How to calculate revenue and expense variance to the budget Before analyzing what budget variances mean, they must first be calculated.

We'll calculate the historical monthly variance of the S&P 500 Total Return Index over a five-year period from August 2010 through July 2015 -- that's 60 observations (5 years x 12 months).

Variance is a measurement of the spread between numbers in a data set. Investors use the variance equation to evaluate a portfolio’s asset allocation.

To calculate statistical variance in Microsoft Excel, use the built-in Excel function VAR.