The easiest way to get a handle on your finances is to be able to see everything all laid out in black and white. For that reason, making your own personal budget spreadsheet is a great place to start. You have many options when it comes to developing your spreadsheet, it can be as simple or as complex as you want, but you really don’t need to get too carried away. Here are some things that you need to have to make your spreadsheet effective.
For one thing, in most cases, you will be better off working on a budget on a monthly basis rather than a yearly basis. There are too many things that can come up over the course of a year, but if you have a monthly budget it will be easier to adjust it in one month say for the holidays and then revert back to the normal budget the next month.
1. If your computer has Microsoft Excel you can easily make a spreadsheet (if you don’t have Excel you can download free spreadsheet programs). Open your program and name your file for the month you are working on.
2. In the first column of your spreadsheet list all your monthly expenses, don’t leave anything out, make sure to include your utility bills, home and car loan payments, groceries, gas, prescriptions, and entertainment including the actual amount (or average) you pay on those bills each month. After you’ve got all your amounts listed, enter a line that says: ‘Total’
3. Use the tabulation feature on whatever program you’re using to total that column so that the total dollar amount you spend every month on those bills is listed in the ‘Total’ cell.
4. Then in another column enter your total monthly income after taxes. Make sure you include your spouses income too if you are using that.
5. Then all you have to do is deduct your monthly expenses from your monthly income to see if you have a surplus or a deficit. In other words do you have money left over at the end of the month (good) or are you in the hole at the end of the month (bad)?
6. Evaluate what you’ve just learned. This can be a very valuable tool since many of us don’t really have a good idea of how much we spend and just where it goes. By listing it out like this you can see where your weak spots are and once you’ve identified them you can make corrections to improve your cash flow every month.
The real trick is using the information that you’ve gathered. If you can plug the leaks in your financial boat you will be better prepared for whatever the future holds. You can use this information to get a handle on any frivolous spending you are doing and then apply that saved money to pay down a credit card or put it in a savings account or CD.
A personal budget spreadsheet doesn’t have to be some big elaborate affair. You can use a computer program or you can use a piece of paper and a pencil, no matter which method you choose consider this the starting point to getting a grip on your finances and achieving your financial goals. Knowing exactly where you are now is the first step to get to where you want to be tomorrow.
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