Investopedia

Continue to Site »

Zero-Based Budgeting - ZBB

Filed Under »
Dictionary Says

Definition of 'Zero-Based Budgeting - ZBB'

A method of budgeting in which all expenses must be justified for each new period. Zero-based budgeting starts from a "zero base" and every function within an organization is analyzed for its needs and costs. Budgets are then built around what is needed for the upcoming period, regardless of whether the budget is higher or lower than the previous one.

ZBB allows top-level strategic goals to be implemented into the budgeting process by tying them to specific functional areas of the organization, where costs can be first grouped, then measured against previous results and current expectations.
Investopedia Says

Investopedia explains 'Zero-Based Budgeting - ZBB'

Because of its detail-oriented nature, zero-based budgeting may be a rolling process done over several years, with only a few functional areas reviewed at a time by managers or group leadership.

Zero-based budgeting can lower costs by avoiding blanket increases or decreases to a prior period's budget. It is, however, a time-consuming process that takes much longer than traditional, cost-based budgeting. The practice also favors areas that achieve direct revenues or production; their contributions are more easily justified than in departments such as client service and research and development.

Articles Of Interest

  1.

    6 Months To A Better Budget

    Can you have perfect abs in just six minutes a day? Maybe not, but you can have a rock-solid budget in six months.

  2. The Beauty Of Budgeting

    Make it to the end of the month, before you run out of money.

  3. Run Your Finances Like A Business

    Think of yourself as your own little company. To make it run smoothly, you need to take a look at your books.

  4. Stop Keeping Up With The Joneses - They're Broke

    Conspicuous consumption could be robbing you of future wealth.

  5. Women: Invest In Your Financial Literacy

    Learning about money may seem intimidating, but it's not as hard as it looks.

  6. 6 Financial Benefits Of Spring Cleaning

    This year, combine your spring cleaning strategies with your big-picture financial objectives.

  7. Browser Extensions That Save You Money

    There is a widening range of online tools that have been designed to help citizens save their hard-earned money.

  8. Financial Solutions For Young Women

    Break through the stereotypes and find out how to manage your life to meet your needs.

  9. Muriel Siebert: Female Finance Pioneer

    Muriel Siebert has blazed many paths for investors, but is especially relevant as the first woman to sit on the NYSE.

  10. Bloated Budget? How To Trim The Fat

    Blood, sweat and tears should belong in the gym, but your money deserves some training time too.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  2. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  3. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  4. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  5. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  6. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.
Trading Center