Zero-based budgeting means giving every pound of your expected income a planned job, such as bills, food, savings, debt repayments or discretionary spending, so your income minus allocations equals zero. This does not mean spending everything: you can assign money to an emergency fund, annual costs or other savings goals. Start with your monthly take-home pay, list essential and flexible expenses, then adjust the figures until the plan balances. Review it during the month and update it when your income or spending changes, keeping a small buffer for unexpected costs.