • Health Insurance
  • Medical Bills
  • Groceries
  • Clothing
  • Credit Card Payments
  • Student Loan Payments
  • Child Care
  • Entertainment
  • Eating Out
  • Gasoline
  • Gifts
  • Home Maintenance
  • Toiletries
  • Pet Supplies
  • Vehicle Maintenance
  • Debt Reduction Goals
  • Fun Money


Words of encouragement

Let me warn you that the first few times you do this, you might get discouraged because you won’t know exactly how much money you will need to assign for each category. But that’s ok, just keep going and creating these budgets as best you can, month by month, and you will get better.

Step 3: Subtract Expenses from your Income

Now that you have all your income and expenses added up, subtract your expenses from your income. The point behind this type of budget is that this total should come out to zero. If you have a positive number after this calculation,  you still have some dollars you haven’t assigned a job to. This money could go towards loan repayment if you’re on a debt payoff plan. If you don’t have any debt then you can allocate this to a savings goal you may have.

If that number comes out to negative, you are going to have to make some cuts. Take a close look at your budget categories and see where you can decrease amounts.

  • Making changes to your budget is normal.
  • Make a new plan every month. Each month will have different categories and expenses.
  • You will get better at this with practice.

Once you’ve done this for a few months you will start to see the benefit of keeping track of your money. Like I mentioned earlier since I started doing this I’ve felt like I got a raise. I’m no longer spending money carelessly and have made greater progress on my debt payoff plan.

Questions for you:

Do you have a budget for your money? What method has worked out best for you? 

PS. If you have any questions feel free to contact me at

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