esm7i Building the Best Budgeting Tool Free Using Spreadsheets
Making your budget with spreadsheets offers numerous advantages. The use of a spreadsheet is at no cost and lets you make use of the most effective practices in budgeting, such as those of the Cash Pie Calculator as well as using the 50/30/20 principle. A personal finance dashboard designed by and for you will help you be accountable and keep track of your financial goals and savings. It can be updated anytime via smartphones, so it doesn’t need to give access to your bank account through an application from a third party.
Budgeting Basics
This tool can assist users with the four points in Money Fit’s list of steps in their Complete Household Budgeting Handbook. It won’t help you set your financial objectives, but it will aid you in logging your earnings and expenses, estimating costs, and identifying and repairing weak points.
Create an Excel spreadsheet. I’ve made a template you can use (below) and set it up so you can input your data. Watching your budget grow as you add expenses and earnings is possible. I would suggest using this as a template and copying it into any spreadsheet software you want to use. I’ll discuss the spreadsheet program you can utilize below.
Note the expenses you incur. Begin by plugging into your fixed costs, and calculate your variable costs with an average that you can later adjust.
I’ve also added a “Miscellaneous” row in the spreadsheet to prepare for unexpected expenses. You should try to keep track of them for the entire year to calculate an appropriate average annually. Of course, you’ll want not to draw on your savings account to pay the costs and bills.
Keep track of income. You can enter your current earnings in the upper right-hand corner of the spreadsheet, in the area marked with lighter blue lines. If you’re required to, you could create a new row for each income stream. This should be done once you’ve determined your expenses.
This tool makes calculating your costs and surplus (i.e., your income less your spending) easy. Therefore, it is only necessary to keep it up-to-date every time you spend.
To do this, you must open your app each time you make a purchase and then remove the cost from those displayed in red. Change your “balance” amount in blue to match your current bank balance.
For instance, if you have a balance of $2,000 and you have budgeted $200 for food, and you purchase $75 worth of groceries, you’ll be able to increase the amount you spend on food to $125. Also, you will subtract the amount you spent from the balance of each month at the top of the list.
This is the concept behind this kind of budget: You can see if the estimate (in this instance, $200) is the amount you spend. If you exceed the amount you planned to budget for but require another $45 worth of groceries before the end of the month, you’ll have to change another item budgeted during the month to ensure you don’t fall lower than $0. Also, when you create your food budget for the coming month, you’ll know how much you spent during the month, and you can alter the budget for the next month in an appropriate way. It is the same for every category of spending. Within two or even three months, you’ll have a more real-time estimate of your expenditure for every category.
When making your first budget, you should close the blue income cell to $0 to focus on your expenditures. If you don’t, you could turn “your budget into an activity of trying to spend as much as possible.” Money Fit has already covered this, so I’ll direct you to their post on variable expenses here.
Only after this step do you include your earnings. You may have multiple income streams by adding a column beneath “Balance.” Make sure that you include only your earnings after tax.
After you’ve completed this step, then, you’ll be able to get an idea of whether your strategy will result in living within your budget or just below the limits.
If the sum in “Left to Spend” sits at or above 0, then you’re doing great, particularly if you have plans to dedicate a portion of the funds to gifts and donations and to improve yourself. If your score is below zero, you’re headed towards debt, and you’ll require tightening your belts in certain areas.
On this form, you’ll find two blocks of spending: “main spending” and “discretionary.” The main spending budget is for your necessities such as living expenses, entertainment, savings, and investing. These numbers are via the Money Pie Calculator and include 10 percent for investing, 10 percent for savings, and 10 percent for entertainment. The discretionary budget is made up of extremely flexible expenses. It also includes budgeting for contributions to charities, gifts and enhancing your abilities and knowledge to boost your earnings. It could involve learning a new language, taking an art class, or a training program.
If the time comes, you could be tempted to look into your budget for discretion first, but you should do everything you can to stay within your budget. If required, you can also shift some of your income to investing, saving, or miscellaneous expenses.
“Left to Spend” section “Left to Spend” section will show you what’s left after you have paid for all anticipated and actual costs for this month. This row already has the amount you’ve saved; however, you should consider saving any extra money at the close of the month.
I’ve also put in two savings rows to fund “Donations/Gifts” and one for “Improving” yourself. You might need to save for months to afford a particular present, course, or certification you wish to get.
