If you are looking for a way to create a budget to spend your money in the right way then you can try a zero-based budget. You can create a zero-based budget in Excel very easily. The objective of this article is to explain how to create a zero-based budget in Excel.

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## What Is Zero Based Budget?

A **zero-based budget** refers to a budget in which you use every penny you earn for a specific purpose. It is an income and expense plan where you make a list of your expected income and expenses before a month starts. And then assign a specific amount to every expense category so that the **end balance** remains **zero**. This means for **zero-based budget**,

**Total Income â€“ Total Expenses = 0**

## Create a Zero Based Budget in Excel: Step-by-Step Procedures

Here, I will show you how you can **create a zero based budget** for yourself in Excel. By creating a **zero based budget** you will be able to track your** income** and **expenses** in a better way so that you donâ€™t have to be in debt at the end of the month. And you will be able to cut unnecessary expenses. Letâ€™s see the steps of creating a** zero based budget** in Excel.

### Step-01: Make Table for Income

In this first step, I will make a **table for income **in the** zero based budget** in Excel.

- In the beginning, create a table with
**four columns**for Income. You can add rows as per your need.

- After that, name the columns.
- Here, I named my
**1st**column**Category**. In this column, I will enter the income sources. - Then, I named the
**2nd**column**Expected**. Here, I will enter the**Expected Income**. - The next column is
**Actual**. Here, I will enter the**Actual Income**. - And the last column is named
**Difference**. I will contain the difference between the**Actual****Income**and the**Expected Income**.

**Read More:** How to Prepare Budget for a Company in Excel

### Step-02: Enter Categories and Expected Income

Here, I will enter the **Categories** and **Expected Income** in them.

- Firstly, enter your income sources in the
**Category**column. Here, I entered mine.**Salary**is**fixed income**here.**Business Profit**and**Interests**are**variable income**.

- Secondly, at the bottom of the
**Category**column create a row for**Total Income**.

- Afterward, insert your
**Expected Income**for every**Category**into the table. Here, I inserted mine.

- Then, select the cells where you want to calculate the
**Total Income**. Here, I selected cell**C9**. - Next, in cell
**C9**write the following formula.

`=SUM(C6:C8)`

- After that, press
**Enter**and you will get the**Total Income**.

**the SUM function**, I selected cell range

**C6:C8**as

**numbers**. The formula returns the

**summation**of the cell range

**C6:C8**.

**Read More: **How to Prepare Annual Budget for a Company in Excel

### Step-03: Create Table for Expenses

Now, I will create a table for **Expenses **in the **zero based budget **in Excel.

- First, create a
**four-column**table for**Expenses**. You can add rows to this table as per your need.

- Next, name the columns.
- Here, I named the first column
**Category**. I will add the**Categories**for**Expenses**in this column. - Then, I named the second column
**Budgeted**. Here, I will insert the**Budgeted Expenses**. - And the last column is named
**Difference**. In this column, I will calculate the differences between**Budgeted**and**Actual Expenses**.

**Read More: **How to Create a Business Budget in Excel

### Step-04: Enter Categories and Budget

In this step, I will enter the **Categories **for **Expenses **and the **Budget **for a specific category.

- Firstly, insert the
**Category**for**Expense**into the table. Here, I inserted mine.

- Next, at the bottom of the
**Category**column create a row for**Total Expenses**.

- Afterward, enter
**Budgeted Expenses**for every**Category**.

- Then, select the cell where you want to calculate the
**Total Expenses**. Here, I selected cell**C19**. - Next, in cell
**C19**write the following formula.

`=SUM(C12:C18)`

- After that, press
**Enter**to get**Total Expenses**.

**SUM**function returns the

**summation**of the cell range

**C12:C18**.

**Read More: **How to Create a Project Budget in Excel

### Step-05: Make Some Adjustments to Get Zero

Here, I will calculate the **Final Balance**. And then I will show you how you can **make some adjustments **to get a **zero based budget **in Excel.

- In the beginning, create a row for
**Final Balance**at the bottom of your table.

- Next, select the cell where you want to calculate the
**Final Balance**. - Then, write the following formula in that selected cell.

`=C9-C19`

- Further, press
**Enter**to get the**Final Balance**. - Here, you can see that the
**Final Balance**is**-$100**. This means the**Total Expenses**are**$100**more than the**Total Income**. But for a**zero based budget**, the**Final Balance**needs to be**zero**. So, I will make**some adjustments**to make it**zero**.

**subtracts**the

**Total Expenses**from the

**Total Income**and returns the

**Final Balance**.

- After that, look where you can cut the
**Expenses**. Here, I cut**$50**from**Personal**. And then the**Final Balance**becomes**-$50**.

- Then, again look for a category where you can cut
**Expenses**. Here, I cut**$50**from**Restaurants**. And finally, the**Final Balance**becomes**0**.

### Step-06: Enter Actual Amount

Here, I will enter the **actual amount **for both **Income **and **Expenses**. This will help to compare the **Budget **and the **Actual **values.

- Firstly, enter the
**Actual Income**. Here, in the following picture, you can see that I have entered my**Actual Income**and it slightly varies from the**Expected Income**.

- Secondly, select the cell where you want to calculate the
**Total Income**. Here, I selected cell**D9**. - Thirdly, in cell
**D9**write the following formula.

`=SUM(D6:D8)`

- Then, press
**Enter**.

**SUM**function, I selected cell range

**D6:D8**as

**numbers**. The formula will return the

**summation**of the cell range

**D6:D8**.

- After that, enter the
**Actual Expenses**in the table.

- After that, select the cell where you want to calculate the
**Total Expenses**for actual expenses. - Next, write the following formula in that selected cell.

`=SUM(D12:D18)`

- Then, press
**Enter**to get the result.

**SUM**function returns the

**summation**of the cell range

**D12:D18**.

- After that, select the cell where you want to calculate the
**Final Balance**. Here, I selected cell**D20**. - Then, in cell
**D20**write the following formula.

`=D9-D19`

- Finally, press
**Enter**.

**subtracts Total Expenses (Actual)**from the

**Total Income (Actual)**and returns the

**Final Balance**.

### Step-07: Calculate Differences

In this step, I will calculate the **difference between **the **Actual **value and the value in the **Budget**. This will show if you were able to maintain the budget.

- In the beginning, select the cell where you want to calculate the
**Difference**. - Then, write the following formula in the selected cell.

`=D6-C6Â `

- Next, press
**Enter**to get the**Difference**.

- After that, drag the
**Fill Handle**down to copy the formula.

**subtracts**the

**Expected Income**from the

**Actual Income**and returns the

**Difference**.

- Finally, in the following picture, you can see that I have copied the formula to the other cells.

- In the end, calculate the
**Difference**for**Expenses**in the same way.

**Read More:** How to Calculate Remaining Budget Using Formula in Excel

### Final Output

In the following picture, you can see the final output. Here, I deleted all the input values so that you can use this as a template for your **zero based budget**. You can also change the categories as per your need. Or, you can follow the steps to** create a zero based budget **in Excel on your own.

## Advantages of Zero Based Budget

You can** create a zero based budget **in Excel before the month starts to track your **Income **and **Expenses **in a more effective way. The advantages of a **zero based budget **are.

- It helps to track
**Income**and**Expenses**. - A
**zero based budget**helps to cut**unnecessary Expenses**. - It helps to set a goal and then spend money according to that plan.

**Download Practice Workbook**

You can download the practice workbook from here.

## Conclusion

To conclude, I tried to explain how to create a zero based budget in Excel in simple steps. I hope this article was helpful to you. Lastly, if you have any questions then feel free to let me know in the comment section below.