What is a zero-based budget, and how do you set one up in a spreadsheet?

Last updated: 4 November 2026 · By Quicksloth

A zero-based budget is a monthly plan where income minus everything you plan to pay, spend, save and pay toward debt comes to exactly zero. Zero is the plan, not your bank balance: it means every dollar has a job before the month starts. Here is how to set one up in a spreadsheet, with one household's plan for 2027 and their real January read against it twice, halfway through and at the end.

Short version: start from the take-home pay you're sure to get this month. Give it jobs, one category at a time: bills, day-to-day spending, savings, debt payments. Keep going until income − bills − expenses − savings − debt payments = 0. If the plan comes out below zero, cut a budget; if it comes out above zero, give the rest a job too. During the month, compare the actual with the plan; when money is left at the end, give it a job by writing the move down, and check first that the bills due before your next payday are covered.

This is a worked example of a calculation, not financial advice. Your own pay, bills and categories will be different.

What "zero" means

In a zero-based budget, the plan for the month has one line that must read zero:

Left over = income − bills − expenses − saved − debt payments

• Saving is a job. Money you move to savings, a sinking fund or a goal counts as spent for the plan. So does an extra payment on a debt. That's why a zero plan doesn't mean you spend everything.
• Zero is the plan, not the account. Your account can (and should) still hold money at the end of the month. What zero says is that you decided what every dollar of this month's income is for.
• A cushion can be a job too. If you want to keep money in the account for surprises, give it a line, for example a savings category or a sinking fund, so it's planned rather than left over by accident.

Start from the income you can count on

A made-up couple, Sam and Alex, are paid every 2 weeks: $2,450 take-home per paycheck, first payday Friday 1 January 2027. Most months bring two paychecks ($4,900); January, July and December 2027 bring three. Sam also has a small side job that usually brings around $350 a month.

A zero-based plan starts from the money you're sure of, so they budget two paychecks, $4,900, plus $350 of side income: $5,250. The third paychecks get a job when they arrive (more on that below). If your income moves a lot from month to month, budget the low end and give anything extra a job when it lands.

Give every dollar a job

Their first pass, with the categories and amounts of our yearly budget example, gave jobs to $5,280: $30 more than the $5,250 coming in. They trimmed dining out from $160 to $130, and the plan came to zero:

• Below zero: cut a budget before the month starts, as they did with dining out. A plan that's short on day one is short every month.
• Above zero: give the rest a job. In our yearly example, the same couple budget pay as an average of $5,300 a month instead of two paychecks, and the same plan leaves $370; a zero-based budget would put that $370 somewhere too, for example in savings or an extra debt payment.
• Leave room for the small stuff. A miscellaneous line ($40 here) catches the costs nobody plans for. Without it, every surprise breaks the plan.

Read the month halfway through

Every money move goes on one row of a transactions list: date, description, category, amount. The monthly view adds up the rows by line and puts them next to the plan. Left is budget − actual on every line, with a word next to it that says what the number means. Here is Sam and Alex's January after the rows up to 14 January, before the second paycheck:

• A negative actual Left over halfway through is normal. Rent, three other bills and all the transfers to savings went out in the first days of the month; only one paycheck has come in. The word says it: still to come, because income is still under its budget.
• On plan means the line is exactly where the plan says. They move their savings on the 2nd and 3rd, so Saved is done for the month.
• Left to spend, left to save, left to pay are what's still allowed on that line this month: $822 of day-to-day spending for the second half of January, $715 of debt payments due on the 16th.

Read the month at the end

All 39 rows of January in:

• Above plan (shown with a +) is good news on income, savings, debt and Left over: more came in, or more went to savings or debt, than planned. Here it's the third paycheck, on 29 January: income is $2,450 above the two paychecks they budgeted, minus $60 because the side job brought $290 instead of $350.
• Over budget is the bad-news word, used only for bills and expenses: electricity $122 and water $47 against $120 and $45.
• Expenses: $120 left as a group, but not on every line. Dining out came to $152 against the $130 they planned (−$22), while gifts, $50 in the plan, had nothing spent. The group total hides the move; the category rows show it.

The $2,506 left over adds up like this: the third paycheck ($2,450), minus the side income that didn't come ($60), minus the bills over budget ($4), plus the spending under budget ($120). The words above are the ones you see while January is still the current month. Once the month has ended nothing more is coming, so a line still under its budget no longer reads still to come or left to spend: income, savings, debt and Left over read below plan, and bills and expenses read under budget.

When the real month doesn't come out at zero

The plan was zero; the real month almost never is. What to do depends on which way it went.

• Money left at the end (Left over above plan): zero-based says it gets a job too. Write the move as a row: a transfer to savings, a sinking fund or a goal, or an extra debt payment. If Sam and Alex moved the whole $2,506 to their emergency fund on 31 January, Saved would read +$2,506 above plan and Left over $0 on plan.
• But check the bills before your next payday first. The 29 January paycheck is the one that pays February's rent, due on the 1st, before their next payday on 12 February. If they had moved the whole $2,506 away on 31 January, the account (which held $1,500 on 1 January) would be down to $50 after the rent on 1 February and below zero the next day, until the 12 February paycheck. Moving nothing, its lowest point between 29 January and that payday is $674, on 11 February. The safe job for part of a third paycheck is carrying you to the next one; How to budget by paycheck shows how to see that before you move money.
• One category over, the month still fine: move money between lines, as a zero-based budget allows: January's $22 over on dining out is covered by the $50 nobody spent on gifts. Write the reason in a note and decide whether the plan itself needs to change.
• Less left than planned (Left over below plan): bills and expenses together ran over their budgets (once the month has ended, also when income came in under its budget). Cover it from a line that still has money (a category under budget, or the miscellaneous line), or from a sinking fund if that's what it's for, and look at the plan before next month. The two other words on that line: still to come means income hasn't all arrived yet, so wait before cutting anything; extra saved or paid means you put more than planned into savings or debt, which is your choice, not a slip.

February and March, with two paychecks each, end close to zero: $29 and $118 left over, both above plan. Small amounts like these get a job the same way, or stay in the account as next month's cushion if that's the job you chose.

Zero-based with pay every 2 weeks

Paid every 2 weeks, you get 26 paychecks in most years (27 in some, like Sam and Alex's 2027), so two or three months bring a third paycheck. Two ways to make that fit a monthly zero-based plan:

• Budget two paychecks a month (what this page does). Every normal month balances on its own, and the third paycheck gets its job when it arrives: first the bills due before the next payday, then savings, a sinking fund or debt.
• Budget the average (in our yearly example, $5,300 of pay a month). The plan looks roomier, but two-paycheck months bring only $4,900 of pay, so they run short of the plan, and the extra from the three-paycheck months has to stay in the account to cover them. In that version, February and March end with $29 and $118 left over against a plan of $370. If the $370 had been given a job and moved out every month, both months would have ended below zero.

You can also make the plan per paycheck instead of per month: each paycheck pays the bills due before the next one and its share of savings and debt, and what's left is that paycheck's spending money. That's in How to budget by paycheck (weekly, every 2 weeks, twice a month), with the same couple.

What our planner does, and what you do by hand

The two tables above are the Monthly tab of our Budget Planner, with Sam and Alex's January rows and the zero-based plan of this page (two budgets differ from the example file: see What this example assumes). What it does for a zero-based budget, and what it leaves to you:

• It does: the Left over line of the Monthly tab, budget and actual, from the monthly budgets in Categories and the rows in Transactions; the Left (budget − actual) column with the word in column F on the six summary lines (Income, Bills, Expenses, Saved, Debt payments, Left over); the same Left column for every category, with bills and expenses over budget in red; and the Dashboard with the year so far.
• You make the plan zero. The file doesn't force it: you adjust the monthly budgets in Categories until the Left over budget reads 0.
• One monthly budget per category. Each category has one Monthly budget that applies to every month of the year. A month with a different plan (a third paycheck, a birthday) means writing its extra jobs as rows in Transactions, not changing the budget, which would change every month.
• No carry-over. Money left in a category doesn't roll into next month's budget. For money you want to keep for later, use a sinking fund.
• The Saved budget moves. In the planner, Saved is your savings categories plus what each sinking fund and savings goal needs per month to reach its goal by its date, worked out from today's date. As months pass, that amount changes, and so does the Left over budget: check that it still reads 0 when you open a new month. (In this page Saved is fixed at $1,040, the transfers they actually make.)
• You give leftover money its job. The planner shows what's left; it doesn't move it. You write the transfer as a row in Transactions, and it shows up in the Saved or Debt payments line.

The formulas, if you build your own

Say you have a Categories tab with Category in column A, Type in B (Income, Bill, Expense, Savings or Debt) and Monthly budget in C, and a Transactions tab with Date in A, Description in B, Category in C, Amount in D and the category's Type in E. On a monthly tab, put the first day of the month in B1 (for example 1/1/2027).

• Left over of the plan (should read 0):
  =SUMIF(Categories!$B:$B,"Income",Categories!$C:$C)-SUMIF(Categories!$B:$B,"<>Income",Categories!$C:$C)
  Income minus every budget that isn't income.
• Left over of the month, actual:
  =SUMIFS(Transactions!$D:$D,Transactions!$E:$E,"Income",Transactions!$A:$A,">="&$B$1,Transactions!$A:$A,"<"&EDATE($B$1,1))-SUMIFS(Transactions!$D:$D,Transactions!$E:$E,"<>Income",Transactions!$A:$A,">="&$B$1,Transactions!$A:$A,"<"&EDATE($B$1,1))
  Income rows of the month minus every other row of the month.

We checked both in LibreOffice on Sam and Alex's plan and January rows: $0 and $2,506, the numbers above. SUMIF, SUMIFS and EDATE also exist in Excel and Google Sheets. Amounts have to be numbers and dates real dates: a value stored as text is skipped by the sums without warning. More formulas, by category and for the whole year, are in How to set up a yearly budget spreadsheet.

What this example assumes

• The household, names and amounts are made up. They are the example of our Budget Planner, with two changes for this page: pay budgeted as two paychecks ($4,900) instead of $5,300, and dining out at $130 instead of $160.
• The Saved budget is fixed at $1,040 a month, the transfers they actually make. In the planner's example file it's worked out from the sinking funds, the savings goals and today's date, so you'll see a different Saved budget and Left over budget there. Every actual number is the same.
• Take-home pay is the same on every paycheck. The account balance assumes every row goes through one account that held $1,500 on 1 January.

We worked the numbers out twice: with the formulas of the spreadsheet, recalculated in LibreOffice on a copy of the example file with the two changes above, and with a separate script. Both give the same budgets, actuals, differences and words. We used AI tools to help write this article and the calculations.

Start your own

Our Budget Planner has the pieces a zero-based budget needs: a Categories tab with a type and a monthly budget for each category (24 starter categories you can rename, up to 60), one Transactions list, and a Monthly tab with the Left over line and the words above for the month you pick. A Paycheck Budget tab does the same split per paycheck, and Sinking Funds, Savings Goals and Debt Payoff tabs give your savings and debt payments their jobs. It works in Excel and Google Sheets and is coming soon to our Etsy shop.

Want a quick check of how your plan splits between needs, wants and savings? See How the 50/30/20 rule works with real numbers. Saving for bills that don't come every month? See Sinking funds: a worked example for irregular bills.

Not financial advice. The example shows how a zero-based budget adds up under the assumptions above; it doesn't know your income, your goals or what your bills will really cost.