If you’re looking for a cost-effective way to manage your finances that also allows you to customize a budget based on your needs, a budget spreadsheet may be the way to go. While it can take some time to get it set up, you’ll have total control over your budget and the features you want to include.
Choose your software and template
Excel and Google Sheets are the most commonly used spreadsheet programs, but if you have a MacBook, you can also use the Numbers app.
If you’re creating your first budget or unfamiliar with spreadsheet formulas, you can search for budget templates to help get started.
Calculate your income
Create a list of all your income sources and include each of them on your budget spreadsheet.
If you earn a fixed income, such as a salary or retirement distributions, you won’t have to update your income each month. However, if your income is dependent on how many hours you work or if you’re self-employed, you may need to estimate your income each month based on what you expect to earn or what your average income has been over the past few months.
Categorize your expenses
Your budget is made up of both fixed and variable expenses. Common fixed expenses include:
- Rent and mortgage payments
- Insurance premiums
- Phone, internet and subscriptions
- Childcare costs
Because these costs may not change each month, you don’t need to set goals for them. Variable expenses, on the other hand, can change from month to month. Common variable expenses include:
- Groceries
- Fuel
- Dining out
- Clothing
Each month, you’ll want to review your income and fixed expenses, then set spending goals for each of your variable expenses based on what you have left over.
Decide how often to update your budget
Because expenses can change monthly, you may want to set your spending goals monthly. Also, consider how often you want to update your transactions and evaluate your budgeting process.
If you have a lot of expenses, for instance, it may make sense to spend a few minutes each day adding them to your budget spreadsheet. If you don’t want that level of oversight, however, you could decide to update your transactions once a week.
Enter your numbers
Once you have all the information you need and the timing set, you can start inputting numbers into your spreadsheet.
In one worksheet, you can lay out your income and your budget goals, broken down into separate spending categories. In a separate worksheet, you can detail your transactions as they occur. You’ll want to use the columns to note the merchant, transaction amount and spending category.
Then, you can use formulas in the first worksheet to automatically update your spending for each category every time you add a new transaction. If you’re unfamiliar with spreadsheet formulas, many budget templates include them for your convenience.
What if you can’t stick to your budget?
If you’re having trouble staying true to your budgeting goals, some changes may be needed. For example, cooking at home instead of eating out, reducing credit card use and driving less are all steps you could take to reduce your expenses.
You may also want to look for opportunities to reduce your fixed expenses, which may involve things like canceling streaming services.
Whatever you do, the important thing is that you take a deep look at your spending and try to find a budgeting method that works for you.
For more information on budgeting, see the following articles: