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Creating a budget spreadsheet

May 1, 2017

As many twenty-somethings will probably agree, one of the scariest parts of #adulting is managing finances. In fact, it makes me feel all fancy and grown up to just type the words “managing finances.”

 

Paying bills, tracking bank statements, planning a budget, and figuring out how to put money in a savings account while still being able to afford groceries is no simple task and can easily become overwhelming. This post is not meant to offer financial advice or insight about retirement planning—I’m still not even sure if I know what a 401(K) actually is—but I will provide you with some tips for creating a budget spreadsheet that can help ease some of the anxiety that comes with “managing finances.”

 

Before we get to the how, let’s address the why. As in, “Why do I need to spend extra time creating a spreadsheet to track my spending habits when all of my banking is done online and all of my expenses are already outlined in my bank statement?”

 

Good question! And I have two answers for you:

  1. Knowing what it costs to live

  2. Peace of mind and less anxiety about spending
     

Knowing what it costs to live

When I got my first job out of college and saw my starting salary, it seemed like an exorbitant amount! After years of babysitting and working as a camp counselor, an annual salary seemed like more money than I could possibly spend, that is, until I realized how much rent, utilities, gas, and cable were going to cost me each month. When I started looking for apartments, I had no idea what price range was reasonable, because I couldn’t predict how much money I would be spending on food, clothes, household products, and entertainment each month. Creating a budget spreadsheet allowed me to take a realistic look at my spending habits, prioritize how I wanted to spend my money (usually food), and make safe decisions about what things I can afford based on what it costs me to live each month.

 

Peace of mind and less anxiety about spending

I have always had a lot of anxiety about money (okay, I’ve always had a lot of anxiety about everything, but money is definitely at the top of the list). Even as a child, I would often ask my parents “Are you sure we can afford this?” whenever we splurged on a nice meal or went on a vacation. As much as I like to buy new things, I absolutely dread spending money. If and when I choose to part with my hard earned cash, I want to feel excited about my purchase, not anxious. Maintaining a budget spreadsheet has granted me this peace of mind by removing some of the mystery from my bank account. A quick glance at the spreadsheet before a purchase will reassure me that whatever I’m about to buy is within my budget, and then I can swipe my credit card with gusto.  

 

Creating the monthly budget

 

Step 1:  Break your monthly spending habits into main categories. You can always change these later after some trial and error. These are the categories that I use:

  • Living Expenses (includes rent, utilities, electric, cable etc.)

  • Car (car payments, maintenance, gas)

  • Food (I further broke this down into "Groceries" and "Dining Out"

  • Household (includes things like cleaning products, toiletries, batteries, etc.)

  • Pet (if you have a pet, things like food, treats, grooming, vet visits, etc.)

  • Entertainment (this includes activities like going to the movies or bowling)

  • Personal (clothes, makeup, jewelry, etc.)

  • Monthly Subscriptions (things like Spotify, Amazon Prime, gym memberships, etc.)

  • Travel (if you travel regularly)

  • Other (anything random that doesn't fit into the other categories)

Step 2:  Figure out the cost of the "non-negotiables," things like rent and other living expenses. For most people, the living expenses and car expenses will total about half of their monthly budget.  

 

Step 3:  Subtract the "non-negotiables" from your monthly paycheck,* what's left is the amount of money you have to spend that month after all your bills are paid. This is what I call "discretionary spending money" because you have some choice in how you spend it. You have to eat, but you can decide how often you cook at home vs. dine out, or whether you spend the extra bucks on organic produce at Whole Foods vs. taking a trip to Costco to get more bang for your buck. Start by simply estimating how much you think you already spend in these areas, or how much you would like to spend ideally. Make sure that the budget you allow for each category adds up to your total monthly paycheck.

 

Creating the spreadsheet

 

Once you've figured out how much money you would like to spend on each category, you need to create a place to store that information and track your progress. I have found that an Excel spreadsheet is the best option for me because A) I am a huge Excel nerd, and B) I can create formulas that will calculate all of the information for me, making the actual data entry portion of this task much simpler.

 

I have attached a blank version of the spreadsheet that I made. The values are based off the average starting salary for a first year teacher in Maryland. Feel free to download and tweak it to your heart's desire (simply change the value in the "Budget" boxes).

 

Example of how to use the spreadsheet:

The bottom of the spreadsheet has a tab for each month: 

 

 

There is also a "Summary" tab that is already formatted to pull data from each month and organize it into a yearly overview!

*Helpful Tips!

 

  • I suggest that you plan your budget based on your main source of income without including supplemental income. For example, as a teacher, I try to make extra money by tutoring. However, I cannot guarantee that I will continue to have clients with regular consistency, so I don't want to rely on that money in my budget. If it is a good month and I've been able to tutor frequently, I will have extra money to spend or save, but if its a slow month I don't have to worry about paying the bills or making ends meet because my budget doesn't rely on the extra income. That's why the "Total Earned" amount above does not necessarily match the "Budget" amount.
     

  • I also suggest including a "Savings" category in your budget, even if you can only spare a small amount. It is easier to put money in a savings account when you think of it as part of the budget, or another non-negotiable bill to pay. A small amount each month will start to add up over time! 

 

DOWNLOAD BLANK SPREADSHEET - CLICK HERE

 

 

 

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