# Zero-Based Budget

A zero-based budget assigns every dollar of income a specific job — spending, saving, or debt payment — until your income minus your allocated amounts equals exactly zero. No dollar is left "unbudgeted."

## Why it matters

Traditional budgeting often leaves a vague surplus that slowly disappears. Zero-based budgeting forces intentionality: every dollar has a purpose, whether it's rent, groceries, or a sinking fund for car repairs. This level of specificity tends to surface hidden waste and accelerate progress toward financial goals.

Example

$5,000 income: $1,500 housing + $600 food + $300 transportation + $400 insurance + $200 entertainment + $500 debt payment + $1,000 savings + $500 miscellaneous = $0 remaining.

## How Ray helps

Ray shows where your unallocated money goes each month by categorizing every transaction. Try to find the leaks in your budget that a zero-based approach would plug.

Terminal

`$ ray "where did my unaccounted-for spending go last month?"`

## Related terms

[Budget](`https://rayfinance.app/learn/budget/`) A budget is a plan for how you'll allocate your income across spending categories, savings, and debt payments over a set period — usually monthly.
  
[Cash Flow](`https://rayfinance.app/learn/cash-flow/`) Cash flow is the net amount of money moving in and out of your accounts over a period.
  
[Savings Rate](`https://rayfinance.app/learn/savings-rate/`) Your savings rate is the percentage of your income that you save or invest rather than spend.
  
[Sinking Fund](`https://rayfinance.app/learn/sinking-fund/`) A sinking fund is money you save incrementally for a planned future expense — like a vacation, insurance premium, or holiday gifts — so the cost doesn't hit all at once.
  
[Net Income](`https://rayfinance.app/learn/net-income/`) Net income is your take-home pay after all deductions — federal and state taxes, Social Security, Medicare, health insurance premiums, and retirement contributions.