January 27, 2022

Spreadsheet Your Budget

Making a budget is not complicated. You can either do it the easy way or the slightly more tedious way. The slightly more tedious way is to do it with a pen and paper or notebook. You have to write everything out by hand and use a calculator. A bad thing about this besides getting a cramped hand is the increased possibility for errors.

The easy way to keep your budget is to use the computer. I like to use an Excel spreadsheet, but you can use any spreadsheet program. You have a few options for creating your spreadsheet budget. You can search the web for a premade template or you can make your own. I prefer to make my own because I can make it exactly to my specifications. Usually the free templates include things I don’t need and exclude things I do need.

You can use a premade template to get some initial ideas. Some are very complicated and some are simpler. By looking at a few, you can tailor them for what you need. For example, if you have a family that you support and have several sources of income and several different expenses, you will probably need to devise a slightly more complicated plan. If you are single, live by yourself, and have one source of income, you probably don’t need as complicated of a plan.

When you create your spreadsheet, you need to have two basic columns, your cash inflows and your cash outflows. Cash inflows include every source of income and for how much. You will list your salary, interest income, dividend income, part time jobs, tips, royalties, and any other revenue you take in every month. Your cash outflows are all your expenses. Include your mortgage or rent, utilities, phone, internet, cable, food, clothes, etc. You can be broad, but I prefer to be as specific as possible. You could put a certain amount for ‘extras’, but I prefer to state a specific amount for books, a specific amount for clothes, music, eating out, etc. Be as specific as you feel you need to be to help you save money.

Finally, have each column add up and subtract your cash outflows from your cash inflows to get your net cash flows. This is what you have extra for saving. You may be wondering where to include investments. If you contribute to a 401k or IRA that is directly withdrawn from your account, this should be included in your inflows anyway. Just include your take-home pay in your income. Keep in mind that you have this money set aside for retirement, but don’t assume this is all you need to be saving. Also save money for emergencies, college, vacation, and you can also invest other money to build your wealth. I would suggest not including this in your cash outflows.

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