The Zero-Based Budgeting Theory

Zero-Based Budgeting (ZBB) is a financial planning approach where each budget period starts from scratch, with every expense justified anew, rather than basing it on previous budgets. Organizations allocate funds based on current needs and priorities, ensuring resources are used efficiently. This method encourages careful review of all expenses, promotes cost-control, and aligns spending with strategic goals. ZBB is especially useful in environments requiring fiscal discipline or significant change, as it helps identify unnecessary costs and optimize resource allocation without assuming past budgets are automatically appropriate.