Why You Should Manage Your Money (With ZBB)


What is ZBB?

Zero based budgeting.

Imagine this: You have received your monthly salary of $10,000 in cash. You portion them into separate envelopes: $5,000 going to expenses, $3,000 going to spending on things you want to, and $2,000 going to savings.

For each envelope, you separate them further into smaller envelopes based on their parent categories, giving each dollar a job. For example:

Whenever you spend money, you consciously spend it from the relevant envelope based on your defined categories.

When you want to spend money that you have not planned for (e.g. ad hoc payments, or unforseen circumstances), that is when you will have to move money from one envelope to another.

When a new cycle starts again (i.e. a month), you portion your money again, without emptying your envelopes. You can choose to replenish your envelopes however you wish, based on what you have learnt from your spending habits.



Each dollar is given a job and planned for, empowering you to spend money know it is all taken care of. You know when your money is running dry for a category, and can make corresponding decisions. You can choose to move money from another category to the one you want to spend money for, making the implicit decision that you are sacrificing one thing for another.


With each cycle, you gain knowledge about how you spend your money, and will be able to adapt or change your habits or plans.

You may start finding out that you are spending too much on coffee and cut back, or decide to invest in a long-term solution, such as making your own coffee.

Making informed decisions

You gain insight into your finances, empowering you to make informed decisions about your money. You can plan for future purchases better.

A good teacher

I believe that the greatest benefit that this philosophy brings is that it forces you to think about what to do with your money. Each decision has implicit consequences that may not be apparent: Five dollars spent on that espresso means five dollars less for groceries.


I make it a habit to manually record every transaction after I make them. If you find this tedious, you can always sync your respective application or website with your bank records. I personally prefer doing it manually since I believe it cultivates awareness.

I only clear credit card transaction when they are cleared on my statement. Often, the final amount charged is not the same as what you are informed of, thanks to additional bank fees.

Every single credit card transaction is spent with my salary, instead of on credit. It can be tempting to spend more money than you can, or use “buy now pay later” platforms, but I believe in only spending money I have, and delaying gratification.

I reconcile my accounts before I plan the next cycle. This ensures that I am planning my month with the most up to date information of my finances. One caveat is to not be too hung up on whether each transaction is recorded, or whether you missed one. Your tool should be used to help you, not harm or hinder you.

I only plan for the upcoming month, instead of planning ahead for months. I prefer stockpiling my savings into a category called “Emergency Fund”, which contains 6-months of my gross salary. I believe this gives me more flexibility for short and visibility in the short-term.

Ignore losses or earnings on your stocks, bonds, and other financial devices until you realise them. The biggest pitfall is thinking you need to record everything. The truth is that you can record as much as you want. I only need to know where my money is going, not how it is doing.

Plan ahead for known payments aggressively. All scheduled subscriptions (e.g. Spotify, Google Drive, etc.) and payments (e.g. insurance, phone, etc.) are usually fixed amounts that can be planned for. I assign the total annual amount to their respective categories to cater for them at the start of the year, freeing my mind up from worrying about them through the year. I also leverage scheduled transactions, which doubles up as a notification and reducing my effort of creating the transaction myself.


I personally use YNAB since it has a mobile application, which fits my use case of recording transactions on the go. You should try out Lunch Money as well, which has a robust feature set.

You can look at them here:

Last words

I strongly believe you should adopt a solution to manage your finances, especially in a digital age. Money has been reduced to numbers on a screen, which affects how we think about money. When it comes to personal finance, anything that helps to restore pragmatism and prudence, is always an investment in your future self.