Zero-based budget spreadsheet
In a zero-based budget, income minus everything you assign equals zero. Not because you spend it all, but because savings are assigned too.
The rule
income − (fixed costs + variable limits + savings + debt payments) = 0
Every unit of income gets a category before the month starts. Money left unassigned tends to disappear; money with a job tends to do it.
Worked example with made-up numbers
Income: 3,000
Fixed: rent 1,100 · utilities 180 · phone 40 · insurance 90 · transport 120 = 1,530
Variable: groceries 420 · eating out 120 · personal 100 · fun 100 = 740
Savings: emergency fund 250 · holidays sinking fund 100 = 350
Debt: extra card payment 380
Total assigned: 3,000 → remaining 0
The spreadsheet layout
- Top: income for the month (actual, not hoped for).
- Categories: one row each, with planned and actual columns.
- Check cell:
= income − SUM(planned). It must show 0 before the month starts. - Transactions: date, description, category, amount. Actual per category comes from
SUMIFS(amount, category, "Groceries"). - Difference:
planned − actualper row.
When reality differs
Overspent on groceries? Move money from another category, such as eating out, so the check cell stays at 0. That is the point: every overspend is visible and comes from a specific place, not from vague "savings".
Irregular income
Freelancers and commission earners can still use it:
- Budget the month on your lowest typical income.
- When more comes in, assign the extra immediately by priority: buffer, debt, savings, then extras.
- Better still, build a one-month buffer and budget each month with last month's income.
If you invoice clients, the freelance invoice tracker shows what is about to come in.
Zero-based vs. other methods
- Compared with 50/30/20, it is more work but shows exactly where each unit goes.
- It pairs well with sinking funds: those are simply categories you fund every month and spend later.
- If you are new to budgeting, start with the monthly budget basics and switch once you have three months of numbers.
Common mistakes
- Budgeting income you do not have yet.
- Forgetting yearly costs: give them a monthly category.
- Too many categories: 12 to 15 is plenty.
- Not leaving a small "miscellaneous" line for the unplanned coffee.
Your first month
The first zero-based month is the hardest because you are guessing some numbers. Use last month's actual spending as the starting point for each variable category, round to a simple number, and accept that you will move money between categories a few times. By the third month, the limits reflect your real life and the check-in takes minutes.
Set a weekly 5-minute look at the categories that move the most, usually groceries and eating out, so you can adjust before the month ends rather than after.
Sample categories
Housing, utilities, phone and internet, insurance, transport, groceries, eating out, personal care, health, kids, fun, gifts, subscriptions, emergency fund, sinking funds, extra debt payment and miscellaneous. Merge or drop the ones that do not apply. Fewer categories make the monthly check-in faster and the plan easier to keep.
Frequently asked questions
What is a zero-based budget?
A budget where income minus everything you assign equals zero. Savings and debt payments are assigned categories too, so zero does not mean spending everything.
Does zero-based budgeting work with irregular income?
Yes. Budget on your lowest typical month and assign any extra as it arrives, or build a one-month buffer and budget each month with last month's income.
What formula checks a zero-based budget?
Income minus the sum of all planned categories. If the result is zero before the month starts, every unit has a job.
General information, not financial, tax or legal advice. Examples use made-up numbers.
Personal Finance Planner
Log income and expenses, set a monthly budget per category and track savings goals in one spreadsheet.