Adulting is hard, but there are certain things that only seem difficult until you get started. One of these tasks is figuring out how to create a budget spreadsheet.
Creating a budget is one of those things you know you should really do, but have probably been putting off for a while.
Very few people like crunching numbers. Even fewer people like the idea of tracking every dollar they spend. But by breaking it down into simple steps, you’ll have an easier time getting your finances in order (and still have time to watch cat videos).
How to Create a Budget Spreadsheet You’ll Actually Use
Before you even get started, think of your motivation for doing this.
Are you struggling to pay off student loans? Is credit card debt constantly on your mind? Maybe you’re saving up to buy a house, or simply finding a way to get out of your parents’ basement.
Whatever your motivation is, think about that. You can read all the “How to Create a Budget Spreadsheet” tutorials online, but until you address the “why,” getting started will be a challenge.
10 Steps to Creating a Budget
1. Find the Right Software
Everyone has a preferred toolset when it comes to staying organized. If you want to jot everything down on a notepad, go ahead.
If Microsoft Excel is more your speed, there are a lot of helpful tools specifically for spreadsheet creation in this platform. Google Docs also has a spreadsheet option with similar functionality.
There are also a number of free budget tools available online that will tell you how to create a budget spreadsheet. Some of them even track your spending to fully automate the process.
2. List Your Income
Once you pick a system that works for you, it’s time to start inputting the data.
The first line you’ll need to include is your income. This includes your net salary (the amount you take home after taxes), and any additional income you may have from freelance or contract work.
If you’re setting a budget with a spouse or partner, be sure to include all streams of income from each person.
3. Document Recurring Expenses
There are certain expenses each month that are non-negotiable. Things like your mortgage or rent, car payments, student loans, etc.
These should be regular payments, meaning the numbers stay the same each month.
4. List Additional Expenses
Your cell phone bill, utilities, groceries, clothing, and entertainment will all fall under this umbrella.
These are the places you’ll find the most leeway in your budget if you find yourself overspending and needing to cut back.
5. Separate Needs from Wants
Within your list of Additional Expenses, you’ll likely see some items take priority over others. For example, keeping the lights on and water running at home is pretty important.
Similarly, getting food on the table is something you need to do in order to live.
Your wardrobe, on the other hand, might not need a refresher for the coming season. You can probably also do without that round of drinks with your friends from work.
While it can be difficult to turn down invitations, these should be considered “wants,” rather than needs.
6. Track Expenses for 1 Month
For the next month, keep all of your receipts and track each transaction you have.
This includes any meals you have during the week, that cup of coffee you got this morning, and that donation you made for the holidays.
Even if these are not “normal” expenditures, it all becomes a part of how to create a budget spreadsheet that is as accurate as possible.
If you have trouble remembering everything or finding receipts, don’t worry – there’s an app for that!
7. Create An Average Budget for Each Item
Once you’ve spent a month tracking all of your purchases and adding them to appropriate columns in your spreadsheet, add up the different rows to figure out an average monthly budget for each one.
So if you spent $57 on lunches at work this month, factor in about $60 per month in outside meal costs. Or, if you want to challenge yourself, get it down to $50.
If you have upcoming events like birthdays to consider, make sure you include that in your budget, too.
8. Estimate Required Savings Per Month
Remember when we discussed your motivations at the beginning of this post? Here’s where they come into play.
What are your financial goals, and what’s your time frame for achieving them?
If you can come up with concrete numbers, see how much you’d need to save each month to reach those goals. If you can’t quite set aside that much on a monthly basis, see if there are any items currently on your budget that you can reduce.
It could be one less cup of coffee per week, eliminating take-out dinners in favor of home-cooked meals, or even finding a cheaper cell phone plan.
When you began researching how to create a budget spreadsheet, it was so you could reach those end goals. Identifying them and making some sacrifices is all part of the game.
9. Set Automatic Savings Transfers
Once you have the amount of money figured out that you’ll set aside for saving each month, looking into automatic transfers.
If you have direct deposit at work, you probably have the option of splitting up your paycheck into multiple accounts.
Many online banking providers will also allow you to set up automatic monthly transfers from one bank account to another.
While it’s perfectly fine for you to set reminders to do this manually, setting up the automatic savings will be one less thing to worry about.
10. Rinse and Repeat
Tracking your budget is a continual process. Keep monitoring and updating your budget columns to keep spending in check.
If your situation changes and you increase your income, make sure the new numbers are reflected (and feel free to add to your savings!).
Making the Most of Your Spreadsheet
Knowing how to create a budget spreadsheet is important, but making the most of your spreadsheet once it’s created is even more important!
Look for ways to get the most out of your income and focus your spending where it matters most. Many of us have had months where we’ve spent more than we’ve earned, and your budget spreadsheet should help prevent this in the future by serving as a spending guide.
Once you have it all figured out, feel free to celebrate by watching your favorite gifs on repeat.