# How to Create a Zero Based Budget in Excel (With Easy Steps)

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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.

## 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.

### 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.

Here, in the SUM function, I selected cell range C6:C8 as numbers. The formula returns the summation of the cell range C6:C8.

### 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.

### 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.

Here, the 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.

Now, the formula 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.

Here, in the 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.

Now, the 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.

Here, the formula 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.

Here, 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.

### 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.

## 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.

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Mashhura Jahan

Hey! Welcome to my profile. Currently, I am doing research on Microsoft Excel. I will be posting articles related to this here. My last educational degree was B.Sc in Industrial and Production Engineering from Bangladesh University of Engineering and Technology. I like to explore new things and find the best and most innovative solutions in every situation.

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