Definition
A budgeting method where every dollar of income is assigned a purpose, ensuring that your money is allocated and nothing is wasted.
What to consider
- Remember you buy these at a discount and earn at maturity.
- Consider the tax impact of imputed interest on these bonds.
- Evaluate if they suit your long-term, low-risk strategy.
Real world scenarios
- Marcy allocates every dollar of her paycheck to expenses, savings, or debt, ending up with zero unassigned funds. This method keeps her finances tightly organized.
- A zero-based approach forces Kevin to justify each line in his budget, preventing wasted spending on rarely used subscriptions.
- Stephanie resets her budget every month, adjusting categories like groceries or dining out to maintain a zero balance between income and outflow.
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