How to Start a Zero-based Budget

Below is a comprehensive, step-by-step manual on how to create an “aesthetic dollar” style, zero-based budgeting system that uses cash stuffing (or “envelope stuffing”). This system includes three variations:

1. Personal Budget (using real or printed money placeholders)

2. Business Budget (primarily digital, but visualized with printed banknotes)

3. Kids’ Version (using real money to teach basic budgeting skills)

Feel free to mix and match elements to fit your life. The key principle is zero-based budgeting: every dollar (or unit of currency) is assigned a purpose until there’s “zero” left unassigned.

• Definition: Zero-based budgeting is a method where your total income minus your expenses, savings, and investments equals zero. In other words, every single dollar (or currency unit) you earn is allocated to a specific category or goal.

• Why it helps: This approach makes you more intentional about every dollar you spend or save. It helps prevent wasteful spending and makes it easier to see where your money is going.

• Definition: Cash stuffing (also known as the “envelope system”) involves dividing your money into different physical envelopes (or digital categories), each designated for a specific category of expense, savings, or financial goal.

• Aesthetics: Many people use cute envelopes, stickers, trackers, and printed “fake cash” to make budgeting more visually pleasing and motivating.

• Benefits: Physically separating money (or using placeholders) makes it crystal clear how much you have left for each expense category and encourages disciplined spending.

Below is the traditional way of doing it with real cash. If you prefer to keep most of your money in the bank, you can use printed “placeholder” bills to visually represent what’s actually in your account.

1. Calculate your total monthly take-home income.

2. If you have multiple income streams (e.g., salary, side hustle, freelance work), list each separately and sum them up.

1. Categorize your expenses:

• Fixed (rent/mortgage, utilities, subscriptions)

• Variable (groceries, fuel, dining out)

• Savings/Investments (emergency fund, retirement, sinking funds)

• Debt Payments (credit cards, loans)

2. Write them down with approximate amounts you plan to spend or save.

1. Gather Supplies:

• Real cash, if going traditional

• Printed placeholder bills (if you want a visual without carrying real cash)

• Envelopes, zipper pouches, or binder pockets labeled by category (decorate them to make it “aesthetic” and motivating).

2. Label Each Envelope: Example labels:

• Rent/Mortgage

• Utilities

• Groceries

• Personal Spending

• Emergency Fund

• Vacation Fund

• Etc.

1. Assign Every Dollar: For each expense category, decide how much you will allocate.

• Make sure the total allocated matches your monthly income (so that “income – expenses = zero”).

2. Stuff the Envelopes: Put the actual cash or placeholder bills into each labeled envelope.

• Tip: You can track the exact amounts on a small index card within each envelope or use a spreadsheet/app.

1. Spend Only from the Correct Envelope: If you’re buying groceries, pay from (or record the purchase from) the “Groceries” envelope.

2. Make Adjustments: If one category starts running low, either:

• Reduce spending in that category

• Move money from a less urgent category

• Remind yourself to “pause” or “cut back” if you want to stay within your envelope limits

1. Tally Remaining Funds: If you have money left in certain envelopes, you can roll it over to next month or reassign it to another goal.

2. Repeat: At the start of each new month (or paycheck period), repeat the process.

Many businesses operate almost entirely digitally. However, using physical envelopes or placeholder bills can help visualize cash flow and maintain discipline—especially for small or solo enterprises.

• Different Accounts: Use a dedicated business bank account to keep personal and business finances separate.

• Establish an Income Baseline: Determine your monthly or periodic business income (sales revenue, digital product income, client payments, etc.).

Examples of common business budget categories:

1. Fixed Overheads (rent for office or co-working space, insurance, internet)

2. Software/Tools (website hosting, subscriptions, design software)

3. Marketing/Advertising (Facebook ads, Google ads, influencer marketing)

4. Professional Services (accounting, legal, virtual assistant)

5. Taxes (set aside a percentage of income each month for tax obligations)

6. Salary/Owner’s Draw (the amount you pay yourself, if you’re a sole proprietor)

1. If Digital: You can label separate savings/checking sub-accounts (if your bank allows) or use a budgeting software that creates “virtual envelopes.”

2. If Using Printed Placeholders:

• Print out fake bills and label envelopes for each expense category.

• When you receive income digitally, “stuff” your placeholder envelopes to represent the portion allocated for each business expense.

1. Zero-Based: Assign every incoming payment to a category (expense, owner’s salary, savings, etc.).

2. Track Expenses: Whenever you pay a business expense from your bank account, note the corresponding deduction in your physical or digital envelope.

3. Reconcile Regularly: At least once a week or month, ensure the placeholders match your actual bank account balances (minus what’s been paid out).

1. Evaluate Cash Flow: Business revenue can fluctuate. Adjust your envelopes and spending each month as needed.

2. Plan for Taxes & Growth: Keep a separate tax envelope/fund. If you aim to grow the business, create an envelope for reinvestment in new products or marketing.

Teaching kids about money management early is a powerful gift. A simplified envelope system can help them grasp spending, saving, and giving/sharing.

• Explain the Basics: Kids should understand that money is limited and that every dollar has a job.

• Make It Fun: Use colorful envelopes or piggy banks, stickers, and simple labels.

• Allowance or Chores: Determine a small “income” for your child based on chores, weekly allowances, or birthday/holiday money.

• Gift Money: If they receive money on special occasions, have them allocate it into envelopes as well.

Keep it simple. For example:

1. Spending (fun or day-to-day purchases)

2. Saving (building up for bigger items or future goals)

3. Giving (charity or gifts for friends/family)

4. Optional: Investing (an introduction to long-term growth, if age-appropriate)

1. Explain “Pay Yourself First”: Encourage them to put some money into savings (and maybe giving) before spending.

2. Physically Divide the Cash: Let them count out how much goes into each envelope. For instance:

• Spending: 50% of allowance

• Savings: 30%

• Giving: 10%

• Investing: 10%

3. Track Progress: Help them track how much is in each envelope.

1. Let Them Spend From the Right Envelope: If they want a toy, it comes from the “Spending” envelope.

2. Encourage Saving Goals: If they want something expensive, show them how saving a bit each week adds up.

3. Reflection: At the end of a month or allowance period, talk about how much they saved, what they bought, and what they might do differently next time.

1. Decorate Your Envelopes:

• Use washi tape, stickers, or color-coding to distinguish different categories.

• For kids, let them draw or decorate envelopes with markers and glitter pens.

2. Use a Budget Binder:

• Many people use a ring binder with clear zipper pouches labeled for each category.

• Add a small index card in each pouch to track the date, amount added, and amount spent.

3. Printable Banknotes:

• You can find free or paid templates online that look like aesthetic “cash.”

• Print them out in different colors or styles, laminate if desired, and reuse them.

4. Visual Trackers:

• Some people create or print trackers with “thermometers” or shapes to color in as they save.

• Kids (and adults) find it rewarding to see these fill up.

1. Start Small: If juggling many envelopes feels overwhelming, begin with just a few (e.g., Bills, Groceries, Savings) and expand later.

2. Stay Consistent: The key to success is consistent, routine “cash stuffing” (real or placeholder) every payday or every month.

3. Flexibility is OK: If your life circumstances change, don’t be afraid to adjust categories, amounts, or timing.

4. Security: If using real cash, keep it stored safely. If you prefer less risk, use placeholders but track meticulously to ensure your bank balance and envelope placeholders match.

5. Involve the Family: Spouses, partners, or kids should understand how this system works so everyone’s on the same page financially.

By combining a zero-based budgeting approach with the visual (and often fun) method of “cash stuffing,” you can take greater control of both personal and business finances. Kids can learn essential money habits early, and businesses can gain clarity on cash flow.

Key Takeaways:

• Every Dollar Has a Job: Whether for expenses, savings, or investments, assign it.

• Visibility & Accountability: Envelopes—real or virtual—give you a physical or visual reminder of your spending limits.

• Consistency Is Crucial: Make budgeting a regular habit (e.g., weekly or monthly check-ins).

Enjoy personalizing your budgeting system to make it both functional and aesthetically pleasing. Good luck, and happy budgeting!

Below is a comprehensive, step-by-step guide on how to use the zero-based budgeting and “cash stuffing” system for multiple scenarios:

1. Personal Expenses for a Family of 4 in Germany (Kids are 8 and 5), saving up for a farm (including a chicken coop and indoor hydroponic mini-farm)

2. A Business (GmbH in Germany), tracked in Notion and using Qonto

3. A Business (LLC in the US), tracked in Notion

4. Paying Off a House and a few loans (mortgage, personal loans, etc.)

It’s broken down into First Steps, Setup, and Routines (including advanced tips on cash condensing, savings challenges, sinking funds, debt tracking, etc.). Think of this as a blueprint you can adapt to your own unique household and business needs.

Note: We’ll make references to “The Aesthetic Dollar” style products (e.g., dashboards, binders, placeholders) but exact pricing or product details aren’t crucial. Focus on the process and how the items (or similar ones) fit into your workflow.

• Definition: Every euro/dollar you receive is assigned a specific purpose (rent, groceries, children’s savings, farm goals, etc.) until no unassigned money remains.

• Why It Helps: Forces you to be intentional, ensures you know exactly where your money goes, and fosters better savings and debt-paydown habits.

• Physical or Digital: You can use actual envelopes with real cash or “virtual” envelopes (sub-accounts in a bank like N26/Qonto or placeholders in your A5 binder).

• Why It’s Popular: Physically separating (or visually tracking) funds reduces overspending and clarifies spending categories.

• Definition: Special savings “buckets” for predictable but irregular expenses (e.g., car repairs, holidays, property taxes, kids’ school expenses, farm-related costs).

• How They Work: You regularly set aside a small amount so that when the expense comes, the money is ready.

• Fun & Motivational: Examples are the 52-week challenge, 100-envelope challenge, or a “farm equipment challenge.” They gamify saving, which can help keep you motivated.

• Definition: Periodically exchanging smaller denomination bills for larger ones so your envelopes/binders are less bulky. This is more aesthetic/organizational than strictly necessary, but it helps you keep envelopes neat and track your progress easily.

• Zero-Based + Debt Paydown: If you have loans (mortgage, personal loan, business loans), you’ll track them as budget categories or separate “debt envelopes.” Each month, allocate a set portion to repay principal/interest beyond the minimum payment if possible.

1. For Personal (Family of 4):

• Monthly living expenses (rent/mortgage, groceries, utilities, kids’ expenses)

• Long-term savings (farm purchase, chicken coop, hydroponic system)

• Short-term goals (vacations, emergency fund, back-to-school supplies)

• Debt (mortgage payoff, personal loans)

2. For Business (GmbH in Germany):

• Operating Expenses (rent for office or co-working, software, salaries, taxes, etc.)

• Growth/Investment (new equipment, marketing, etc.)

• Tax obligations (VAT/Umsatzsteuer, income tax/Einkommensteuer pre-payments, etc.)

3. For Business (LLC in the US):

• Operating Expenses (platform fees, marketing, software subscriptions)

• Emergency/Contingency Funds

• Tax obligations (federal/state taxes, sales tax if applicable)

4. Pay Off a House / Loans:

• Minimum Payments on the mortgage or loans

• Extra Principal Payments if your budget allows

• Binder(s): A5 binders or separate smaller binders, one for personal finances, one for each business, if you prefer.

• Dashboards & Dividers: (Optional) Aesthetic dashboards from The Aesthetic Dollar or similar brands.

• Notion: Create a workspace with pages for personal finances, your GmbH, your LLC, and any other big goals (house payoff).

• Bank Accounts:

• Personal: e.g., N26 with sub-accounts (“Spaces”) for specific categories.

• German Business: Qonto with sub-accounts if needed.

• US Business: A separate LLC account with a bank that supports multiple categories or real-time expense tracking.

• Kids Savings Planners: Could be physical mini-binders/envelopes or shared Notion pages where they track their own “earnings” from chores, etc.

• Combination Approach: Because you have multiple streams (personal + 2 businesses), you might:

• Use physical cash (with real euro bills) for personal variable expenses (groceries, kids’ allowance).

• Use placeholder bills or sub-accounts for large amounts (farm saving, mortgage paydown).

• For the GmbH and LLC, keep everything mostly digital but visualize it via Notion dashboards or placeholder envelopes if it motivates you.

1. Identify Net Monthly Income: After taxes and social contributions (if employed in Germany). Include child benefits (Kindergeld), side hustle income, etc.

2. List Fixed Expenses: Rent/mortgage, utilities, insurances, kid’s extracurriculars, phone bills, etc.

3. List Variable Expenses: Groceries, transport, household supplies, entertainment.

4. List Goals:

• Farm Fund: You might have a target date or cost in mind.

• Emergency Fund: 3–6 months of expenses.

• Savings for Chicken Coop & Hydroponics: Separate from the main Farm Fund if you want.

• Sinking Funds: Car maintenance, clothing, kids’ birthdays, Christmas, property taxes, etc.

Use an A5 Binder with tabs or dashboards labeled:

• Bills (Mortgage/Rent, Utilities)

• Groceries

• Transportation

• Kids (school, extracurricular, clothing)

• Farm Fund (long-term)

• Chicken Coop & Hydroponics (medium-term)

• Emergency Fund (short-term accessible)

• Fun / Entertainment

• Debt Payments (if you have credit cards/loans aside from mortgage)

• Kids’ Mini Binders or Kids’ Notion Page:

1. Allowance: Decide on weekly or monthly.

2. Savings Goals: Let each child have a short-term goal (e.g., a toy) and a long-term goal (e.g., a bicycle).

3. Give/Save/Spend Envelopes: Teach them to allocate allowance (e.g., 10% to “Give,” 30% to “Save,” 60% to “Spend”).

1. Notion:

• Create a “Personal Finance” database or page with categories matching your envelopes.

• Track monthly actuals, notes on spending, and your progress on the farm fund.

2. N26:

• Use Spaces (sub-accounts) for big categories: Farm Fund, Emergency Fund, etc.

• Transfer budgeted amounts to each Space on payday.

• Why Qonto: It’s popular for business banking in Germany, often with the ability to create sub-accounts, track receipts, and integrate with accounting tools.

1. List All Sources of Income: Sales, services, etc.

2. List Monthly/Quarterly Expenses:

• Rent, software, salaries, marketing, taxes (VAT, corporate tax if applicable), etc.

3. Create “Envelopes” or Sub-Accounts in Qonto (or placeholders in an A5 binder if you like the visual):

• Operating Expenses

• Taxes (set aside expected VAT and income/corporate taxes)

• Emergency/Reserve

• Growth/Investment

• Salary/Owner’s Draw (if you pay yourself as a managing director)

1. Database for Income & Expenses: Log all invoices, payment dates, and categories.

2. Project or Goal Pages: e.g., “Expand Product Line,” “Marketing Campaign,” with budgets assigned.

3. Debt Tracking (if your GmbH took out business loans):

• Create a “Debt Repayment” entry and track monthly or quarterly payments.

• Similar process, but in the US context. Keep personal and business finances separate to preserve LLC protection.

1. Monthly Income: Sales, freelance, etc.

2. Expenses: Tools, software, labor, shipping, marketing.

3. Taxes: Federal, state, self-employment taxes if relevant.

4. Notion:

• A second workspace or a distinct “LLC” section with the same style approach (budget categories, monthly tracking).

• Treat each loan as its own “sinking fund” or “envelope.”

• Minimum Payment envelope + Extra Payment envelope if you aim to accelerate payoff.

• Create a “Debt Tracking” board or table:

• Columns for Loan Type, Outstanding Balance, Interest Rate, Due Date, Monthly Payment, Extra Payment.

• Update monthly as you pay them down.

1. Income Arrival

• Note your net income in Notion (personal or business).

• Transfer to sub-accounts or “stuff” physical envelopes (or both).

2. Allocate

• Fixed Bills first: mortgage/rent, utilities, etc.

• Sinking Funds: For upcoming expenses (car maintenance, farm equipment).

• Savings/Investments: Farm fund, kids’ funds, emergency fund.

• Debt/Loans: Minimum payments plus extra if possible.

3. Check Qonto/N26 or your US bank for business:

• Move designated amounts to sub-accounts (taxes, operating, salary, etc.).

• Review Notion: Log new expenses and income.

• Reconcile: Make sure the envelope amounts (or placeholders) match your real balances in the bank.

• Adjust: If groceries are running over, maybe reduce dining out or entertainment.

• Track Progress:

• How much did you save toward the farm?

• Did you reduce any debt significantly?

• Are business profit margins on track?

• Cash Condensing (optional, aesthetic step):

• Take thick stacks of small bills from your personal envelopes and exchange them for larger denominations at the bank.

• Update placeholders if needed.

• Family: Maybe do a 52-week savings challenge for the farm fund (each week deposit a fixed or increasing amount).

• Kids: A smaller version, like a coin challenge or a “chicken coop piggy bank.”

• Businesses: You could do a “monthly margin challenge,” aiming to set aside a little more each month if revenue exceeds targets.

To make this more tangible, here’s a hypothetical monthly flow for your Personal Budget (Family of 4 in Germany):

1. Payday: You get \€4,000 net.

2. Auto Payments (some might be direct debits):

• Rent/Mortgage: \€1,200

• Utilities/Internet/Phone: \€300

• Insurance: \€100

• Car Payment (if any): \€200

• These amounts stay in your main bank account, or you have a sub-account “Fixed Bills.” You place placeholders in your binder under “Bills.”

3. Sinking Funds: \€500 total

• Farm Fund: \€200

• Chicken Coop & Hydroponic Setup: \€100

• Car Maintenance: \€50

• Christmas/Holiday: \€50

• Kids’ School Expenses: \€50

• Vacation Fund: \€50

4. Groceries & Household: \€600 (you withdraw physically if you want a true cash envelope, or keep a sub-account in N26).

5. Kids’ Allowance: \€60 total (two kids, \€30 each for the month). They split into “Save / Spend / Give.”

6. Debt Paydown: \€200 extra toward a personal loan.

7. Emergency Fund: \€100

8. Discretionary: \€400 (this includes entertainment, dining out, clothing, etc.).

Once you distribute these amounts, your total allocated is \€4,000 — matching your net income. Zero left unassigned. That’s zero-based budgeting.

1. What if my income varies?

• Estimate a conservative amount. If you earn more, add the surplus to your highest-priority goals or “flex” envelopes.

2. Do I need physical envelopes?

• Not necessarily. You can do it all digitally with sub-accounts (N26 Spaces, Qonto sub-accounts) and track in Notion. Physical envelopes are just more tangible.

3. How do I handle big irregular expenses (like a new chicken coop)?

• That’s exactly where Sinking Funds shine. Save monthly in the “Chicken Coop” envelope/Space, so you’re ready when it’s time to buy.

4. Cash Condensing… Is it necessary?

• It’s optional. It just keeps your envelope system neat. If you keep large sums, you might want fewer, bigger bills.

5. What about online purchases?

• When you buy something online from a category (e.g., groceries or kids’ items), remove the equivalent cash from that envelope or note the deduction in your digital system.

6. How do I track loans in the system?

• Treat each loan as a “debt envelope.” Allocate the minimum each month, plus extra if you’re focusing on early payoff.

7. What if I’m short on money for an essential category (like groceries)?

• You may need to shift funds from discretionary or a lower priority sinking fund. This teaches you to be flexible and make trade-offs.

By setting up Notion pages, A5 binders (physical or with placeholders), and separate bank accounts (N26 for personal, Qonto for your GmbH, and a US bank for your LLC), you can unify all your finances under the zero-based budget principle.

• Step-by-step:

1. Calculate income

2. List expenses/goals

3. Create envelopes/budget categories

4. Allocate every euro/dollar until you reach zero

5. Track spending

6. Reconcile and adjust each week/month

Use dashboards, dividers, cash envelopes, and digital trackers (like Notion and sub-accounts) to stay organized. Sinking funds, savings challenges, and cash condensing are added layers that make the process more structured and even fun.

Whether you’re paying off a house, building a farm, running two businesses, or teaching your kids about money, this system ensures every financial goal has a dedicated “bucket.” With consistent check-ins and adjustments, you’ll see steady progress on debts, savings, and all your farm/business dreams.

Below are some additional tips and optional ideas to round out your zero-based budgeting, cash-stuffing, and overall financial management system for personal and business use:

• Banking Automations:

• If your bank allows it, set up automatic transfers to your sub-accounts (N26 Spaces for personal, Qonto sub-accounts for business) right when your income hits. This way, you “pay yourself first” into savings, sinking funds, and taxes without having to remember each time.

• Recurring Tasks in Notion:

• Use Notion’s reminder or recurring tasks features to prompt you to “Stuff Envelopes,” “Reconcile Accounts,” or “Condense Cash” at regular intervals.

Since you have a GmbH (EUR) and an LLC (USD), you may occasionally deal with foreign currency:

• Dedicated Currency Sub-Accounts

• If you receive or pay in both EUR and USD, keep them separate to avoid confusion and exchange rate surprises.

• Exchange Rate Tracking

• In Notion, set up a small table where you log exchange rates on the days you do conversions, so you stay consistent with your budgeting numbers.

• GmbH Compliance:

• In Germany, ensure you’re meeting Bookkeeping (Buchhaltung) requirements. Qonto can integrate with tools like DATEV or other accounting software.

• Keep accurate records for VAT (Umsatzsteuer) and corporate tax (Körperschaftsteuer).

• LLC Compliance:

• File state and federal returns correctly. If you’re paying yourself as an employee or taking distributions, track that separately in your Notion and bank logs for clarity.

• Seek Professional Advice:

• For both the GmbH and LLC, a tax consultant/CPA can guide you on how best to track and categorize expenses, especially if you have cross-border or multi-currency operations.

• Debt Snowball vs. Debt Avalanche:

• Debt Snowball: Pay off the smallest balance first for quick motivational wins, then roll that payment into the next debt.

• Debt Avalanche: Pay off the highest interest rate first to minimize total interest paid.

• “Round-Up” Payments:

• Whenever you pay a loan or mortgage, consider “rounding up” to the next €50 or €100. Over time, these small increments speed up debt reduction.

• Visual Debt Thermometers:

• In your Notion or in your physical binder, create a simple bar or “thermometer” to fill in as you pay down principal. It’s surprisingly motivational!

• Give Them Ownership:

• Let your kids (8 and 5) decorate their own mini-binders or envelope covers. Encourage them to set specific goals (“I want to buy a new bike!”).

• Math & Life Skills:

• Turn “counting and allocating money” into fun math lessons. Have them practice addition/subtraction when splitting their allowance into Give/Save/Spend envelopes.

• Digital Tracking:

• Even if they have a physical piggy bank, you can show them a simplified Notion page with a progress bar that moves every time they add money.

• Separate “Seed Fund” for New Projects:

• If you plan to expand beyond chickens (like goats or a bigger greenhouse), create sub-envelopes or sub-spaces specifically for each new project.

• Estimate Upfront Costs:

• Research typical costs for building materials, feed, equipment, or seeds. Then break that total into monthly/weekly sinking-fund contributions.

• Long-Term Maintenance:

• Remember that a farm’s costs (vet bills, feed, repairs) can fluctuate. Keep a small “Farm Emergencies” envelope.

• Personal Emergency Fund:

• Typically 3–6 months of household expenses is recommended.

• If you’re in a unique situation (like living partially off farm income), you may want more.

• Business Emergency Fund (GmbH and LLC):

• Keep at least 1–3 months of operating costs in reserve, so you can cover payroll or fixed expenses if revenue dips.

• Separate from Sinking Funds:

• Emergency funds should be quick-access and not used for planned expenses.

• Quarterly Audits:

• Every three months, compare your actual spending and saving to your budget goals. Adjust your categories or amounts if you see consistent over/underspending.

• Accountability Partner:

• If you have a partner or trusted friend, review your budget together. For businesses, consider scheduling a monthly call with a bookkeeper or CPA to stay on track.

• Expense & Receipt Management Apps:

• For business: Tools like Expensify, Pleo, or Qonto’s built-in features can help capture receipts and track spending in real-time.

• Connecting Notion to Other Apps:

• Using automation tools like Zapier or Make (formerly Integromat) can push bank transaction data or PayPal sales info into your Notion database automatically.

• Celebrate Small Wins:

• Did you manage to save an extra €50 beyond your usual deposit? High-five yourself or the family!

• Stay Flexible:

• Budgets are living documents. If your circumstances change (new job, bigger farm, new child), adjust your envelopes and sub-accounts accordingly.

• Keep It Fun:

• Use colorful dashboards, stickers, or digital badges in Notion to mark milestones. The more enjoyable the process, the more likely you’ll stick to it.

Implementing a zero-based budgeting system across multiple personal and business ventures can feel like juggling, but the key is structure and consistency. Set up clear categories, automate what you can, and log everything routinely—whether in your Notion workspace or your physical binder with aesthetic dashboards. Over time, you’ll develop an intuitive sense for your cash flow, enabling you to grow your farm, strengthen your businesses, and pay off debts with confidence.