If you’re looking for ways to take charge of your finances, a budget spreadsheet is an excellent way to get organized and track your spending. Sometimes, just laying out all of your income and expenses in a list and actively monitoring it can help curb spending.
Spreadsheets can seem intimidating, but they’re actually the perfect tool for building and managing a detailed budget. In this article, we’ll guide you through the process of creating a budget spreadsheet that will help you track your finances at a glance and work toward your financial goals.
1. Define your goals
Before you get into the technical aspects of creating a budget spreadsheet, take some time to think about your financial goals. Are you saving for a down payment on a house, aiming to pay off debt, or planning for a dream vacation? By defining your goals, you can plan your budget around them, which can help you reach them faster. And having something rewarding to work toward can be a great motivator!
If you need a little help determining how to set up a budget that will best meet your needs, you can read this article to learn more about budget types that focus on different scenarios.
2. Choose the right tool for you
Using the right spreadsheet software is an important part of creating an effective budgeting tool that you’ll be comfortable using. Some of the most popular options are Microsoft Excel, Google Sheets, and Apple’s spreadsheet app, Numbers. Check each of them out, and see which one feels most intuitive to you.
3. Set up your spreadsheet
Begin by creating a new spreadsheet and setting up the columns and rows for all of the things you want to track. Some key columns to include are income sources, expenses, savings goals, and a section where you can keep notes. Label the rows based on the categories you spend money on, like housing, transportation, utilities, groceries, entertainment, childcare, pet care, etc.
You can set up your spreadsheet to track monthly or weekly expenses. Weekly tracking provides the most advantage, because it allows you to see your spending in a more detailed way, and it’s easier to make adjustments. An ideal approach might be to set up weekly and monthly rows for each category.
If you need some help setting up your spreadsheet, here are some spreadsheet templates you can use to get started.
4. Calculate your total income
In the income section, list all the sources of income you have, such as salary, freelance work, or investment returns. Include both regular (like a paycheck) and irregular (any income that doesn’t repeat at regular intervals) income sources. Calculate your total monthly income by adding all of it together. If your irregular income is sometimes a large number, but not consistent enough to count on, it’s probably safest not to factor it into your income; it could be risky to allocate it toward covering expenses if it might not always be there when you need it.
5. Determine Your Expenses
List all your monthly expenses for each category. Group them based on fixed expenses (rent or mortgage, car payments) and variable expenses (groceries, utilities, dining out).
Analyze your bank statements, receipts, and bills to ensure everything is included. You’ll want to make sure you don’t miss anything at this step, or your whole budget could be inaccurate. Some expenses may be every two or three months, or quarterly; it can be helpful to break them out monthly to make sure your budget planning accounts for them (and can accrue funds to pay them when they’re due.)
6. Assign values to categories
Assign a value to each expense category based on your spending patterns. Estimate the amounts based on your previous spending history. If you don’t have a long history to draw from for certain things (e.g., if you previously lived somewhere that you weren’t responsible for paying utilities and now you are) find out what your average cost is likely to be. Most utility companies have tools to help you estimate what your bill might be, and here’s an article that can also help with that. It’s better to slightly overestimate than underestimate.
7. Calculate savings and remaining income
After you subtract your expenses from your income, you’ll see what you have available to save or invest. Designate a certain amount toward your savings goals, like emergency funds, retirement plans, or debt repayment. Subtract that amount from your remaining income to get an accurate picture of what you have left for discretionary spending.
8. Implement Formulas and Formatting
To make your budget spreadsheet easier to use, you can implement formulas that automatically calculate totals, percentages, and other things. Use functions like SUM, AVERAGE, and IF statements to simplify your calculations (whichever spreadsheet tool you use will have a guide to help you with common formulas). Formatting your spreadsheet with colors, borders, and conditional formatting can make it easier to interpret.
9. Monitor and Adjust
Creating a budget spreadsheet is an ongoing effort. Regularly check in on your income, expenses, and savings to make sure you’re staying on track. Compare your actual spending with the budgeted amounts, identify areas where you may be overspending, and make necessary adjustments. Updating your spreadsheet frequently will help you gain valuable insights into your financial habits and make informed decisions.
Creating a budget spreadsheet is a proactive step toward taking control of your financial future. By following these steps and customizing your spreadsheet to fit your needs, you can get a clear understanding of your income, expenses, and savings goals. Remember that consistency and periodic updates are key to successful budgeting.
