Using Excel for Budgeting and Financial Planning

Talking about money can be intimidating for many who find budgeting and financial planning an additional chore. If thinking about your personal finances doesn’t interest you, think about it this way.

Can you afford your dream vacation? Can you afford to renovate your home? Do you want to pay off your student loan and mortgage? Are you thinking about a good retirement? If you are optimistic about these things, consider your financial health seriously.

Microsoft Excel spreadsheet is a popular tool that can be used to build your own budget template. You can choose from Simple Sheets‘ collection of budgeting templates to save time and begin planning your financial goals.

Budgeting and Financial Planning

If you want to save or set aside money for your plans and goals, budgeting is a great way to do it. Budgeting is an excellent way of tracking your expenses, income, and savings.

Financial planning helps you control and keep track of your income and expenses. Your income and expenses differ every month. That’s why it is necessary to update your financial spreadsheets regularly.

Do you need a budget?

Yes, everyone should have a budget. A budget is a list of your actual income. It also includes your cash flow and where you plan to allocate your income. It reflects the amount that you can afford to spend and your savings.

Budgeting and financial planning should be done regularly. Avoid delaying, for this can become harder to do, and eventually, you end up not doing it at all.

What are savings?

There are three important components of savings. These are emergency, designated, and long-term or retirement savings.

Emergency Savings

Emergency savings are the money you set aside to cover your living expenses when you suddenly lose your income or have a medical emergency. Emergency saving has a budget period of three to six months. This is enough time for you to recover from your loss and bounce back up again.

Designated Savings

A designated saving is the money you have saved for years which will be used to fund large purchases such as a new house, a new car, or a grand vacation.

Retirement Savings

A retirement saving is simply the money you saved for your retirement. You will need money to spend on your daily living expenses now that you are retired or no longer working. You cannot depend on other people to support you. Hence, retirement savings are a big help.

Steps in Creating an Excel Budget Spreadsheet

Whether you are a student, businessman, or professional, using Excel for budgeting and financial planning is a great choice. Using Microsoft Excel spreadsheet budget templates, you can make budgeting much easier and faster.

Below are the simple steps for creating an Excel budget spreadsheet.

1. Know Your Financial Goals

The first step is not opening an Excel file. Rather, it is taking your time and carefully thinking about your financial goals, whether it is about your personal or professional finances.

Knowing your financial priorities, you can plan your future. You can pay for your car payment, student loans, retirement, and many more while saving money in the process.

2. Know Your Budget Period

After determining your financial goals, the next step is to consider your budgeting period. You can set either a monthly or annual budgeting period.

3. Know Your Annual or Monthly Income

You can only budget if you know how much you earn. If you are earning a fixed income monthly, budgeting is easy. The challenge would be earning on a per-job basis, which means you have an irregular income.

4. Create Your Excel Budget

You can easily create an Excel budget using a budgeting template. Several pre-made templates online, such as a household budget template you can use immediately. You can use a budgeting spreadsheet template to monitor and track your income and expenses.

You can create a budgeting template by following the steps below:

1. Open your spreadsheet and set up your Excel workbook. Encode your bills and all your monthly expenses, including the transaction date. You can also add the payment method and notes. You can keep your spreadsheet simple.
2. The next important step is to add functions or formulas to your spreadsheet template. The SUM function would be the most commonly used formula in your spreadsheet. You use the SUM function to compute the income, expenses, and savings.
3. You may add other basic functions like subtraction, multiplication, and division to your spreadsheet.

5. Encode All Financial and Budgeting Data

Encode all your financial data, such as your cash on hand, bank checks, debit card and credit card transactions, bank account details, and other expenses.

6. Know Your Monthly Expenses

Calculate all your expenses to determine which areas you are overspending, whether it is your credit card payments, rent, etc. You can then make adjustments to your budget and spending habits.

7. Compare Budget and Expenses

You must know your financial status. You can know it by comparing your income and expenses. Are you overspending, or are you well within your spending budget?

If your expenses exceed your income, you are overspending and may need to find a way to increase your income. You can get another job or review your expenses to track which expense needs to be cut.

8. Reviewing Your Expenses

If you are overspending, you must review all your expenses to check which particular area you are spending on the most. You can either cut off your expenses or reduce them.

You can check your spending habits by being more energy conscious at home to reduce your electricity bill or minimize going out, eating at restaurants, or shopping. Downsizing your lifestyle can be challenging for many, but you must instill discipline to control your financial health.

9. Practice Diligence and Discipline

Your financial journey is successful if you practice diligence and discipline. You must monitor and update your budget spreadsheet and check if you are within your target budget. You can make sound financial decisions if you diligently monitor your budget.

Take Control of Your Financial Health

Using Excel for budgeting and financial planning helps monitor your budget, spending habits, and fixed expenses. Having a budget helps you plan your daily life.

Desiring a successful financial journey can be challenging, but it is possible. You can take control of your financial plans and reach your goals through budgeting. Budgeting and financial planning can be fun and stress-free when you use a free budget template.