Which of the following is a primary benefit of writing and following a zero-based budget?

• A. It helps you avoid overspending and impulse purchases.
• B. It guarantees an increase in your monthly income.
• C. It allows you to spend without any restrictions.
• D. It eliminates the need to track your expenses.

Answer: (A)

Verified step by step guidance

1. Understand the concept of a zero-based budget: A zero-based budget is a budgeting method where every dollar of income is allocated to a specific expense, savings, or investment category, ensuring that the total income minus total expenses equals zero.
2. Identify the primary benefit of a zero-based budget: The main advantage is that it helps individuals control their spending by assigning every dollar a purpose, reducing the likelihood of overspending or making impulse purchases.
3. Evaluate the incorrect options: Analyze why the other choices are not correct. For example, a zero-based budget does not guarantee an increase in income, nor does it allow unrestricted spending. It also requires tracking expenses to ensure the budget is followed, so it does not eliminate the need for expense tracking.
4. Relate the correct answer to financial discipline: Emphasize how a zero-based budget promotes financial discipline by encouraging thoughtful spending and prioritization of financial goals.
5. Conclude with the importance of budgeting: Highlight that following a zero-based budget is a proactive approach to managing finances effectively, helping individuals achieve financial stability and avoid unnecessary debt.