What is Zero Base Budgeting?
Zero base budgeting is a strategy that is often employed by businesses, non-profit organizations, and even individuals in planning an operating budget for an upcoming calendar year. What sets this approach aside is that there is no assumption on the front end of resources in hand to fund the budget. Instead, the line items contained in the budget are based on forecasts of revenue that will actually be generated and received during the period covered by the budget. In other methods of preparing a budget, there is usually some amount of resources of revenue that is carried forward from a previous period. With a zero base budgeting approach, there is no financial cushion that is included in the determination of how many resources will be earmarked for each section of an operating household budget. Instead, the idea is to determine the budget allotments based on the reasonable expectation of collected revenue during the period. For example, an individual may use zero base budgeting by plan
