I preach the value of doing a new budget every single month and how important it is to get in the habit of planning every dollar that will come in. In doing so, I get a lot of feedback dominated by eye rolls and smirks. Apparently a lot of you don’t like to make a plan for your money on paper every month. And I can’t necessarily blame you.
It is hard, and it takes discipline. It also is IMPORTANT. So when you have to choose between the latest episode of your favorite TV show or doing your monthly budget after a long day of work, the budget is apt to lose every now and then.
That being said, I bet you’d appreciate it if I could give you an easier method to do your budget than pencil and paper. That’s what today’s post is all about, thanks to a question by a reader. Let’s learn to simplify the dreaded budget!
If you’ve read my book or attended any of my workshops, you know I generally teach folks to do a budget on a calendar. It is very visual and very effective. But it is also a lot slower than other methods. For those really struggling to make ends meet and/or to behave with their money, I believe this is needed. But eventually I hope we all graduate to a better method that allows us to put our funds into categories and allocate as appropriate. This is the assumed method with this template.
If you’re a nerd like me, you’re always looking for ways to use Excel. It is something about the view of those lovely cells on the rich, white background that makes you want to enter data and calculate important variables (by formula, of course), such as 2 + 2 or 1,739,384 * 2,324,525,757 just to see what the answer is. What? Just me? I’m the only one who does that? Oh.
If that whole last paragraph made no sense to you because you don’t know what Excel is, stop reading now and just use paper – it will be easier. For everyone else who knows what Excel is and have it installed on your computer (or are willing to download Open Office or use Google docs (part of Google Drive now), a couple of good (and free) alternatives), this post is for you.
First, download the Excel budget template here. This is to give you an idea of what you can do with Excel for a simple family budget. This will NOT fit your scenario 100%. Budgeting is designed to be flexible, so please know this is just a template to guide you in doing your own budget in Excel. I’ll walk you through our process so you can see how we do our budget each month based on our steady income (I’m salaried). If you’re on an irregular income, you should read this post before you go further.
Notice there are several tabs along the bottom of the spreadsheet: one for each month, one for instructions and one for categories. Read the instructions, then fill out the categories tab according to those instructions. Most importantly, only enter data in the green cells!!!
Next, go to the tab for the month for which you’re ready to prepare the budget. Since it is currently toward the end of November, that means you’d be looking at the December tab. Remember, spend the money on paper (or in Excel) before you get it in hand. You’ll always make better decisions that way. You’ll find all the data you entered from the Categories tab auto-populated into your December tab. Yay for Excel! On this tab, enter any extra income you plan on for that specific month that you didn’t enter on the Categories tab, then enter the amounts of your various expenses. If you have other one-off expenses for the month, put those in the green cells provided for that purpose along with their amounts. Voila!
When it is all said and done, you should have a big fat 0.00 in the lower right of that month’s tab (highlighted in orange) and your budget is complete. Between savings and expenses, you “spent” every dollar of your income. That’s how a correct budget works.
If something goes wrong with your budget during the month, you can easily come back here and make adjustments. Your goal is to always end up with a 0.00 in the lower right while covering all your expenses with the income you’ve got to work with.
Well, that’s about it. For those of you who like Excel, I suspect you’ll love this form. For those of you who hate Excel, you will probably hate me now too. Oh well. That being said, I’m sure you’ll have some questions. That’s what the comments are all about. Will this make your budgeting easier?