When it comes to managing your finances effectively, a budget spreadsheet may prove to be one of the most accessible tools in your arsenal. It can help you track your income and expenses, identify areas where you might be able to save money and give you a more detailed view of your financial habits.
Creating an effective budget spreadsheet is often the first step toward taking greater control over your financial destiny.
Here are some steps that may help when building your own budget:
- Choose a spreadsheet program or template.
- Create categories for income and expense items.
- Set your budget period (weekly, monthly, etc.).
- Enter your numbers and use simple formulas to streamline calculations.
- Consider visual aids and other features.
1. Choose a spreadsheet program or template
A logical starting point to building a budget spreadsheet would be to choose a program or template for this purpose. There’s a plethora of spreadsheet software to choose from, as well as several online budget planning apps. You may also be able to find pre-made templates you can use with some of the most popular spreadsheet programs.
When choosing your spreadsheet program or template (PDF), it can be helpful to consider a few things:
- User-friendliness: You’ll need to update your data regularly for your budget spreadsheet to be effective at tracking your finances. Are features you need to use hidden away in hard-to-find places? Are the menus overly complicated? Choosing a program or template that’s confusing to use or requires advanced knowledge from novice users can frustrate your budgeting efforts.
- Layout and legibility: If you’re going to use and update this spreadsheet regularly, it helps to ensure that its layout lets you easily track your data. Highly stylized templates may look cool, but can become distracting and difficult to work with from a practical standpoint.
- Additional features: While most spreadsheets use a common cell-based organization system, some of them offer unique additional features that may be worth considering. Perhaps you’re someone who really loves charts and graphs (more on those later). If that’s the case, you might want a program that specializes in creating graphs quickly or a template that automatically builds and updates them for you.
- Pricing: Last, but by no means least, is the price. This can vary from nearly nothing all the way to several hundred dollars, depending on the complexity of the program and your personal needs.
2. Create income and expense categories
Categories help to organize your budget. While the exact number can vary from person to person, there are two categories that are helpful to have: income and expenses. Within those, you can divide each into different subcategories. For example, you may consider breaking down different types of income you may have (including job salary, investment dividends and rental income).
Your expenses can potentially be divided into subcategories like dining, groceries and utilities, to name a few. If you wanted to get even more detailed, you may even be able to create additional subdivisions. Tracking individual bills for electric, water and heat under that larger “Utilities” category, for instance, may help you identify areas in which you could cut costs.
Another way to track and categorize some of these items is based on whether they’re fixed or variable:
- Fixed expenses: Fixed expenses in a budget are line items that are unlikely to change in the long term.This includes things like your rent or mortgage, car payments, insurance bills and the like.
- Variable expenses: These expenses include things like dining out or shopping, in which the total from one month to another is likely to vary.
The above concepts can also be applied to your income. You can note which subcategories are fixed (or fairly steady, like a job salary) or variable (like stock sales or contract work).
3. Set a budget period
When creating your budget spreadsheet, you’ll need to specify the period over which you’ll track your expenses. Monthly budgets are quite popular and might be the first thing you think of, but it might help to consider other periods too. Your budget period can be as little as a few days and stretch all the way to several years.
Some people may find a weekly budget helps them stay focused on short-term, specific goals, while others find that the wide view of annual budgets gives them clarity on their long-term habits. It’s really a matter of personal preference. Some programs may even let you get the best of each by taking your short-term data and expanding it over longer periods.
Another helpful tip is to create separate columns for your budgeted income and expenses, your actual income and expenses and the difference between them. This can provide more insight into your progress, helping you see how well you’re sticking to your projections or goals.
4. Input your numbers and use formulas
Once your spreadsheet is set up the way you like, it’s time for some real fun: crunching numbers! We get it — doing math may not be everyone’s idea of a thrilling time. But spreadsheet programs do most of the math for you, almost instantly. We can't say that’s not a little exciting!
Once you’ve entered all your income and expense data, you can use input formulas to automate many essential calculations, such as adding all your expenses or finding the difference between your expenses and your income. You can also average things to get an overview of your monthly spending patterns, as well as perform a host of other calculations you may need. Specific formulas may vary from one program to another, but most of these formulas are readily available online for quick reference.
When starting out, you may not be able to recall all your spending or income off the top of your head. Your old bank statements can help you make some educated guesses to get you going. You can update these numbers with real-time figures as you continue over time.
5. Consider visual aids and other features
Many spreadsheet programs and budgeting apps can go well beyond standard arithmetic calculations, offering a range of other features to help you control and understand your budget on a deeper level. Here are a few additional features to consider:
Charts and graphs
There’s an old saying that a picture is worth a thousand words. Visual representations of your budget may be easier to digest than rows upon rows of numbers on a screen. For example, a pie chart could be a way to compare how much you spent across different expense categories.
Filtering and sorting
Another feature in many spreadsheet programs is the ability to filter or sort your data, based on criteria that you can customize. This might be useful if you’d like to filter your data to see things like expenditures over a specific amount or your spending patterns over a certain period of days.
Conditional formatting
Along with filtering and sorting, many spreadsheets allow users to create conditional formatting rules. For instance, you may be able to set a condition where a cell is highlighted green or red depending on whether you're over or under budget for that line item this month. This can help you see how well you’re sticking to your budget at a single glance.
In summary
Creating a budget spreadsheet doesn’t have to be a complex or intimidating process. Thanks to automated formulas in modern spreadsheets, budget calculations don't need to feel like a chore. Once you choose your program, you can potentially make your budget as simple or detailed as you like — or even let it evolve alongside you.
Learn more about Chase’s budget planner
