Zero Based BudgetZero-based budgeting is an approach to planning and decision-making that reverses the working process of traditional budgeting. In traditional incremental budgeting departmental managers justify only variances versus past years based on the assumption that the "baseline" is automatically approved. By contrast, in zero-based budgeting, every line item of the budget must be approved, rather than only changes. Zero-based budgeting requires the budget request be re-evaluated thoroughly, starting from the zero-base. This process is independent of whether the total budget or specific line items are increasing or decreasing.
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Envelope System
Set spending goals for various categories and label envelopes accordingly. Then, distribute your budgeted amounts in cash into the corresponding envelopes. If your spending in one area exceeds the amount you allocated for it, the funds must be taken from another envelope (not your bank account) to keep your overall spending in check.
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Reverse BudgetingReverse budgeting can be appealing to anyone who just wants to save money and isn't too concerned about gaining insight into their spending habits. The system asks you to automatically transfer a certain amount of money to your savings each month, and whatever is left over is yours to spend however you choose.
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