Just as every person has a unique lifestyle, every budget must be designed to meet that lifestyle. While many already designed templates can be modified to meet your needs, it is good to know how to quickly and easily build your own budget template using a simple spreadsheet. Here are the steps you’ll need to complete in order to build your own spreadsheet based budget. You can read through this article as well as watch our video on how to create a simple template.
Choose Your Spreadsheet Program
It used to be that Excel was the only viable spreadsheet program to use, but that has changed dramatically over the past several years. Now there are a number of free alternatives to choose from. For a complete Microsoft Office replica, you can download OpenOffice.org for free and have access to a spreadsheet program that can save its files in Excel format and that can also open Excel and other files. Or, if you don’t mind working online, check out Google Docs, where you can access, save and download spreadsheets in either Excel or OpenOffice format. At Google Docs you can save the spreadsheet under your username and access it from any computer that has Internet access and a browser. Once you’ve chosen your spreadsheet program, it’s time to start creating your budget template.
Start by Listing Budget Categories
The easiest way to start your template is to begin by listing top level expense and income categories. Make sure you know how to add rows to your spreadsheet and reorder it so that you can keep making changes as you think of new categories. Start by putting your income at the top, followed by expenses. You should have some type of organizational method in mind when making your list of expenses. For example, you could list the categories alphabetically if you desire. In our case, we prefer to list the categories based on the size of the expense. After a few minutes of thinking about expense categories, here is what our spreadsheet looks like:
Add Detailed Expenses Under Each Category
The next step is to add a row for each expense under each of the categories. For example, for housing you can add a line item for your monthly rent or mortgage, as well as your homeowners or renters insurance, and any other expenses relating to your housing costs. Do the same for other categories. We recommend adding a margin or indenting these detailed expenses to make it easier to read. We also chose to make the main categories in bold. The hardest part about this step is trying to remember all of the expenses for each category. Don’t worry if you forget some of the budget items, as you can always modify and add new expenses as they occur. Here’s what our budget template looks like now:
Add Columns for Monthly and Annual Expenses and Totals
Now it’s time to get your budget spreadsheet ready to enter your expenses. At this point, you must determine how you would like to finish your budget. You could create a budget that tracks your actual expenses each month of the year, or you could create a somewhat averaged budget, that allocates annual expenses into a monthly figure so that you can compute what your average month’s budget looks like. It really depends on what you are trying to do. If you’re just trying to get an estimate of how much money you should be saving each month then you could just add two columns. One for monthly and one for annual expenses. For annual expenses, you would create a formula for the monthly amount that just divides the annual expense by twelve. In this case, we’ll make a budget that is meant to be updated each month with actual expenses, so we’ll add a column for each month. In this step, we’ll also put in totals and borders. When finished, our budget template will look something like this:
Note that the “income minus expenses” field is really a calculation of your budget surplus or deficit. Once you have this step completed, its time to customize your template.
Add in the Final Touches to Your Budget Template
Now that you’ve got most of the template completed you can add in some final touches. These include adding a title at the top as well as any calculations you want to create. For example, you could add a percentage calculation for each expense category. You could calculate it as the percent of total income that you spend on each category, or it could represent the percent of your total expenses. Determine which figures are most important to you and make some calculations. Some common budget calculations are as follows:
- Add up all discretionary expenses and calculate what percent of your total budget they represent.
- Make a column after each month that shows the percent increase or decrease from the previous month.
- Add a row at the bottom that shows your budget surplus or deficit as a percent of your total income. This is equivalent to what percent of your income you should be able to save each month.
- Create a column at the right of your template that shows an average of each expense.
- Create a row at the bottom of your spreadsheet that shows how much you’ve improved your budget each month in terms of dollars and percents.
- Really, the number of calculations you can make here are endless, so focus on what drives your budgeting the most.
Now that you have completed your budget template, it’s time to start tracking your expenses and adding them to your template. You’ll need to constantly modify it to accomodate one off expenses and to include expenses that you forgot to include in the initial design. Have fun and save money!